If you’re deciding to build a house or an investment property, it is comforting to know that you have a contract binding you to your builder and vice versa.
However, when there is so much at stake in a building contract, it is important to know that if the project runs into difficulties there are robust guidelines for resolving issues and reaching completion.
That is why ongoing discussion about ‘good faith’ provisions in contracts has caught my attention, because such provisions affect our conveyancing clients and dwell within the ‘fuzzy’ or subjective area of law, which always makes my conveyancer mind apprehensive.
When is good faith enough faith?
In the In Daily article, Uncertainty over ‘good faith’ in contracts, we hear from the Masters Builders Association that moves by Standards Australia to make the management of contracts easier and resolution of issues clearer, might actually risk creating more confusion.
John Vozzo from MBA Law says the new draft wording for Australian Standard 11000 is vague, arguing it is almost impossible for anybody to know with certainty what is really meant by wording such as ‘to act reasonably in a spirit of mutual trust and cooperation, and generally in good faith towards the other’.
The MBA is arguing that the wording needs improving to state clearly that good faith means both parties agree to cooperate, to comply with accepted standards but not to the extent that one party must ‘subjugate’ itself to the other.
A conveyancer’s thoughts on good faith provisions in contracts
We have done more than enough contract work to know that at every turn both parties to a contract want certainty and they also want things kept as simple as possible.
Both parties typically want certainty and clarity in terms of the process to agree and execute a Contract, as well as in the process to complete, or enforce, a Contract.
This move by Standards Australia to strive for standardisation in contract law is honourable.
However, we know, at an excrutiating level, just how often the devil is in the detail with contracts.
Therefore I urge you to still seek advice from an independent advisor, even if this new, ‘generous’ wording gets adopted.