There are different building contracts available in Victoria for land or homeowners. Choosing which contract is suitable for you depends on whether you are carrying out:
• Domestic building work: works carried out on land or a building intended to be used as a residence (i.e. building a new home or altering or renovating a home); or
• Commercial building work, including industrial and other non-residential works (i.e. building a restaurant or installing shop fronts).
Domestic building contract
A domestic building contract is an agreement between a homeowner and a building contractor to carry out domestic building works. If the contract price for carrying out the works is more than $10,000.00 and involves more than one type of work, you must enter into a ‘major domestic building contract’. This means additional legal requirements apply, such as prohibiting unregistered builders from entering into such contracts.
Commercial building contract
A commercial building contract is an agreement between builders and sub-contractors for non-residential building works. There are no formal requirements for commercial building contracts. However, there are various standard form building contracts available from specific industries.
Terminating your building contract
Issues may arise after building works have commenced, which may cause frustration. There are limited circumstances in which a building contract can be terminated.
Mutual Agreement
All parties can agree to mutually terminate the contract. This agreement should be in writing to clearly outline each party’s obligations to end the contract.
Contract Terms
A building contract may contain terms detailing your right to terminate under the contract. Where there is no express right to terminate, you may still be able to terminate the contract where there is a substantial or serious breach by the building contractor, such as abandoning the work site and refusing to carry out any work. A lawyer can assist you by reviewing your building contract.
By Law
There may be instances where you may terminate a building contract according to law. For example, you may end a major domestic building contract under the Domestic Contracts Act 1995 by written notice if:
a) the contract price rises by 15% or more after entering into the contract; or
b) the contract is not completed within 1.5 times the period it was due to be completed.
This increase in cost or completion time must be due to unforeseeable reasons by the builder when entering into the contract.
W Legal can help
Terminating a building contract should be considered carefully. There are important financial and commercial factors to consider, such as finding a new builder to complete works. Before terminating a contract, you should make attempts to resolve any issue with the other party with the assistance of the property conveyancing lawyers in Melbourne at W Legal.
