Div 1Requirements in relation to certain domestic building work contracts

Division 1—Requirements in relation to certain domestic building work contracts 27—Application of Division (1) This Division applies to a contract entered into on or after 1 May 19871. (2) This Division does not apply to a contract for the performance of minor domestic building work. (3) The requirement that the terms of payment be included in a domestic building work contract applies only to a contract entered into on or after the commencement of this Division. 1 1 May 1987 was the date of commencement of the corresponding Division of the repealed Builders Licensing Act 1986. 28—Formal requirements in relation to domestic building work contracts (1) The following requirements must be complied with in relation to a domestic building work contract: (a) the contract must be in writing; (b) the contract must set out in full all the contractual terms; (c) the contract must set out the name in which the building work contractor carries on business under the contractor's licence, the contractor's licence number and the names and licence numbers of any other persons with whom the contractor carries on business as a building work contractor in partnership; (d) the contract must comply with any requirements of the regulations as to the contents of domestic building work contracts; (e) the contract must be signed by the building work contractor and the building owner personally or through an agent authorised to act on behalf of the contractor or building owner; (f) the building owner must be given a copy of the signed contract as soon as reasonably practicable after it has been signed by both parties together with a notice in the prescribed form containing the prescribed information; (g) the copy of the contract and the notice given to the building owner must (apart from signatures or initials) be readily legible. (2) If any of the requirements of subsection (1) is not complied with, the building work contractor is guilty of an offence. Expiation fee: $5 000. 29—Price and domestic building work contracts (1) Subject to this Division, a domestic building work contract must stipulate a specific price for the performance of the building work specified in the contract, being a price that is fixed and not subject to change, and the terms of payment. (2) If a domestic building work contract stipulates that building work is to be completed within a specified period, it is lawful to include a rise-and-fall clause in the contract. (3) A building work contractor is not entitled to the benefit of a rise-and-fall clause in relation to any part of the building work performed after the end of the period stipulated for completion of the building work. (4) However, a building work contractor is entitled to the benefit of a rise-and-fall clause in respect of a part of the building work performed after the end of the period stipulated for completion of the building work if— (a) the contract provides for extension of the stipulated period; and (b) the delay in completing the building work was the fault of the building owner or due to some cause beyond the control of the contractor that the contractor could not reasonably be expected to have foreseen at the time the contract was made; and (c) the contractor, as soon as reasonably practicable after becoming aware of the likelihood of delay in the completion of the building work, gave notice in writing to the building owner or an agent authorised to act on behalf of the building owner extending the period for completion and specifying the cause of the delay; and (d) the building work was completed as soon as reasonably practicable in the circumstances. (5) Despite the preceding provisions of this section, it is lawful to include in a domestic building work contract a provision entitling the building work contractor to recover— (a) the actual cost to be incurred— (i) in acquiring materials specified in the contract; (ii) in performing work specified in the contract, together with an additional amount not exceeding 10 per cent, or such other percentage as may be prescribed, of that cost; and (b) other amounts, unliquidated at the time of the contract, of a kind stipulated by the regulations. (6) If— (a) a domestic building work contract includes a rise-and-fall clause or a provision referred to in subsection (5); and (b) as a result the price specified in the contract for the building work or part of the building work or for any labour or materials may change or is an estimate only, the contract must contain the statement "This Price May Change" or "Estimate Only" (as the case may require) set out in the contract immediately alongside or below the price to which it relates. (7) If more than one price of a kind referred to in subsection (6) is specified in a domestic building work contract, the prices must be set out in a single list in the contract. (8) A price specified in a domestic building work contract that is an estimate only must be a fair and reasonable estimate. (8a) Despite the preceding provisions of this section (but subject to any other relevant law), it is lawful to include in a domestic building work contract (other than a fixed price contract made on or after 1 July 2000) a provision (a GST clause) entitling the building work contractor to recover the GST paid or payable by the contractor on the supply of goods and services under the contract. (8b) If a domestic building work contract contains a GST clause, the contract must contain a statement in prominent type or handwriting as follows: (a) if, at the date of the