The standard key terms generally relate to cost, time, and standards.
The Queensland Building and Construction Commission Act 1991 (Qld) (the Act) specifically provides that a contract is required for any building work valued at more than $3300. That really sets the bar quite low as it is hard to imagine any true building or construction work that would fall below that sum.
Standard-form contracts are used because they are familiar to those who work in construction and usually require minor amendments to suit the circumstances of the project.
However, this is not always the case, and each building contract should be carefully assessed to absolutely ensure both builder and consumer know exactly what is required.
The type of standard form contract used will depend on the size and complexity of the project, state legislation and the party who administers the contract.
Two commonly used standard form contracts for new home construction in Queensland are the Queensland Building and Construction Commission (QBCC) contract and the Housing Industry Association (Queensland)’s equivalent contract. These are generally weighted toward the builder, but do at least provide certainly as to the terms.
Australian Standard Contracts are used mainly for commercial projects but may be used for larger residential projects.
There are also standard-form contracts available and routinely used for renovations, extensions, and repairs; subcontracting; natural disaster repairs; demolition; and small building projects.
The legislative requirements of a building contract
To be valid under the Act a building contract must be in written form, dated and signed by or on behalf of each party to it. It must include:
- the names of the parties;
- the building contractor’s licence number;
- a description of the work;
- any plans and specifications;
- the contract price or the method for calculating it, including the building contractor’s reasonable estimate;
- the date for ‘practical completion‘ and how it is to be calculated; and
- a notice advising the building owner of the right they might have to withdraw from the building contract for licence reasons.
Importantly the Act also stipulates that there are warranties implied in every building contract. The key warranties relate to:
- materials, which must be new and suitable for purpose (unless stated otherwise in the building contract);
- allowances (variances), which must be calculated with reasonable care and skill; and
- work, which must
- comply with all laws, plans and specifications;
- be done with reasonable care and skill;
- be done with reasonable diligence; and
- create a home suitable for occupation when finished.
Residential domestic building contracts
For projects priced at more than $3300 but less than $20,000, a Level 1 Regulated domestic building contract is required.
For projects priced at $20,000 or more, which are seen as requiring more rigorous control, a Level 2 Regulated contract is required.
Domestic building work involves:
- the erection or construction of a detached dwelling;
- the renovation, alteration, extension, improvement or repair of a home;
- removal or re-siting work for a detached dwelling; or
- the installation of a kit home on a building site.
It also includes associated work such as landscaping and paving, and the addition of buildings and fixtures such as driveways, carports and swimming pools; and the provision of services and facilities such as lighting, air conditioning and water.
A Level 2 Regulated contract has the same requirements as a Level 1 Regulated contract, but it also must include other details such a start date or how it is to be determined, the provision of commencement notice, and a prominent price change warning.
Commercial building contracts
For projects priced at more than $10,000, a contract must be signed before work begins, and for projects priced at $10,000 or less, a contract must be signed before work is finished.
Retentions and securities must be included in a commercial contract.
Key terms in a building contract
Disputes commonly arise due to uncertainty over key terms, highlighting the importance of ensuring they are correct from the outset. Key terms include:
Cost
This includes deposits, progress payments, variations and provisions that apply in the event of insolvency.
Time
This includes the cooling-off period, commencement date, delays, extensions of time and practical completion (the latter of which is a term with a specific meaning). Time related terms also includes provisions for the payment of damages if building works are not completed on time.
Standards
This includes defects, contract termination, disputes and liquidated damages.
Queensland Home Warranty Scheme
This scheme involves claiming on home warranty insurance, which must be taken out by a building contractor for residential work valued at more than $3300 in Queensland.
It offers several protections for the building contractor and the owner, including when the building contractor fails to rectify defective work, and when the building contractor does not complete the contracted work and the owner correctly terminates the contract.
How Gibbs Wright Litigation Lawyers can help
If you’re involved in a building contract dispute or need to seek legal advice before you enter into a building contract, you can call Gibbs Wright Lawyers. We can discuss your matter in a confidential consultation.
