Construction Contracts

Contracts in the building & construction industry come in many and varied forms.

A construction contract can be a very simple oral agreement.

It could also be part written, and part oral. For example; you might email a quote to someone and they might pick up the phone and say go ahead.

Probably a safe minimum is a written quote and a written acceptance, be it sms text message or email or fax or hand delivered documents on letterheads / purchase orders, it’s good to have a written record of the agreement.

Organisations such as Master Builders Association (MBA) and Housing Industry Association (HIA) have basic contracts available for purchase at reasonable prices. These are a good basic agreement to use if there is nothing else available.

Larger projects will use quite substantial instruments of agreements such as AS4000, AS4902, AS2124 etc…

Government projects will use contracts such as the GC21.

Regardless of the form of the agreement made between two parties the law says that the agreed terms are binding. However it isn’t unusual for parties to recall the detail of the agreement differently resulting in a dispute. Hence the reason why a written record of the agreement is invaluable.

It is important to understand the key components of an agreement.

Who the parties to the contract are, correct and complete entity names inclusive of ABN’s and ACN’s if relevant. If an individual full name and identifier such as drivers licence is helpful.

Execution.

What the contract works / services are. Scope of works.

Type of contract, ie; fixed lump sum, schedule of rates, cost plus, etc…

Price, schedule of rates.

Commencement date and completion date.

Time for making claims.

Time for payment.

How to claim an extension of time in respect of the completion date when your work is delayed by others.

Liquidated damages.

How to claim a variation to the contract.

How to terminate the contract.

Completing the contract.

Retentions.