contract, it is possible but not likely that goods or services will be supplied under the contract after 1 July 2000—a statement to the effect that the contract price of the building work may increase to cover GST; (b) if the contract is made on or after 1 July 2000 or, at the date of the contract, it is likely that goods or services will be supplied under the contract after 1 July 2000—a statement to the effect that the contract price for the building work will increase to cover GST. (8c) A domestic building work contract (other than a fixed price contract made on or after 1 July 2000) may contain both a cost-plus clause and a GST clause. (9) If any of the requirements of this section is not complied with, the building work contractor is guilty of an offence. (10) In this section— cost-plus clause means a contractual provision of the kind described in subsection (5); fixed price contract means a domestic building work contract that contains neither a cost-plus clause nor a rise-and-fall clause; GST clause means a contractual provision of the kind described in subsection (8a); rise-and-fall clause means a contractual provision under which a price stipulated for performance of domestic building work may change to reflect changes in the costs of labour (including related overhead expenses) and materials to be incurred by the building work contractor. 30—Payments under or in relation to domestic building work contracts (1) A person must not demand or require that a payment be made under a domestic building work contract or preliminary work contract by the person for whom work is to be performed under the contract unless— (a) the payment constitutes a genuine progress payment in respect of work already performed; or (ab) the person is entitled to the payment under the Building and Construction Industry Security of Payment Act 2009. (2) If it is proved, in proceedings for an offence against subsection (1), that the defendant received a payment other than a payment referred to in paragraph (a) or (ab), it is to be presumed, in the absence of proof to the contrary, that the defendant demanded or required the payment. (2a) A person must not demand or require that a payment be made under a domestic building work contract or preliminary work contract by the person for whom work is to be performed under the contract unless the payment is a prescribed payment. (2b) If it is proved, in proceedings for an offence against subsection (2a), that the defendant received a payment other than a payment referred to in that subsection, it is to be presumed, in the absence of proof to the contrary, that the defendant demanded or required the payment. (3) The building owner under a domestic building work contract is not obliged to make a progress payment in respect of building work performed under the contract unless— (a) the building work contractor has requested the payment by notice in writing given to the building owner or an agent authorised to act on behalf of the building owner; or (b) the domestic building work contract is a contract to which the Building and Construction Industry Security of Payment Act 2009 applies (in which case the provisions of that Act relating to progress payments apply). (4) In this section— preliminary work contract means a contract— (a) that is collateral to or otherwise related to an existing or contemplated domestic building work contract; and (b) that provides for the performance of work that is preliminary or ancillary to the domestic building work that is or would be required to be performed under such contract; prescribed payment means 1 or any of the following: (a) a payment to a third party for engineering, drawing, surveying or other professional services; (b) a payment to reimburse the cost of building indemnity insurance or the amount of any fee required to be paid under an Act in respect of the work performed or to be performed under the contract; (c) in the case of a domestic work building contract made before 1 September 2011—a payment as a deposit of not more than $1 000; (d) in the case of a domestic building work contract made on or after 1 September 2011— (i) if the price stipulated in the contract for the performance of the building work is less than $20 000—a payment as a deposit of not more than $1 000; (ii) if the price stipulated in the contract for the performance of the building work is $20 000 or more—a payment as a deposit of not more than 5% of the price; (e) a payment of a kind prescribed by the regulations for the purposes of this definition. 31—Exhibition houses (1) If a house is, or has been, made available for inspection by the public with a view to inducing persons to enter into contracts with a building work contractor for the construction of similar houses— (a) the contractor must, on request by a person inspecting the house, make copies of the plans and specifications of the house available for inspection by the person; and (b) a contract entered into with the contractor by a person who, to the knowledge of the contractor, inspected the house and sought the construction of a similar house is to be taken to contain a warranty that the house to be constructed by the contractor will be constructed according to the same plans and specifications and to the same standards of work and materials as those of the house inspected by the person (except to the extent that the contract specifically provides for any departure from those plans, specifications and standards). (2) A building work contractor who fails to comply with the requirements of subsection (1)(a) is guilty of an offence.