Construction rebound? Take care with your contracts!

Construction rebound? Take care with your contracts!

Newspaper

 

In the above Courier Mail article on 8 October 2013, Anthony Marks referred to data released by AIG and the HIA showing the first real positive trend for the industry since April 2010.

If this trend continues, there will be a surge in the number of contracts. Lenz Moreton highlights the need to carefully review your contracts before signing them. You may be happy that work is becoming more plentiful, and want to improve your bottom line for the first time in ages, and of course that is important.

However, signing a contract without really knowing what is in it can cause you a lot of headaches in lost revenue, stress and lost opportunities that you could otherwise have enjoyed, if only you hadn’t got involved with this drama!

Seek advice about the terms of the contract, so that you are able to manage, or at least be aware of and price, the risk that you are about to take on. Here are some of the things that you should always check before your signature appears on the contract. There are many more, but this is a start, and you will start becoming more aware of the risks you are expected to take on board.

  1. Who are you contracting with? Is it a company, joint venture, partnership, or a sole trader? Have you done any organisational searches?
  2. Are you comfortable that they have the capacity to pay you? Should you get moneys paid up front, or into a joint account, or satisfaction from a bank that there is finance for your project?
  3. Do you comply with licensing/registration requirements as builder, trade contractor, electrician or a Registered Professional Engineer or Architect for the work you are contracting to carry out?
  4. Are extensions of time (“EOT”’s) available under the contract for delays that are not your fault, and can you claim the costs of delays under the contract?
  5. Is there a variation clause under the contract, and how are variations defined, and who decides if something is a variation?
  6. What are the notification requirements for 4 and 5 above? Carefully check when and how you must notify about these claims. If the times are too short, renegotiate these time frames.
  7. If there are no EOT or variation clauses, be especially careful.

“She’ll be right, it won’t happen to me” is the most dangerous mindset to have, especially when the industry is looking up! You don’t want to be left behind in the next growth phase!

Please contact us on (07) 3220 0299 for assistance in reviewing your contract.