In areas such as the building and construction industry, there can often be resistance to change, particularly when it comes to using ‘tried and tested’ documents, templates, and contracts.
The ‘standard form’ contracts used in the building and construction industry, drafted by industry groups such as the Master Builders and HIA, are fantastic starting points and are very helpful for builders and owners alike when you have a straightforward, simple transaction.
Unfortunately though, those ‘standard contracts’ might not fully protect you where your deal is a little out of the ordinary. Unless you make some changes to it that is.
We are hearing more and more from clients that builders are saying they “can’t change the contract, this is the standard industry contract” or that “we’re not changing, this is how we have always done things”.
Strictly speaking, that is not correct. Even the standard industry (MB and HIA) contracts have a space for ‘special conditions’, which are new, extra conditions parties can negotiate and agree, in addition to the ‘standard’ terms and conditions of a contract. A special condition can create a new requirement for the parties or change an existing condition.
One example we are seeing recently where special conditions are definitely required is where a prospective buyer signs two contracts with a developer/builder – firstly, a contract to buy the block of land from the developer, and secondly, a contract for the construction of a brand-new home on the land.
If one contract falls over, because the two contracts are technically separate the parties may be left with the other contract still standing. In that example, parties should consider including a special condition in both contracts so that if one falls over, a party is able to terminate and get out of the other contract.
This is just one example where changing the ‘standard contract’ isn’t something to be worried about, but is actually sensible and important. Special conditions suited to your deal, and carefully drafted contracts, can protect your rights and interests if things go bad.
Another common example we have seen recently is where building and construction contracts are affected by COVID-19, causing issues with access to materials, significant delays, and significant price increases (such as the recent price increases for steel).
A building client of ours recently came to us in circumstances where the cost of the materials had increased by thousands and thousands of dollars – meaning it would almost be losing money on the build – but the contract didn’t provide for the extra costs to be passed on. Thought should be given to clauses to permit those sorts of changes.
Thankfully we were able to assist the builder in validly terminating the contract for other unrelated reasons, however because of the way the contract had been drafted by the client itself, if the contract had been pushed ahead the builder would have been out of pocket thousands.
The experienced, qualified, and practical lawyers in the Preston Law building and construction team can assist you with any issues you have like this, make sure your contracts are properly drafted and that you are properly protected.
If you have concerns, queries, or have a building contract dispute, please contact our building and construction team on 4052 0703.