• Construction contract law

    The importance of a sound construction contract is often overlooked when the need to ‘win the project’ or ‘get on with the job at a minimal cost’ are factors at play. When a construction dispute (inevitably) arises, it can cost your company hundreds of thousands, if not millions of dollars to resolve issues which could have been prevented by an expertly drafted contract.

    In this article, we consider five important clauses to turn your mind to when negotiating your next construction contract. 

  • What are the Legal Implications of the Coronavirus Impacting the Supply of Materials in the Construction Industry?

    If the Coronavirus is Causing Disruption to your Construction Project Supply-Chain, are you Legally Protected?

    Coronavirus or 'COVID-19' continues to spread across the globe, with the World Health Organisation (WHO) referring to the epidemic as a “public health emergency”.

    With Australia’s reliance on China for providing goods and materials for the construction sector higher than ever before, many of Enterprise Legal’s construction clients have started raising concerns about how the outbreak could affect their projects, big and small – and when it inevitably does, what will their rights and potential liabilities be? 

    Risks to Developers and Other Principals

    Most Developers/Principals of construction projects care about three main things when it comes to their project delivery, that is - will the project be:

    • on time;
    • delivered within budget; and
    • of a quality standard and within scope upon practical completion.

    The recent shortage of materials from China as a result of factory closure and import limitations could see Developers and Principals alike exposed on all three of the above criteria.

    Some key factors for Developers/Principals who have current projects or projects that are at the ‘sign-up’ phase to consider include:

    • what materials and/or goods are at risk of not being supplied on time;
    • delay damages – is the delay a compensable cause under the Contract which could see the Developer/Principal having to pay delay damages to the Contractor;
    • extensions of time – does the Principal have an obligation to grant an extension of time under the Contract for the delays, in which case the project completion date could be significantly pushed out:
      • without giving the Principal the right to enforce liquidated damages; and
      • exposing the Principal to potential claims from future tenants, purchasers or alike;
    • does the Developer/Principal have ‘good faith’ obligations under the Contract and how would those obligations apply in the current circumstances; and
    • what practical steps can (and must) the Developer/Principal take to mitigate its own losses in respect of the project. 

    Risks to Contractors

    Conversely, the risk to Contractors are in the reverse. For example:

    • could the Contractor be exposed to delaying the project without any entitlement to extensions of time, consequently exposing the Contractor to liquidated damages payable to the Principal/Developer;
    • does the Contract’s ‘force majeure’ clause adequately protect the Contractor where the extension of time clause otherwise may not;
    • what obligations do the Contractor have to its subcontractors, and what liabilities could it be exposed to in that regard; and
    • what steps does the Contractor have to take from the outset to best protect itself from unnecessary exposure. 

    What Should You Do?

    Enterprise Legal’s advice is ‘be alert, but not alarmed’. Make sure that you arm yourself with the knowledge that you’re legally protected and the best way to do this is to see an expert construction lawyer to get guidance and advice on what the best way forward is for your specific project, so as to mitigate any liability or other exposure under the Contract or otherwise.

    Most importantly, by arming yourself with the relevant information and taking practical steps without delay, you will maximise the chance of successfully delivering the project, which is a win-win for both Developer/Principal and Contractors alike.

    If you are currently a party to a construction project or planning to sign an agreement in the near future, contact Enterprise Legal’s Construction Law Team for advice today! Ask to speak to our firm director and dedicated building and construction specialist, Sharné Lategan.

    Always remember, prevention is better than cure – and being proactive is the best next step you can take!

    ☎️ (07) 4646 2621

    ✉️ Submit an Online Request 

  • In early June the Federal Government announced a $680 million HomeBuilder scheme to stimulate the construction sector as Australia begins the economic recovery following COVID-19. This scheme will allow eligible owner-occupiers to access a tax-free grant of $25,000 to build a new home, or substantially renovate their existing home from now until 31 December 2020.

    To check whether you are eligible, click here to view the HomeBuilder Frequently Asked Questions PDF.

    Things to Consider

    If you are interested in taking advantage of the HomeBuilder grant, there are a few things you should consider before you jump in.

    Consider Your Timeline

    One of the requirements of the grant is that construction begins within three months of signing the contract. Due to this tight time frame, it is important that you are organised and prepared, so you should consider whether you will have the sufficient time to have plans drawn up, obtain council approval and commence building within three months when signing the contract. From our experience, three months is a ‘tight timeframe’ to achieve the latter, so preparation is key!

    Consider Your Finances

    In addition to the HomeBuilder grant, you should consider whether you may be eligible for other grants, which may include the first home owner grant and the regional home building boost grant. You won’t be able to use the grant in your initial deposit as it is expected that it will take some time for it to be awarded. As such, you will need to ensure you have sufficient financing for any initial costs that you may have.

    Choose Your Builder Carefully

    It is very important that your builder is registered or licensed, otherwise you will not be eligible for the grant. You also cannot do the building work yourself as an owner-builder, or engage family or close friends. When selecting a builder, you should also review their proposed prices to ensure they’re reasonable and that you aren’t being ‘ripped off’ by builders capitalising on the HomeBuilder grant. Be on the lookout for builders who only commenced operating following the HomeBuilder announcement, as they are more likely to be taking advantage of the scheme than longstanding builders. Lastly, always make sure that you perform a QBCC license search on your builder, as this search will show you:

    • the date your builder became licensed;
    • the value of projects your builder completed since inception, and each financial year; and
    • whether the QBCC has had to take any disciplinary action against the builder, such as notices to rectify, issuing of defect notices etc.

    Review Your Construction Contract Carefully

    It is very important that you do not simply ‘sign up’ to the contract your builder presents. The financial commitment you are making is likely one of the biggest in your life, and it should be treated with the same caution and respect as any other financial arrangement of that size. There are a number of key clauses that you need to pay very careful attention to, and a number of standard amendments you ought to request.

    Make sure you check out our knowledge page in the coming weeks for our ‘Top 10 Domestic Construction Contract Clauses to Consider’ article.

     

    In the meantime, if you would like to take advantage of the HomeBuilder grant and it feels like there is too much to consider, the team at Enterprise Legal can help.

    ☎️ (07) 4646 2621

    ✉️ Submit an Online Request