Ten things contractors must change in their construction contracts in 2016

With the BCIPA amendments now in force and a number of recent Supreme Court decisions dealing with BCIPA and the QBCC Act, it is essential that contractors amend their contracts to minimise exposure:

1. Do not agree to amend clause 5 of Australian Standard 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 obtain an injunction if necessary.

2. Decide on a process when payment claims are over $750,000, and make a decision on whether the payment schedule under BCIPA and / or the certificate under the contract will:

(a) be due 15 business days from receipt of a payment claim (which will be the same day as payment is due!); or

(b) 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 BCIPA 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 to 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 cannot overturn the decision of the superintendent.

7. Resist any clause excluding the “prevention principle”. This would mean liquidated damages 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. Amend the security clause so that at FC only the value of the defects is retained and balance of security is released.

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