Part 1 – Who are you? Who are you contracting with?
One of the first things that we look at when a client comes to us is who the relevant parties are. It is necessary that we think about this for a number of reasons.
Despite their size or experience, clients are often confused about what their own legal entity is, what legal entity they have contracted with, or what legal entity they are about to contract with. The different legal entitles may include:
- an individual;
- an individual with a registered trading name;
- a company;
- a company with a registered trading name;
- an individual as trustee of a trust;
- a company as trustee of a trust; or
- a partnership.
Often clients are not aware of the difference between the above entities or what the ramifications are if they get it wrong.
So when it comes to contracting with another party – be clear on who you are contacting with. Some checks that you can do include the following:
- If the other party is a company with an Australian Company Number (ACN) – do a free search on the Australian Securities and Investment Commission’s (ASIC) website to check the name and ACN.
- Check the builder’s name listed on the contract matches the builder’s name on the Queensland Building and Construction Commission (QBCC) licence search. A free licence search can be done on QBCC’s website here.
- Check the director/s matches the director/s name on the QBCC licence search and the address match up.
- Make sure an Australian Business Number (ABN) is listed and look up the ABN here to check it matches the name listed on documents.
- Check the names on the quote match the name on the contract.
- Do a paid ASIC search to check relevant details.
- Check that the QBCC licence number listed is current and not suspended.
Please note that this does not assist with checking the financial position of the entity, it is simply to check that you are contacting with the right party names.
Checking a QBCC licence search and ASIC search
You should always perform a QBCC licence search and ASIC company search prior to entering into a contract with a builder or subcontractor. While it is not conclusive of their financial position or their ability to perform the project, these searches can tell you a number of things:
- whether they hold the correct licence for the works to be carried out;
- whether they have ever been issued with a direction to rectify;
- whether they have complied with the direction to rectify;
- whether they have been prosecuted;
- who the current director/secretary is (and when they changed); and
- their registered business address.
If you get the contracting parties wrong
- It will create confusion and difficulties if a dispute arises
- The QBCC may not be able to direct the builder to rectify defects
- You may not be entitled to be paid (if you are the builder)
- You may have difficulty obtaining finance or insurance
Aleisha MacKenzie, Legal Practice Director