Question

Codelfa contracted with the State Rail Authority to excavate tunnels to do the concrete work on the construction of Sydney’s Eastern Suburbs Railway. Various stages of the work were to be completed by certain dates, and the whole contract was to be completed within 130 weeks. Due to building noise, local residents applied for and were granted Injunctions to restrain work during the night, and as a result, Codelfa could not complete the contract on time.

Required: 1. Can a Term be implied into a contract to require the State Rail Authority to give an extension of time?

2. Discuss the legal condition of the Performance of the contract.

Answer 1

(1): No, a term cannot be implied into a contract to require the State Rail Authority to give an extension of time. There are five conditions which need to be satisfied for a term to be implied:

• It must be reasonable and equitable
• It must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it
• It must be so obvious that it goes without saying
• It must be capable of clear expression
• It must not contradict any express terms of the contract

The condition not being satisfied here is the 3^rd condition i.e. it must be so obvious that it goes without saying. It should also be noted that there are several possible ways in which the parties in this case might have dealt with the situation if they had anticipated the same. Hence requirements are not met for implying a term.

(2): In this case the contract was frustrated by the grant of injunction. This is because parties proceeded on the assumption that the works can be completed in a lawful manner by the intended mode of work. Thus in this case the whole construction work was disrupted as it was not possible (or impossible) to complete the contractual obligations lawfully. The performance of the contract in the new situation was substantially different from the performance in the situation that was contemplated by the contract.