Chapter 16 Scenario 1

Principal contractor scenario 1 – Developer does not own the land

Issue

A parcel of land is owned by a government authority. The government authority engages a developer to develop the land. The developer engages a contractor to design and construct a commercial building on the land. Who appoints the principal contractor; and how does the contract provide for the appointment of a principal contractor in this circumstance?

Solution

Harmonised jurisdictions

The developer will need to engage the principal contractor as it is the person conducting a business or undertaking that commissions a construction project.

Accordingly:

  • in the design and construct contract, the developer would need to engage the
  • contractor as principal contractor for the construction project; and
    ensure that the principal contractor is given:
  • any information they have about hazards and risks in the vicinity of the workplace where the construction work is to be carried out; and
  • sufficient authority to have management or control of the workplace and to enable the principal contractor to discharge its functions.

Victoria

As the government authority is the owner of the site, by default it is the principal contractor. In the development agreement, the government authority should appoint the developer, or ensure the developer makes the contractor accept an appointment, as the principal contractor. The government authority will need to provide the developer or contractor (as the case may be) with the authority necessary to fulfil that responsibility.

In the design and construct contract, if:

  • the developer is the principal contractor, the contractor should recognise this arrangement and agree to be bound by the directions of the developer; or
  • the contractor is the principal contractor, the contractor must agree to accept an appointment by the government authority.

The government authority should exercise the second option with caution since, being the owner of the property, it will by default continue to be the principal contractor until the contractor is appointed to that position by the developer.

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