Construction Goes Off the Rails

Abstract:     
Parties to a contract may agree to restrict or qualify the right of one party to terminate for another’s breach or repudiation. A typical clause may require notice to the defaulting party, and an opportunity to rectify the default or show cause why the right to terminate ought not be exercised. Other clauses may require the right to terminate to be exercised within a limited period of time.

In Wallace-Smith v Thiess Infraco (Swanston) Pty Ltd (2005) 218 ALR 1; [2005] FCAFC 49, the Full Federal Court considered the effect of a clause restricting the right to terminate. This article examines critically that decision and the principles governing the operation of such clauses. It suggests that there are several flaws in the reasoning of the Full Court.

Number of Pages in PDF File: 12

Keywords: Contract, Breach of contract, Termination

JEL Classification: K10, K12, K30

Accepted Paper Series