Building & Construction
4. Building Contracts
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 23 Jun 2015
- Depending on the type of construction and the state or territory you are in a written contract between the owner or principal and the builder may be mandatory. Even if it is not mandatory it is highly recommended to use a written contract when hiring builders and contractors.
- Your contract needs to set out the rights and obligations of all the parties and to specify the dispute resolution mechanisms to be used in case of conflict.
- Building associations such as the Queensland Building and Construction Commission and the New South Wales Housing Industry Association provide template contracts. However builders and contractors may have their own contract that they wish to use.
- You are free to negotiate the template and form of your contract. If you are not using a standard contract you should seek legal advice to ensure that it is fair and that you fully understand your rights and obligations.
- The following information should be included in the contract:
- the names and addresses of all parties including owners and contractors;
- the contractor’s license number;
- relevant dates such as when the contract starts, the dates of expected stages and completion;
- the contract should also make allowances for unforeseen conditions such as bad weather and non-working days;
- a detailed description of the work to be undertaken;
- a ‘cooling off’ period or the period of time in which you can withdraw from the contract. Note that not all contracts in all states and territories require this;
- the agreed price and payment provisions including deposit and progress payments;
- plans and specifications of work to be undertaken;
- definitions of key terms in the contract;
- any work which is not to be included in the contract;
- potential variations;
- statutory warranties such as that:
- the materials will be suitable and of good quality;
- the contractor will comply with the law;
- the contractor will use reasonable skill and care; and
- the completed project will be suitable for occupation.
- All parties must sign this contract. Remember there may be a cooling off period.
- There may be circumstances where the contract can be terminated. For example in Queensland a homeowner may terminate the contract if the work is not completed within 1.5 times the stipulated time but only if the contractor could have foreseen these circumstances and the homeowner was not responsible for the delay.
- Should you wish to terminate a contract you should first seek legal advice as you may be bound by certain provisions and could risk breaching them by terminating or not performing your end of the contract.
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