Introduction
Having a contract in writing is not always afforded the importance it should be. In construction in particular, there are often disputes and the effectiveness of having an agreement in writing to resolve the dispute can often save the parties time, money and stress (particularly where the contract clarifies any issues which led to the dispute in the first place). It is for this reason that the Queensland Building and Construction Commission have minimal requirements for contracts in the construction industry. This article focuses on the requirements for non-domestic construction contracts for building work and more specifically on Part 4A of the Queensland Building and Construction Commission Act 1991 (the “Act”).
Minimum written requirements for non-domestic contracts
Part 4A provides the minimum requirements of a building contract other than a domestic building contract. It should be noted that a breach of Part 4A of the Act does not automatically have the effect of making a contract void or voidable. However, any inconsistency between a building contract the Act will render the part, parts or whole of the building contract which is inconsistent with the Act as having no effect. It should also be noted that in the case of retention amounts, any inconsistency between retention amount provisions in a building contract and the requirements of the Act will render that part of the contract unenforceable. The Act requires a building contract to:
1) be put in writing before any work is started (if the cost of the building work is $10,000.00 or more);
2) be put in writing before any work is started as a result of a change in the scope of work or a variation, resulting in the building contract cost increasing to $10,0000.00 or more; and
3) be put in writing before the work is finished (in the case of a building contract for building work less than or equal to $10,000.00).
As of the date of this article, the maximum penalty for a breach of these provisions of the Act is 80 penalty units or roughly $11,500.00.
Minimum provisions to be included in written non-domestic contracts
A building contract must specify the following in writing:
1) the scope of the building work the subject of the building contract;
2) when the building work is to be completed;
3) the amount to be paid for carrying out the building work or, if appropriate, how the amount to be paid for carrying out the building work is to be calculated;
4) the parties’ agreement about retention amounts and securities to be held;
5) the name of the building contractor who is the contracted party for the building contract;
6) the license number of the building contractor as it appears on the building contractor’s license card; and
7) the address of the land where the building work is to be carried out.
Exceptions
The only exception to these requirements is if:
1) the building work the subject of the contract must be carried out urgently; and
2) it is not reasonably practicable to enter into a written contract in the particular circumstances.
The Act gives the example of a cyclone having caused considerable damage to a remote community requiring urgent repairs and the parties to the building contract not both being present at the community and communication failures preventing the transmission of written material between the parties.
Other mandatory and prohibited conditions
Other than the minimum provisions required in writing in a building contract, there may also be mandatory conditions and prohibited conditions which are allowed by the Act to be prescribed by regulation (from time to time) although as of the date this article was written, there are neither any mandatory conditions nor prohibited conditions specified by regulation.
If you would like to discuss any of the above information in more details, please feel free to contact Mateo Gonzalez of our firm. https://www.spglawyers.com.au/people/
