Resolution of controversy has been a problem for merchants since the earliest contracts were made by barter on village market days. By the mid-19th century, England had enacted some statutes relating to commercial arbitration; but it was a court of law in the United States of America which first recognised the legally binding character of arbitration in commerce, with the ruling (Scott vs Avery, 1856) that parties can agree that “no right of action shall accrue in respect of any differences which may arise between them until such differences have been adjudicated upon by an arbitrator”.
In Australia, the same kind of controversy which had resulted in the Common Law Procedure Act (England, 1854), as well as the precedent-setting US court case mentioned above, probably began on the banks of the Tank Stream when the earliest NSW building contracts were let.
Disputes about payment of building progress monies led to a fruitless attempt, in 1863, to form a builders association. By 1873, however, master builders in NSW had recognised a real need for standard forms of contract which would ensure fairer conditions for builders, and which would require arbitration of any dispute between parties to a contract.