Building Contract Administration & Requirements

Building Contract Administration & Requirements

8 Aug 2017

By Kim Lovegrove RML, FAIB, Senior Lawyer, Lovegrove & Cotton.

Contract administration

  • You need to know how to ensure that your building contract is a good one. A good building contract will be one that is produced by one of the Trade Associations or a construction lawyer.
  • Make sure you understand every clause of the contract, a builder must know a building contract like the back of his hand.
  • If the contract states that you must lodge progress payments on a monthly basis, then so be it. Comply with the time frames “to the letter”.
  • Keep detailed diaries and minutes of any conference where site or contractual matters are discussed.
  • Confirm everything in writing. Keep paperwork well organised and up to scratch.
  • If the client commits any default, invoke the contractual remedies immediately.
  • Do checks from time to time on the client’s finances.
  • If there is a default in payment act immediately, do not unwittingly “finance the project”.

Essential building contract requirements

What a sound building contract should have:

  1. Certainty in respect of payment or remuneration
  2. Mechanisms that give the builder security for payment such as director’s guarantees, charging clauses and bank guarantees.
  3. Clear grounds for default and determination.
  4. A suspension clause that enables the builder to suspend work without having to determine the contract if a client defaults.
  5. A cost adjustment facility.
  6. Sufficient clarity to enable easy use and interpretation of the document.
  7. Provisions that give the builder the ability to claim both time extensions and costs associated with time extensions.
  8. In the case of domestic building work, the builder must ensure that the contract complies with the domestic building legislation and regulation on point. Failure to use a compliant domestic building contract can culminate in prosecution.

A sound building contract should not have:

  1. Complex, longwinded confusing turn of phrase
  2. Vague payment terms
  3. A bias that is weighted in favour of the client
  4. Uncertainty as to critical matters such as payment, time extensions, liquidated damages and prolongation costs.
  5. In the case of domestic building conracts , contractual provisions that contravene or are at odds with the governing act of parliament, see the Domestic Building Contracts Act (date) Victoria or Home Buildings Act (date) NSW

Lovegrove & Cotton Lawyers to the building industry

For thirty years, Lovegrove & Cotton have represented builders, building surveyors and building practitioners in Melbourne, Canberra, Sydney and Queensland. Doyles Guide ranks Kim Lovegrove as one of the leading construction lawyers in Australia. Justin Cotton, likewise, is a leading Australian construction lawyer and widely respected in the building fraternity as evidenced by his recent elevation to Chairperson of the HIA Industrial Relations and Legal Services Committee, and member of the Regional Executive Council, for HIA Victorian Chapter. Lovegrove & Cotton can help practitioners resolve any type of building dispute and are preeminent in the area of building practitioner advocacy.

If you wish to engage the firm, feel free to contact us via our website or by emailing