Given the fact that construction projects are governed by the contract existing between the parties, it is surprising the number of contracts we see that do not comply with the requirements imposed by the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act).
The QBCC Act regulates the form and content of both domestic and non-domestic head contracts and subcontracts. Schedule 1B of the QBCC Act regulates domestic head contracts, whilst Part 4A of the QBCC Act regulates non-domestic head contracts and all subcontracts.
In this article we outline how Part 4A regulates the form and content of non-domestic head contracts and all subcontract. We see many head contracts and subcontracts that do not comply with Part 4A. It is an offence for the head contractor and the subcontractor not to comply with these requirements. In most cases, failure to comply with Part 4A will attract 4 demerit points per offence.
To assist you in ensuring your building contract complies with the QBCC Act, we have created a checklist considering the key requirements under Part 4A:
- Is the contract in writing?
The requirement for the contract to be in writing seems obvious, yet is often overlooked. Any agreement reached between the parties, even if it is an agreement relating to only a small part of the works, should be recorded in writing in the contract.
Notably, section 67G of Part 4A requires contracts for more than $10,000 to be in writing before commencement of the building work, however if the value is less than $10,000, the QBCC Act only requires that the contract be in writing before completion of the work.
Despite this exception, we consider it a good idea for all contracts to in writing as soon as possible to reduce the potential for confusion between the parties as to the terms of your agreement.
- Does the contract contain the names and contact details of the parties, including the name and QBCC licence number of the contractor who will carry out the works?
- Are the site details (including the address) clearly set out in the contract?
- Does the contract clearly set of the scope of works?
- Does the contract clearly state a date for completion?
- Does the contract state the amount to be paid for the work, or how that value is to be calculated?
- Does the contract set out any agreement between the parties about retention amounts and securities to be held?
- Does the contract include mandatory conditions or contain prohibited conditions prescribed by regulation?
- Does the contract set out payment terms?
- Does your contract provide a process for dispute resolution?
Generally, sections 67K and 67L provide the value of retention/ security held must not exceed 5% of the contract price at any time before practical completion.
After practical completion, section 67N provides that the value of retention/security held cannot exceed 2.5% of the contract price.
Sections 67GA and 67GB allow for future regulations to prescribe mandatory terms and void terms. As at the date of this article there have been no such regulations put in place.
You should note that a payment provision will be void if, in the case of a head contract, it provides for payment of a progress payment by a contracting party to a contracted party later than 15 business days after submission of the payment claim.
In the case of subcontracts, the maximum period for payment is 25 business days after submission of the payment claim. Therefore, given the importance of, we recommend ensuring that payment clauses are drafted with care.
If your answer is “no” to any of the above, or you are unsure if your contract adequately meets any of these requirements, you should seek immediate legal advice as your contract may be void or unenforceable under the QBCC Act. Even if you answered “yes” to each question, it may be a good idea to have a solicitor review your contract as this checklist only reflects the minimum requirements to satisfy the QBCC Act and you may still be unprotected against certain risks.
If you would assistance reviewing your contract or drafting further clauses to ensure its compliance with the QBCC Act, please contact our experienced team at Construct Law Group on (07) 3139 1874 or email us at firstname.lastname@example.org.
This article is provided for general information and educational purposes only and does not constitute legal advice. Readers should obtain appropriate independent legal advice based on their own specific circumstances.