This thesis takes AB 92, FIDIC and AIA as starting point and compares the developer’s right to make changes to a construction project and analyses which efficiency implications this have on the total revenue of the contract in the light of Hart and Moore’s models.
Firstly, it is described how the area is regulated under Danish law, secondly it is discussed and compared which right AB 92, FIDIC and AIA gives the employer to demand changes respectively. It is seen that the contracts are very similar and that the only fundamental difference is how disputes are handled between the parties. AAB 92 is different from FIDIC and AIA since there is no third party involvement, which means that the only dispute solution is arbitration, whereas FIDIC and AIA has multiple steps prior to arbitration.
Next Hart and Moore’s models from the article “Contracts as reference points” is described where after these are used to explain the employer’s unilateral right to initiate changes, and the contractors right to get compensated for implementing the changes. The models have some rather idealistic assumptions, hence are not a perfect fit for construction law. For that reason, the models are extended to make some of the assumptions more realistic. The first extension is to describe what happens with the parties feelings of entitlement when AB 92 is agreed and a dispute arises. Next that is compared with the situation from FIDIC and AIA where either an engineer or architect is involved in determining the compensation cost as a start. Lastly it is introduced that the parties re-negotiate instead of resolving the dispute in arbitration. These models suggests that, at least theoretically, FIDIC and AIA is better suited to handle the disputes between the parties, and whether or not the parties are successful in re-negotiating the cost of the change depends on how aggrieved one part feels and how significant the transaction costs of arbitration are.
|Educations||MSc in Commercial Law, (Graduate Programme) Final Thesis|
|Number of pages||79|
|Supervisors||Henrik Lando & Peter Møgelvang-Hansen|