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Contracts information for kitchen, bathroom and laundry businesses
Insurances you will need
The Contract requires that you take out public liability with a cover of at least $5 million. If the owner tells you to insure the products you will be installing against loss or damage occurring after they are delivered to site or to similarly insure the owner’s property while you are carrying out the installation, you can charge this cost plus back to the owner plus another 20% for arranging the insurance.
If the work you will be doing is valued at more than $20,000 you need to take out a policy of Home Warranty Insurance.
Payment in progress stages
The Contract allows you to nominate progress stages that will act as a trigger for payment. The amount claimed under each stage should reflect the actual value of work completed within that stage. It’s important that you complete the work described in a progress stage before submitting a claim. If you have made a valid claim, the owner must pay you within seven days after you give them a written claim.
Frequently asked questions regarding contracts
How much can I take as a deposit?
In NSW, the amount that you can charge as a deposit is a maximum of:
- 5% if the contract price is more than $20,000, or
- 10% if the contract price is $20,000 or less.
What happens if I am finding it difficult to get access to site?
Your Contract provides that the owner must give you unrestricted access to the site to check measure, deliver and install the product and fix any defects during normal business hours.
What happens if the owner has animals?
Your client is responsible for the safekeeping, control and supervision of domestic animals on the site. It’s a good idea to remind your client of this prior to starting work if the animals could place your workers at risk, if your work could place the animals at risk or if there is a chance the animals could escape.
What happens if at the time of entering into the contract the owner has not made selections so I cannot cost these items accurately?
The Contract contains a clause that allows you to include ‘provisional sums’ in your contract price. This will be an allowance that represents the estimated cost of that item or cost of providing the work. The owner must pay the actual cost of the item so where that cost is more or less than the allowance, the contract price will be adjusted.
When am I able to claim an extension of time?
You are entitled to claim an extension of time for things that are beyond your control – e.g. if the owner fails to make a selection, does not have the site ready for installation or does not give you access to site. You need to ensure that you claim these extensions of time in writing and in accordance with your Contract.
Do variations need to be in writing?
Yes, they need to be in writing and signed by the parties before you vary the Contract. The process for variations is set out in the contract and must be followed.
What if the owner is contracting their own specialist trades – e.g. electricians and plumbers?
The Contract provides that if the owner is to provide plumbing and electrical services or will supply or install appliances, they must have the site ready and the appliances available at least 24 hours before you install your product (cabinets, etc). The owner must also use licensed trades.
What happens if the client does not pay a progress stage?
You should first discuss this issue with your client to find out why – it could be a simple misunderstanding. However, if the client is in serious breach of their obligations, you may give them a written request to remedy the breach within 14 days. This is a necessary step if you intend on terminating the Contract on account of the serious breach. The Contract provides that you are entitled to interest on late payment.
If I have not been paid can I take back the materials that I have installed?
The Contract does contain a ‘retention of title’ clause. However, these types of clauses can be very difficult to enforce and relate to a very complex area of law. It is therefore important that you seek legal advice prior to taking any action to recover your goods that have been installed.
For more detailed information about insurances available.
To find out more, contact HIA's Contracts and Compliance team
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