The importance of contracts

Using written contracts for any building work you undertake is highly recommended as they outline agreed steps and terms for getting paid and can help avoid disagreements and payment disputes.

When to use a contract

Written contracts are recommended for anyone entering into a construction contract, including:

  • developers and contractors
  • subcontractors
  • suppliers of construction related goods and services
  • consultants providing construction related services.

Contracts for building work where the contracting or contracted party is a QBCC licenced building contractor or an owner builder permit holder must be in writing. Different requirements also apply to contracts that are made directly with homeowners for domestic building work.

The payment protections and obligations in the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) apply regardless of whether there is a written or oral agreement.

Contracts should include:

  • name, contact details and licence numbers of all parties
  • address of the building site
  • description of work to be carried out
  • start and completion dates for work
  • how much is to be paid for the work
  • dates for when a payment claim can be given (the reference date)
  • the date when payment is due to be made
  • other payment terms such as retentions and length of defects liability period.

If the contract is not clear or makes provisions inconsistent with BIF Act requirements, the Act provides default reference dates (the last day of the month the work was carried out) and due dates for payment (10 business days after the payment claim is given).

Top tips for contracts

  • by spending a little time preparing and reading over a contract, you could save yourself thousands of dollars and heartache later on
  • read the fine print carefully don’t be afraid to seek legal advice before signing
  • confirm all variations in writing as soon as possible before work begins on them
  • verbal agreements and variations made should be confirmed in writing as soon as possible
  • keep copies of emails, quotes and specifications as well as notes from discussions
  • avoid verbal contracts as they can often lead to disputes.