The Crucial Conditions and Attributes of Domestic Subcontract in Malaysian Construction Industry

Abstract

The duties and responsibilities of the parties signing a contract are governed by the previously agreed terms of the contract. General conditions are a standardized form of preprinted contract which specifies the general project rules and relevant commercial terms. The contracts are developed and published by various associations and professional bodies and are widely used in the construction industry. In the Malaysian construction industry, there are several standard forms of main contracts and nominated subcontracts. However, for a domestic subcontract, the main contractor prefers to use a bespoke contract, which results in contract disputes. Drafting a complex contract can be time-consuming and expensive. It also requires the involvement of the legal team to provide legal opinions and advice on its content. Hence, this study intends to identify domestic subcontract attributes and critical conditions to overcome the major issue of unclear terms and conditions for the domestic subcontract. A set of attributes and critical conditions have been established through a detailed review and analysis of twenty-two (22) bespoke contracts collected from the industry and an extensive literature review from published articles.Content analysis was done on leading academic journals in construction engineering and management. Clarity, consistency, parties, risk, language, and format of the domestic subcontract are some of the attributes. Meanwhile, payment, liquidated damages, delay, subcontract sum, termination, variation order, practical completion and defect liability period, commencement and completion, and safety provision are the most crucial conditions discovered through extensive review and content analysis of the bespoke contracts. The advantage of establishing these characteristics and critical conditions is that they serve as a prerequisite for the development of a domestic subcontract framework.