How should Developers amend Construction Contracts to provide greater protection?

The first quarter of 2017 shows us that developers need to amend their construction contracts as follows to provide maximum protection from vexatious BCIPA claims:


1. Amending clause 5 of Australian Standard contract:

(a) to allow security to be converted “immediately” following the provision of notice;

(b) to allow conversion for any amount “claimed to be” due; and

(c) to survive termination.


2. Ensuring that:

(a) a termination for convenience clause exists;

(b) there is no further reference date after termination for convenience; and

(c) any termination for convenience clause survives termination

Preconditions to Payment

3. Obtain legal advice on the validity of any preconditions on the right to lodge a payment claim, or to reference dates arising (for example, the provision of a statutory declaration or other documentation required to assess the claim). Preconditions as to the validity of a claim under BCIPA will be invalid.

Release at PC

4. Requiring a signed deed of release as a precondition to the contractor achieving PC and FC, to prevent contractors from lodging an adjudication application after PC.

Time Bars

5. Amend the contract so that the superintendent has the right to grant EOTs at the superintendent’s absolute discretion (whilst being under no obligation) so that:

(a) an adjudicator or court cannot exercise a discretion in favour of the contractor to award time-barred EOT claims; and

(b) the principal’s / developer’s entitlement to liquidated damages is preserved.

Liquidated Damages

6. Excluding the operation of the prevention principle, as an additional safeguard of the principal’s / developer’s entitlement to liquidated damages.


7. Protect and define the parties’ rights (especially those belonging to body corporates, lessees and subsequent purchasers) and liabilities in relation to pure economic loss for latent defects by requiring the contractor to provide a warranty in their favour at PC.

Adjudication Decisions

8. Amending the contract to ensure a Principal can, in effect, convert security immediately after receiving an unfavourable adjudication decision. This strategy can negate an adverse adjudication decision. Claims after PC

9. Amending the contract so there is no reference dates between PC and FC and so no right to lodge an adjudication after PC.

Set off

10. Amend the set off clause to:

(a) include amounts “claimed” to be due;

(b) include monies owing under other contracts between the parties; and

(c) to survive termination.


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