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When is a Written Building Contract Required?

When is a Construction Contract Required for Domestic Building Work in Queensland?

Most domestic building work in Queensland requires written construction contract. Often, the contractor and the owner come into a disagreement because they did not enter into a written contract or because the contract is defective.

There can be serious ramifications if the proper contracting procedure is not followed. In some cases preventing the recovery of costs. QBM Lawyers can help you guide and advise in any related matter.

The information in this page is current as at 8 January, 2024.

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What is domestic building work?

Domestic building work includes most types of building work done on or around a home, such as construction, renovation, repairs, and landscaping. The Queensland Building and Construction Commission Act 1991 provides a detailed definition of “Domestic Building Work” in Schedule 1B, Section 4. https://classic.austlii.edu.au/au/legis/qld/consol_act/qbacca1991487/sch1b.html

What Form of the Construction Contract is Required?

Where if the cost of work is more than $3300 (called the “Regulated Amount”), then a written contract is required.  If the work costs less than $20,000 (an amount prescribed as the level 2 amount by sec 45 of the QBCC Regulation), the contract is named “Level 1 Regulated Contract.” It must comply with section 13 of Schedule 1B of the QBCC Act.
The contract must be written, dated, and signed by all parties. It must include the information required by section 13(3) and follow any other requirements in the QBCC Regulation.
If the work costs $20,000 or more, the contract is called a “Level 2 Regulated Contract.” It must follow the detailed requirements of section 14 of Schedule 1B of the QBCC Act.

The Consumer Building Guide published by the QBCC (and available online https://www.qbcc.qld.gov.au/resources/guide/qbcc-consumer-building-guide-v3) must also be given to the owner before the owner signs a Level 2 Regulated Contract.

Incorporation of Warranties

Sections 19, 20, 21, and 22 of Schedule 1B incorporate warranties into the Construction Contract, whether written or not.

Section 22 of Schedule 1B includes warranties on the suitability of materials and compliance with legal requirements. Plus, the proper execution of work with reasonable care and skill.

If plans and specifications are part of the contract, section 23 ensures the contractor warrants that the work will align with these documents.

For projects involving home construction or renovation suitable for occupation, section 24 guarantees the home’s suitability upon completion.

Section 25 mandates that work be completed diligently and promptly.

Section 26 provides warranties regarding provisional sums or prime cost items, ensuring these amounts are calculated with care and skill based on available information at contract entry.

Under section 27, subsequent property owners enjoy the same rights for breach of warranty as the original owner, assuming they were unaware of the deficiency at property purchase.

Section 29 specifies that claims for breach of statutory warranties must commence within six years after completion for structural defects or within one year otherwise. Detailed provisions in section 29 cover the start of relevant periods when work is incomplete or defects are not immediately apparent.

Common Problems with Contracting 

Our lawyers often identify fundamental issues in contracting formats, including instances where:

  • The provisions of a contract may contravene the unfair contract provisions of the Australian Consumer Law or provisions of the QBCC Act.
  • The wrong type of contract is used, or the guide is not provided.
  • A company associated with the contractor enters into the contract instead of the licensed contractor personally, leading to issues with unlicensed contracting.
  • The contractor signs the contract before obtaining the foundation data required by section 31, especially if the construction includes footings or a slab.
  • Deposits exceed the amounts permitted under section 33.
  • There is confusion between provisional sums and prime cost items.
  • No one enters into a contract at all.

What Contract Should Be Used?

The QBCC provides free contracts for use, along with the Consumer Guide. Additionally, the HIA and MBA offer their contract forms. Our construction lawyers can suggest additions and modifications to these contracts to prevent disputes and clarify the parties’ positions.

For advice about construction contract and building matters generally, contact our partner Justin Mathews at justinm@qbmlaw.com.au

Justin is a specialist accreditation in commercial litigation. He is a registered adjudicator for payment claims in construction contracts for Queensland, New South Wales and Northern Territory. In addition to that, he and his team deal with construction contracts and disputes, together with licensing matters.

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