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Contracts Checklist

Some things to consider for inclusion in your building contract.

Introduction

After obtaining Local Council approval of your proposed construction, you must be clear about what Council has approved and the conditions of approval. If you are not sure about any aspect of the approval you should consult the Town Planner at Council and professionals such as a qualified builder, architect, engineer and your solicitor.

Below is a checklist of some items for consideration in your contract with the builder. It is not an exhaustive list but covers some items that are often forgotten or not properly considered. If you are not sure of any aspect of the legalities, you should consult your solicitor.

  1. The Parties

    1. Is the builder licensed and, if so, what are the conditions or restrictions on his or her licence?
    2. Is the builder a company or trading name? If so, what do you know about it's financial worth, reputation, systems, and accreditations?
    3. Restrictions on your ability to contract eg., you are not an owner of the property, bankruptcy.

  2. The Contract

    1. What does it comprise: what documents should it incorporate?
    2. Clearly identifying what the builder is to provide by way of labour, skill, materials, plant and machinery.
    3. The need for written agreements and the formalities of a binding agreement.

  3. Price

    1. How is the price determined and is it clearly stated?
    2. Different methods of payment: lump sum with progress payments; rates referable to a bill of quantities or schedule of rates, etc.

  4. Variations, Unforeseen conditions and Discrepancies

    1. Conditions on the job which differ materially from the conditions that were reasonably foreseeable at the time of the builder's quote.
    2. Extension of time and cost.
    3. Contract to provide for means of calculating costs, proper notice by the builder and proper modes of acceptance by you.
    4. Day work.

  5. Security

    1. Is either party obliged by the contract to lodge security?
    2. Does the builder seek a caveatable interest in your property?
    3. What are acceptable forms of security?

  6. Retention

    1. What they are and when you should insist on retention amounts.

  7. Performance Undertakings

    1. What they are and when you should insist on performance guarantees.

  8. Serving notices under the contract

    1. Proper modes of serving notices.
    2. When written notices are important and useful.
    3. Timing of notices.

  9. Assignment and Subcontracting

    1. When it may be unacceptable to allow either or both parties to assign their rights under the contract or to delegate responsibilities.
    2. How to provide for assignment or subcontracting in the contract.
    3. Provision for you to nominate subcontractors for different trades.

  10. Insurances and Risks

    1. Different types of risks and how to insure against them.
    2. Whose responsibility?
    3. Right to insist upon sighting evidence of insurances.
    4. What if you build or take primary responsibility for parts of the construction?

  11. Provisional Sums

    1. What are they and should you use them?
    2. Evidence of expenditure upon.

  12. Statutory Requirements

    1. Knowing those that apply, when and to whom.
    2. Avoiding breaches eg, Environmental Protection Act, Local
    3. Government Act, nuisance, pollution, working hours, etc.
    4. How to deal with changes in legislation.

  13. Representatives

    1. Appointment and proper identification of nominees or representatives under the contract.
    2. Limits on their powers or obligations.
    3. Sub-delegation.

  14. Control of Builder's Employees and Subcontractors

    1. Including a power to remove any such persons guilty of misconduct, negligence or incompetence.

  15. Site Issues

    1. Possession, access, uses prohibited, etc.
    2. Delivery of materials before possession.
    3. Minerals, fossils and relics.

  16. Setting out the Works

    1. Survey marks and maintaining them.
    2. Errors and how to deal with them.

  17. Quality Issues

    1. Specifying the quality of materials and work.
    2. Standards in the absence of specification.
    3. Acceptable standards of finishes.
    4. Provisions for defective materials or work: directions to remedy; timing; evidence; accounting for defective materials or work.
    5. Provisions for incomplete materials and work.

  18. Progress of Works

    1. Deadlines.
    2. Commencement and Practical Completion.
    3. Suspension of works and extensions of time.
    4. Liquidated damages for delays.

  19. Defects Liability

    1. Period of liability.
    2. Minor defects and major defects.

  20. Cleaning up and rubbish removal

    1. Cleaning during course of works.
    2. Removal of plant, equipment after practical completion.

  21. Certificates and Payments

    1. Payment claims, Terms, Certificates, Calculations.
    2. Retentions, Defects Period and Final Payment Claims.
    3. Set-off amounts.

  22. Payment of Workers and Subcontractors

    1. Proof.
    2. Withholding payments to the builder.

  23. Default or Insolvency

    1. Types of conduct or failures (by either party) that are substantial breaches of the contract which amount to default.
    2. Notices to show cause and time for satisfactory reply.
    3. Rights of termination of the contract, suspending payment, using plant and completing the works.
    4. Liquidated damages.
    5. Situations or types of conduct or failures (by either party) that amount to proof of insolvency.
    6. Rights of each party where the other party insolvent.

  24. Termination by Frustration

    1. Situations that amount to frustration of the contract by law.
    2. Either or both party unable to perform its part of the contract by operation of intervening events or situations beyond the control of the parties.
    3. What happens with the works then and what are your rights.

  25. Dispute Resolution

    1. Specifying a mechanism for resolving disputes without the need for litigation.
    2. Appointing mediators, experts, arbitrators and other neutral third parties.
    3. When negotiations fail and litigation becomes a better option.