Building Disputes · Additional Resources

Failure to comply with the Domestic Building Contracts Act 2000 (“the Act”) may result in:-

Some of the key provisions of the Act include: -

Contracts in Writing

All domestic building work valued at $3,300.00 (inclusive of GST) or more must be covered by a written Contract which complies with the Act. For a small cost contracts can be obtained from associations such as the Master Builders or BSA. Otherwise we can assist draft contracts to ensure they comply with the Act.

Information Statement

The Act requires contractors to provide clients with a signed copy of the Contract, together with a BSA approved Contract Information Statement within five (5) days of entering into the Contract.

Variations in Writing

All variations requested by the contractor must be put in writing and copied to the client as soon as possible. If requested by the contractor a variation involving additional work will only cost the client if the contractor could not have reasonably foreseen the extra work at the time of contracting. Home-owners will however be liable for payment for those variations requested on their behalf.

The contractor must not demand payment for variations before the work has commenced.

Numerous difficulties have arisen as a result of contractors failing to commit variations to writing and failing to keep home-owners fully informed. This often results in contractors not being paid for work carried out and also being penalised by the BSA for breach/s of the Act. Contractors and home-owners must always keep in mind that the costs of litigation are rarely if ever recovered in full by either party, and the process is more often than not emotional draining and lengthy.

The Cooling Off Period

Generally home-owners may withdraw from a Contract within the five (5) business days provided they give written notice of their intention to do so. However home-owners would usually incur certain costs, for “out of pocket expenses” reasonably incurred by the contractor, before the home-owner can withdraw from the Contract.

If however a contractor has not given a home-owner the Information Sheet they extend the period in which a contractor is exposed to the risk of a home-owner withdrawing from the contract.

The five (5) business days in which a contractor can withdraw from the Contract commences only upon the contractor providing a signed Contract and a BSA approved Contract Information Statement to the home-owner.

Contract Termination

In certain circumstances the home-owner may be entitled to terminate the Contract. For example, if the contracted price rises by more than 15% or the construction period extends by more than 50% - provided these increases could reasonably have been foreseen by the contractor and any rise in price was not due to a delay caused by the owner.

Implied Warranties

As soon as any domestic building work is carried out to a value exceeding $3,300.00 certain warranties are implied and imposed on contractors carrying out such work.

These warranties include the work will be carried out: -

Such warranties are often relied upon in claims commenced in either the Magistrates Court or the Commercial and Consumer Tribunal where recovery damages are sought for defective work carried out by a contractor.

Delays During Construction

The BSA has published information concerning the number of builders claiming delays in obtaining materials and labour for house building construction as “incalculable delays”. Although the term “reasonable delays” is inserted in the terms of a building contract the aforementioned practice is illegal - except in the rarest and most unlikely of circumstances. Calculable delays must be included in the contractual document itself. Such circumstances might include delays in importing of materials from overseas or unusual shortages of trade contractors (for example, the shortage of trades persons after the cyclonic conditions experienced in far North Queensland in early 2006).

Liquidated Damages

The purpose of liquidated damages is to compensate the consumer in the event that the contractor fails to meet an agreed completion date. Although a rate of $15.00 per day is often included in pre-prepared Contracts it is more likely that a higher amount of $60.00 or $70.00 per day is appropriate given the recent increase in property valuations, particularly in the Central Queensland area.

Both contractors and home owners alike should be aware of these damages and the time frames allowed under the terms of the Contract.