Many building contracts are still fairly rudimentary or are
standard boilerplates that don't reflect how a contractor
The building contract is a key structure in the business of any
contractor and it is important for a contractor to understand how
their contract operates and if changes are needed.
When you are looking at a building contract there are some
fundamental areas that should be covered including:
Contractor and client obligations;
Price (and adjustments);
Variations and a clear description of the works/plans; and
If the contract doesn't cover these aspects then the
contract needs to be revised.
How does the business operate?
Covering the key terms is not enough. The contract should match
how a particular contractor operates their business. For example,
if a contractor needs the client to provide a level building site
with good ground then the contract should make this the
Correspondingly, if a contractor normally completes earth works
and excavation then the contract should reflect this, or at least
provide this as an alternative. If the contract doesn't reflect
the reality of a contractor's operations then this can often
lead to disputes and/or extra costs.
Some of the standard building templates do not provide
flexibility, or require the involvement of architects, engineers or
project managers. If a particular contractor does not fit these
standard documents then they run into the problem of either having
an inappropriate contract or being forced to heavily amend the
standard agreement for each project.
Where does the client come in?
In the past building contracts have often been based solely
around protecting a contractor's position. While this is an
advantage from a contractor's stand point, it can often leave a
client feeling uncomfortable or mislead when they signup.
For example, a contractor may deal with the client on the basis
of a fixed price or quote for a project. The client is expecting
that the contract will reflect this arrangement, however the
contract has been drafted to allow the contractor the normal
ability to charge above the fixed price for provisional sums, cost
fluctuations etc. While it is important for a contractor to limit
their exposure, there should also be continuity between what a
contractor is telling its clients and the terms of contract.
The specialised Construction Law Team at Cavell Leitch can help
a contractor sort out their contracts so they are comprehensive and
tailored to their particular business operations.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Be aware that most modern subdivisions now include land covenants which are registered against the titles.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).