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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:
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).
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.
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.
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.
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.
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 has two trade contracts available for purchase which cover each of the above elements:
The Building and Construction Industry (Security of Payment) Act 2021 (WA) (SOP Act) applies to some construction contracts but excludes others. Before you make a claim under the SOP Act, it is important to confirm that your contract is covered.
The Tasmanian Government has released the Residential Building (Miscellaneous Consumer Protection Amendments) Bill 2022 for consultation. HIA has raised concerns with some elements.
Geraldton’s own third year carpentry and joinery apprentice Callum Marquis from Connolly Creative Building Co. has been named 2022 HIA Stratco WA Peter Stannard Apprentice of the Year.
Security of payment laws provide for the rapid adjudication of payment disputes in the building and construction industry.
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.