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When is a Written Building Contract Required?
Building contracts in Queensland
Our building contract lawyers advise on construction contracts in Queensland, where most domestic building work must be carried out under a written contract.
Disputes often arise where there is no written agreement or where the contract is unclear or defective. Failing to follow the required contractual processes can have serious consequences, including the loss of rights to recover costs.
QBM Lawyers provides clear, practical advice on building contracts and related disputes.
Information current as at 8 January 2024
What is domestic building work?
Domestic building work includes most types of building work carried out on or around a home, including construction, renovations, repairs and landscaping.
The Queensland Building and Construction Commission Act 1991 provides a detailed definition of domestic building work in Schedule 1B, section 4.
What type of building contract is required?
If the cost of the work exceeds $3,300 (the “regulated amount”), a written contract is required.
If the cost of the work is less than $20,000 (the amount prescribed as the Level 2 threshold under section 45 of the QBCC Regulation), the contract is classified as a Level 1 regulated contract and must comply with section 13 of Schedule 1B of the QBCC Act.
The contract must be in writing, dated and signed by all parties. It must include the information required by section 13(3) and comply with any additional requirements set out in the QBCC Regulation.
If the cost of the work is $20,000 or more, the contract is classified as a Level 2 regulated contract and must comply with section 14 of Schedule 1B of the QBCC Act.
Before entering into a Level 2 regulated contract, the contractor must provide the owner with the Consumer Building Guide published by the QBCC.
Incorporation of warranties
Sections 19 to 22 of Schedule 1B incorporate statutory warranties into construction contracts, whether written or not. These warranties include requirements that materials are suitable and comply with legal standards, and that work is carried out with reasonable care and skill.
Where plans and specifications form part of the contract, the contractor warrants that the work will be performed in accordance with those documents.
For residential construction or renovations intended for occupation, the work must result in a home that is suitable for that purpose on completion.
The contractor is also required to carry out the work diligently and complete it within the time required under the contract.
In addition, provisional sums and prime cost items must be calculated with reasonable care, based on the information available at the time the contract is entered into.
Subsequent owners of the property are entitled to rely on these warranties in the same way as the original owner, provided they were unaware of any defects at the time of purchase. Claims for breach of statutory warranties must generally be commenced within six years of completion for structural defects, or within one year for other defects, subject to the specific provisions of section 29.
Common problems with building contracts
Our building contract lawyers regularly identify issues in construction contracts, including:
- Contract terms that contravene the unfair contract provisions of the Australian Consumer Law or the QBCC Act
- Use of an incorrect contract type or failure to provide the required consumer building guide
- Contracts entered into by a company associated with the contractor, rather than the licensed contractor personally, creating risks of unlicensed contracting
- Contracts signed before obtaining the foundation data required under section 31, particularly for work involving footings or slabs
- Deposits that exceed the amounts permitted under section 33
- Confusion between provisional sums and prime cost items
- Failure to enter into a written contract
What construction contract should be used?
The QBCC provides standard form contracts for use, together with the Consumer Building Guide. The HIA and MBA also provide commonly used contract templates.
Our building and construction lawyers can advise on the most appropriate contract for your project and recommend amendments where required to reduce the risk of disputes and clarify the parties’ obligations.
Contact our building contract lawyers
For advice on construction contracts and related matters, please contact our partner Justin Mathews at justinm@qbmlaw.com.au
Justin is an accredited specialist in commercial litigation and a registered adjudicator for payment claims in construction matters across Queensland, New South Wales and the Northern Territory. He has extensive experience advising on construction contracts, disputes and licensing matters.
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