Contracts

Building contracts

The contract decides most of what happens later. It fixes the price, the programme, how a change is priced, and what each side must do when something goes wrong.

General information, not legal advice. This page sets out how the law generally applies. It does not take account of your circumstances, and you should get advice about your own situation before acting on it. The official sources this page is written from are listed on it; where they differ from anything here, they are the authority.

Who this page is for

Before you sign, and after it has gone wrong

Two sorts of people read a page like this. The first is about to sign something. A builder has handed over a document, there is pressure to get started, and the clauses about variations, delay and payment have been skimmed rather than read. Half an hour spent on the contract at this point is the cheapest half hour in the whole project.

The second is already in trouble. The work has stopped, or the invoices have grown, or a letter has arrived saying the contract has been terminated. What can be done now is decided almost entirely by what the document says and by what each side has already written to the other. That is why we ask for the contract and the correspondence before anything else.

For residential work the contract is not the whole story. The Home Building Act 1989 requires a written contract once the price passes the amount it prescribes, and it implies warranties into that contract whether or not anyone typed them in. A clause that tries to take those warranties away does not work. So the question is never only what was signed; it is what was signed plus what the law puts in.

For commercial building work there are no implied statutory warranties of that kind, and the document does far more of the work. The contract will usually set out the programme, the extension of time regime, the variation procedure, the defects liability period and the security. Each of those is a place where a right can be lost by saying nothing.

How we help

What the work actually is

Reading a contract before it is signed

We go through the document clause by clause and tell you in writing what it requires of you, where it differs from the standard form it is based on, and which clauses are likely to cause trouble on this particular project. Where the contract is one of the NSW Government’s own templates, we say so, because that changes what is worth negotiating.

Checking the things that sit outside the contract

Whether the contractor holds the licence the work needs, whether home building compensation cover has been obtained and the certificate given, whether the price and the payment structure comply with the Home Building Act, and whether the work is on a regulated building that brings the Design and Building Practitioners Act with it.

Drafting and negotiating the terms that matter

Not every clause is worth arguing about. We concentrate on the ones that decide money and time: the payment schedule, the variation procedure, extension of time and liquidated damages, the defects liability period, security and retention, and what happens if either side wants to stop. See variations and delay and extensions of time.

Working out where you stand once a dispute has started

We set out what the contract obliges each side to do now, what notices have or have not been given, and what the realistic options are. That advice comes in writing, with the costs and the risks attached to each option, so you can decide rather than guess.

Questions

Questions people ask first

The builder wants to start on a quote and an email. Is that enough?

For residential building work above the amount the Home Building Act prescribes, no. The Act requires a written contract, dated and signed. Starting without one does not make the work lawful, and it removes the document you would otherwise argue from when something goes wrong. The NSW Government publishes free contract templates for small and large jobs, so the cost of doing it properly is close to nothing.

The contract says the statutory warranties do not apply. Does that work?

No. The warranties in section 18B of the Home Building Act are implied into the contract by the Act itself, and the Act provides that a term purporting to exclude or restrict them is void. If you are being asked to sign something that says otherwise, that is a reason to get advice rather than a reason to sign.

How much deposit can I be asked for?

The Home Building Act caps the deposit on residential building work at a percentage of the contract price. We do not publish the figure here because a number on a website is exactly how people get caught out; the current cap is on the NSW Government’s contracts page, linked below. If you are asked for more than the cap, that is not a negotiating position, it is a breach.

I signed yesterday and want out. Can I still get out?

Possibly. A residential building contract above the higher amount the Act prescribes must state a cooling-off period, which runs from when you were given a signed copy. Whether it is still open, and what it costs to use it, depends on the date and on what the contract says. Check the date on your own copy and raise it straight away rather than after the weekend.

Do I need a lawyer if I am using the government's own template?

Often not for the form itself, which is the point of the templates. What is still worth checking is what has been written into the blanks and attached to the back: the scope, the plans and specifications, the payment schedule, the special conditions and any inclusions and exclusions list. That is where the disputes come from, not from the printed clauses.

The contractor is not licensed. What does that mean for the contract?

It matters in several directions at once, including insurance, the contractor’s ability to recover money, and the route a dispute takes afterwards. NCAT’s home building pages treat a claim involving an unlicensed contractor differently from an ordinary dispute. It is worth advice early rather than after the work is done.

What to bring

Almost every question about a building contract is answered by the document and the dates rather than by recollection.

The contract itself, including the special conditions and anything attached to the back of it.
The plans, specifications, and any inclusions and exclusions list.
The quote or tender the contract was based on, and any email that changed it.
The date you were given a signed copy, and the date work started.
The certificate of home building compensation cover, if one was given to you.
Every invoice and every payment made, with dates.
The correspondence, in the order it was sent — including the messages you would rather not show anyone.