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It is imperative that you pay close attention to precisely what is required of you under a contract. The builder and other responsible parties should go through the relevant parts of the plans and the specification with a fine-tooth comb. If there is any uncertainty about the extent of the parties’ obligations then they need to be clarified before the contract is signed.
A common example of this sort of problem is fencing work. Quite often plans will show a perimeter fence, but no mention will be made of it in the specification. Clients may later argue that you are obliged to build a fence for them. If the contract says the plans have priority over the specification then the client’s argument might have some force in a court, even though you know that neither party ever mentioned a fence when negotiating and costing the contract.
You also need to get even the most minor details of the building work right. You have promised under the contract to build according to the plans. It is not good enough to say that the work you have done is ‘as good as’ what is shown on the plans. Work must reflect the plans exactly or you may be regarded as in breach of contract.
If the client thinks you have not performed all of his obligations, obtaining payment will be very difficult.
Many builders outsource to third parties for preliminary services including design work, soil testing and surveying. If you are organising for this sort of work to be done before you have signed a formal building contract then you should enter into a preliminary services agreement. This will help you get paid if you do preliminary work, but don’t end up doing the building work.
It is possible to use a HIA Preliminary Services Agreement where preliminary services are less than $12,000. Otherwise, you will need to use a contract that contains prescribed payments stages as required by the Regulations.
Every variation should be agreed in writing and expressed in terms that identify precisely what work is to be done under the variation. If variations are not agreed to in writing, it is much more difficult to get paid for them. Agreeing to variations in writing also puts the client on notice of the extra costs that are being incurred.
If you agree to do a variation for free it may still be a good idea to cost it up, and then give the client a credit for it, so that the client has some idea of the lengths that you are going to for them. You might feel awkward pointing out your generosity but it helps assure the client’s good will if problems arise later on.
We suggest that you use the HIA Variation Authority Form for all variations.
Although your contract is with the client, his or her promise to pay you is only as good as the finance behind it. Banks can be difficult to deal with, but there are some things you can do to make life easier or at least more predictable:
If your client does not pay you by the due date for payment, you will need to consider your options as to what steps to take. In any event HIA suggests that you should first contact your client and discuss the non-payment. You may mention that late payment interest is now chargeable.
Your options will depend on your contract. Your options include stopping work (for a progress claim), taking steps under the contract to end the contract and/or commencing a court action or alternative dispute resolution. You do not have to end a contract first before taking steps to obtain an overdue payment.
You should read your contract carefully concerning your rights and you seek advice if you are unsure.
Most HIA contracts allow for the works to be suspended in the event of non-payment. To stop work you must give your client a written notice to this effect. If this right is not set out in your contract then you cannot stop work for non-payment.
Your HIA contract may be ended if your client does not pay. HIA recommends that you seek advice before taking steps to end the contract.
HIA contracts provide for the resolution of disputes through alternative dispute resolution including conciliation and dispute reference. If the dispute is a simple money claim (without the owner claiming defective work) then court action may be appropriate. However, if the dispute is more complex and involves questions of workmanship, then we suggest that you should consider whether you pursue court action or alternative dispute resolution.
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