A written contract for a new home build is a no-brainer. When there’s a significant chunk of change on the table and a number of things that can go wrong along the way, it’s only natural that the parties to the agreement will want their rights and obligations evidenced in writing and to safeguard themselves with certain protections. But what happens when you do not understand the terms of your building contract? It’s great to have your contract in writing, but its also important to understand the terms of the contract, how the terms are administrated and what happens if things go wrong.
Contract Terms
A construction contract is a legally binding document, and its terms and conditions can have significant legal consequences.
The majority of disputes arise when there is a misunderstanding between the builder and homeowner because the contract terms are poorly documented, or the parties simply do not understand them. It’s important for both builders and homeowners alike to have clear, and complete understanding of the terms of the contract to avoid disputes arising throughout the course of the build.
Contract Reviews
How can you safeguard yourself? Easy – ask the experts! It is never a poor choice to err on the side of caution and seek advice from a solicitor prior to entering into a building and construction contract. A contract review can help identify any potential issues that could arise or result in financial risks and potentially save you from costly disputes or legal proceedings down the track.
Should I have a solicitor review my contract before signing?
A contract review is likely to help you avoid unnecessary disputes, having armed you with the knowledge and understanding of your rights and obligations under the contract. A contract review provides an opportunity to:
- identify any errors in the scope of works, plans or specifications;
- identify any ambiguities or inconsistencies in the terms;
- ensure that the builder is complying with Schedule 1B of the QBCC Act 1994;
- ensure that terms such as liquidated damages are a genuine pre-estimate of loss which may be suffered by you if the build exceeds the completion date;
- understand whether the contract you’ve been provided is the right contract for the job;
- whether any special conditions or unusual terms have been included in the contract which should not be agreed to;
- understand the build process based on the contract;
- receive plain English advice about what the terms mean to you;
- understand the risks you are facing.
Reviewing, negotiating and amending a building and construction contract prior to entering it is the best deterrent for later costly disputes. Chances are, if you’ve taken the time to understand your contract, your solicitor will have provided you with valuable advice which can prevent cost overruns, delays, unexpected costs and disputes.
Next Steps
If you’re a homeowner looking to enter a building and construction contract, or if you’re a builder and you’d like a review or better understand your contract, contact one of our experts today for a contract review. Klein Legal is able to provide you a plain English explanation as to your rights, obligations and any risks or protections that arise out of the clauses of your contract.
This is general information only and does not constitute legal advice.
If you or someone you know would like more information or require advice about anything raised in this article, please contact us on (07) 5458 6855 or email mklein@kleinlegal.com.au.