Building Contracts

Strata , bodies corporate, community and company title schemes often enter into building contracts with builders and tradespeople for a range of services, including for example the remediation of building defects and the on-going maintenance of the building.

During the period of a contract, disputes can arise concerning:

  • claims for payment by the contractor where work may be incomplete or defective (see also Building and Construction Security of Payment Act claims);
  • unacceptable delays in the progress of the work;
  • claim for variations to the contract;
  • interpretation of the contract as to the rights and obligations of the parties; and
  • allegation of breach of contract (or repudiation of the contract).
    Many of these disputes can be avoided at the contract preparation stage by ensuring that the obligations of each party are clear and unambiguous whilst at the same time protecting the interests of the consumer.

Where the contract is less than clear, it is essential that the contracting parties obtain good legal advice. Disputes in relation to contracts can escalate quickly to a point where each party may threaten to terminate a contract for an alleged breach of the contract by the other party.

However, the contract and the law generally may affect each party’s right to terminate the contract, or the alleged breach of the contract by the other party may, at law or under the contract, and may be an insufficient ground to terminate the contract. Should a party terminate a contract when it should not have (or had not right to), it exposes itself to claims for damages by the other side. It may also adversely affect any Home Owners Warranty Insurance.

Clients are often at a disadvantage in contract disputes. Demands made by contractors are sometimes unable to be responded to by deadlines because of the way in which strata, bodies corporate, community or company scheme make decisions and operate. The engagement of a lawyer during a contract dispute should assist in protecting and preserve the rights of the Scheme.