What do contractors need to change in their construction contracts from the lessons of 2017?

With the Unfair Contract Terms legislation now in force, changes to the Building code, and a number of recent Supreme Court decisions dealing with BCIPA and the QBCC Act, it is essential that contractors look at amending their contracts on at least the following:

  1. Resist any change to clause 5 of Australian Standard Contracts to allow security to be converted “immediately” following notice being provided (the 28 day notice period in the QBCC Act will not affect this). Insist on 5 days written notice before security is converted and only for an “amount due”, so you can apply for an injunction.
  2. When payment claims are over $750,000, make a decision on whether the payment schedule under BCIPA and / or the certificate under the contract will:
    • be due 15 business days from receipt of a payment claim (which will be the same day as payment is due!); or
    • be due 10 business days from receipt of a payment claim, to reflect our recommendations (as was the previous position).
  3. Ensure that where a termination for convenience clause exists, that there is a further reference date after termination. Otherwise you may not have any more reference dates to lodge a BCIPA claim and no such claim can be made for work carried out after the last reference date and up to the date of termination.
  4. Take legal advice on any preconditions on the right to lodge payment claims (i.e. statutory declarations and other documentation required to assess the claim) as preconditions of this type may be void.
  5. Where the principal requires a signed deed of release as a precondition to the contractor achieving PC or FC, insist that the deed is made subject to any notice of dispute.
  6. Resist any clause allowing the superintendent to grant EOTs at the superintendent’s absolute discretion, while being under no obligation to do so. Otherwise a court or adjudicator may not be able to overturn an unfair decision of the superintendent.
  7. Resist any clause excluding the “prevention principle”. This would mean liquidated damages may still apply if an EOT claim is made out of time and even if the principal caused the delay!
  8. Ensure that an EOT exists for delays by “other contractors” retained by the principal or tenants.
  9. Ensure that any warranty that the contractor will not put the principal in breach of a lease or sales contract is limited to: “in carrying out WUC will not put in breach”.
  10. Does the Unfair Contract Terms legislation apply to void any deemed unfair terms such as LD’s, time bars and termination for convenience clauses? This legislation commenced on 12 November 2016, where the subcontractor has less than 20 employees and the subcontract sum is less than $1 million with a DLP of 12 months.
  11. Is it a Commonwealth funded building project which is covered by the Building Code? Is so, then tender documents, head contracts and subcontracts need to comply with the Code and all notices and information statements given.
  12. Do you want release of the subcontract retention / security tied to release under the head contract? If so, link the release to a statutory requirement to PC under the head contract.
  13. Limit any right of the principal to set-off from amounts owing under the contract to “amounts due” rather than amounts “claimed to be due”.
Stephen Pyman – Director | Principal


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