COMMERCIAL CONTRACTS AND SUBCONTRACTS
Contracts for building work must be in writing and includes:
- head contracts;
- Subcontracts for domestic building work; and
- all contracts for commercial building work between developers, builders and subcontractors.
This also applies to contracts for building work between a contractor and an Owner Builder Permit holder. Different requirements apply to contracts that are made directly with homeowners for domestic building work.
What do I need to include in the contract?
- the scope of the work covered by the contract
- when the work is to be completed
- the amount to be paid for the work (or how the amount is to be calculated)
- details of any agreement between the parties about retention’s and securities
- the name and licence numbers of the building contractors
- the address of the site where the work is being carried out
- the name and contact details of the parties involved
- the timing of payments for the contracted work
- a procedure for dispute resolution.
As a consequence of the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Act 2017 (Cth) (“the Act”) which comes into effect as of 1 July, 2018, QBCC has removed all of its commercial building contracts, being the Major Works Subcontract, Minor Works Subcontract and the Period Minor Works Subcontract from the QBCC website and will no longer provide commercial building contracts.
As the Act applies to all contracts entered after 1 July, 2018 QBCC is concerned to ensure any person entering a contract after that date seeks legal advice in regards to the termination clauses. If you currently have a copy of the current version of the QBCC commercial contracts and will not enter the relevant contract prior to 1 July, 2018, please discard this contract or seek legal advice.
Consumers are reminded that the termination of any contract is a significant step which should not be taken without prior legal advice from an experienced lawyer.
Does the contract have to be in writing before commencing work?
Contracts for building work over $10,000 must be in writing before work starts. If the building work is valued at $10,000 or less, the contract must be in writing before the work is completed.
When is a contract not required?
Generally, work valued at less than $3,300 is not classed as building work and therefore doesn’t require a written contract. However, work of any value involving plumbing, drainage, gas fitting, design drafting, completed building inspections, site classification, fire protection and pest controlling must be recorded in a written contract.
How long do I keep the contract and associated documents?
You must ensure that all contract documentation, including related plans and specifications, are kept for seven years from the date the documents were put into writing.
What if I don’t comply?
If you don’t put a contract in writing, or you enter into a contract that doesn’t contain the requirements stated in the QBCC Act, you commit an offence. We may prosecute or take disciplinary action and you could accrue demerit points.
Notice of end of defects liability period
New requirements apply to the retention’s, security and a statutory defects liability period.
If under a building contract:
• a retention amount may be withheld; or
• a security may be held after practical completion for the rectification of any defects in the building work.
Any retention amounts or security must be released 12 months after practical completion if the contract does not specify the defects liability period. It is now an offence to not release retention amounts without reasonable excuse.
Also, there is a new requirement that contractors must give a Notice of End of Defects Liability Form to subcontractors advising of the impending end of the defects liability period. This notice must be given within 10 business days before the end of the defects liability period or within 5 business days after receiving a notice if the defect liability period is linked to another building contract. This requirement does not apply to a contracting party who enters into a building contract as a principal. Not providing this form is an offence.