Written by Peter Waller, Special Counsel – QLS Accredited Specialist – Commercial Litigation

When do you have your construction contact reviewed? The ideal time may surprise you.

Having your construction contract reviewed early, before it is available your builder, could decrease your transaction costs and minimise the diverse risks to you that are involved in building and construction projects.

Why is this important?

Parties to construction contracts allocate the risks in a building and construction project between themselves through the terms of the construction contract.  These risks are linked and include cost, time, quality, payment, performance, insurance, termination, claims and dispute resolution.

The standard form contracts attempt to achieve a balance between the competing interests of principal and contractor. They are, more or less, neutral between the competing interests.

So, why should the construction contract be reviewed and reviewed early in the project? Here are my top three reasons why the construction contract should be reviewed early in your project:

1. Having solicitors prepare or review a construction contract could identify key risks for you

Across all forms, contracting sectors and values, the highest incidence of amendment is in respect of following risk factors:

  • Extensions of time;
  • Delay damages (including liquidated damages);
  • Site conditions;
  • Payment (including security of payment);
  • Variations;
  • Warranties as to quality;
  • Claims (including time bars);
  • Limitations of liability; and
  • Project specific circumstances.

Clauses in relation to these risk factors may be amended to shift the risk to another party.

2. To deal with relatively recent statutory requirements

Important legislation has been passed since the release of most of the standard form contracts. For example:

  • the introduction of GST;
  • the security of payment laws;
  • Workplace Health and Safety legislation;
  • the proportionate liability legislation; and

The requirements of this legislation have not been included in some standard form contracts and care must be taken to ensure compliance with legislative requirements. For example, aligning payment terms with statutory payment terms under security of payment legislation.  It is recommended that appropriate additions be included in construction contracts to ensure such compliance. 

3. To reduce burden on contract administration

This can be achieved through:

  • choosing the right type of contract;
  • modifying sections of the standard form contracts relating to contract administration;
  • aligning standard form subcontracts, supply contracts or other trading terms with the head contract.

How we can help

Our construction law team at MBA Lawyers can help you with project structuring, preparing tender documents, contract reviews, negotiating contracts, drafting contracts and amendments to them as well as advice on contract administration issues.

For more information,  get in touch with us today.

Peter Waller, Special Counsel – QLS Accredited Specialist – Commercial Litigation

Duane Williams, Partner – Commercial Litigation