A proposal to reduce the complexity of the Australian law of contract

The phrase 'legal complexity' is often used but rarely defined or explained, perhaps because of the inherent difficulties in undertaking such a task. The most useful explanation is provided by American scholar Peter Schuck, who explains that legal complexity is the extent to which a law or rule is dense, technical, differentiated and/or indeterminate. The Australian law of contract fits all of Schuck's criteria, and its complexity has an impact on participants in the Australian economy, within which the Australian construction industry is one of the largest sectors. This industry is chosen as a focus for analysis because it has the highest proportion of small businesses; it operates in a 'subcontracting model', in which a principal often sits at the top of the chain followed by a head contractor, followed by tiers of subcontractors; and it appears that those toward the top of the chain sometimes use contract law's complexity as a 'shield' against practices that might otherwise be unlawful. Remedies that are frequently employed in the construction industry will be reviewed to illustrate the difficulties faced by subcontractors. On apparently similar sets of facts the courts have arrived at vastly different conclusions. While agreeing that the Australian law of contract is complex, commentators differ as to what (if anything) can or should be done about it. One school of thought suggests inaction – reform options are inherently risky and the case for such a reform has not been made. Another goes to the other extreme, proposing that contract law as a whole (including statutory, equitable and common law elements) should be codified under some sort of statute. After considering the merits and demerits of these arguments, the thesis looks abroad for other solutions, and suggests that a possible answer may lie in an organisation established a century ago in the United States of America: the American Law Institute (ALI). There are intriguing parallels between the issues of uncertainty and complexity that the ALI has sought to address, and those that exist in the contemporary Australian law of contract. The 'solution' the ALI offered was to ask leading experts (judges, lawyers and academics) on a particular subject to 'restate' the law in one text, with the aim of reducing the subject's uncertainty and complexity. On a number of measures, the ALI's restatements have reduced uncertainty and complexity in the USA, and there is reason to think similar success could be achieved in Australia. A restatement arguably benefits from most of the advantages of codification and few of the disadvantages. Thus the thesis argues that a restatement, which is a middle option between the two extreme options outlined above, is a reform option worthy of serious consideration to address the issues encountered in the Australian construction industry.