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Six reasons why you should be using a trade contract

Regional news

Six reasons why you should be using a trade contract

Regional news
With licensed trade contractors in demand now more than ever, it is important for principal contractors (builders) and their subcontractors (trade contractors) to have a written agreement in place to protect all parties and to keep your projects running smoothly.

Trade contracts, commonly referred to as ‘subcontractor agreements’, set out a scope of works, timeframe for performance, and an agreed contract price for an engagement between a principal contractor and subcontractor. 

More importantly, the trade contract defines the rights and obligations of each party and reduces the risks associated with relying on quotes, verbal agreements, or handshake deals. 

If you haven’t been using a trade contract, read on to find out why you need a trade contract for your next project: 

1. It is a legal requirement

In Queensland, it is a requirement under the Queensland Building and Construction Commission Act 1991 (‘the Act’) to have a written agreement in place when carrying out building work. To comply with the Act, building contracts must contain specific details. Failure to comply with these requirements may result in the principal contractor and subcontractors being exposed to risk of financial penalties and/or having demerit points issued against their licence(s). 

2. Securing price and labour in times of uncertainty

In the current economic climate with industry delays, price rises, and increased building activity putting significant pressure on the availability of labour, it is critical to have a trade contract in place. A trade contract creates a contractual obligation for a scope of works to be completed at a particular time and at a particular price. Without this, it can be difficult to enforce action against either party. 

3. Clarifying the terms of the engagement

A trade contract will set out clear expectations for each party and aid in avoiding any ambiguity about the nature of the agreement. HIA’s trade contracts can be relied upon to assist both parties in resolving disputes that may arise, or with any luck, stop disputes from arising altogether. 

4. Managing your defects liability period

Trade contracts include a defects liability period to ensure subcontractors are held liable to rectify any defects associated with their work for an agreed amount of time. Without this, the principal must rely on the QBCC to issue a Direction to Rectify (‘DTR’) to the subcontractor. Subcontractors should remember that a DTR remains on their licence history for a period of five years. 

5. Variations and extensions of time

A trade contract includes a clear scope of works which the subcontractor should perform for the principal contractor. If the principal contractor requests that further work is carried out, the subcontractor can issue a variation document to ensure they are provided with additional time and financial compensation for carrying out the extra works. 

6. To access assistance from QBCC

For either party to access assistance from the QBCC in relation to their engagement, the QBCC requires written evidence of a compliant agreement. Without this, avenues for either party to raise a complaint, access adjudication, or enforce DTR’s become significantly more difficult. 

HIA’s trade contracts

HIA has two trade contracts available for purchase which cover each of the above elements:

  • The Project Trade Contract is to be used by builders and subcontractors where the subcontractor is engaged for a single project.
  • The Period Trade Contract is similar to the Project Trade Contract but designed to reduce paperwork where there is an ongoing relationship with a subcontractor or multiple jobs over a period of time. 
  • Digital versions of both the Project Trade Contract and Period Trade are available through HIA's Contracts Online platform.
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Contracts Online 

The industry’s go-to digital platform. 

No matter the size of the job, a watertight building contract is critical to protect your business, and the current climate presents a great opportunity to go digital with your contracts.

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