Does Equity undermine Construction Contract risk?
Construction industry participants negotiate risks under the common-law principles of contract which govern their bargain. However, risks are often unfairly allocated. When a party is left with losses they simply cannot bear, some seek Equity’s assistance to overcome their contractual position. The tension that arises by doing so, is that the contractual risk allocation may be undermined; which is what the parties had bargained for. This becomes particularly important where there are a series of cascading contracts between various participants in the contractual chain, who have agreed the allocation of risk to one another. This paper explores this tension by considering a practical hypothetical scenario of a realistic construction project with which many readers will be familiar.