South Australian Current Regulations South Australian Current RegulationsForm 1—Notice under section 28(1)(f) of Building Work Contractors
Act 1995
YOUR BUILDING CONTRACT: YOUR RIGHTS AND OBLIGATIONS
This notice contains important information about your rights and obligations.
You should read it carefully and keep it for future reference.
Your domestic building work contract is a binding legal agreement. You have
rights and obligations under the agreement. You also have certain rights
guaranteed under the Building Work Contractors Act 1995 in relation to
the agreement. In particular, you have certain "cooling off" rights, which may
enable you to cancel your contract if you are not satisfied with it, and you
act quickly.
1—What does the Act require?
You must have a written contract with your building work contractor, setting
out all the terms and conditions of your agreement. You must be given a copy
of the signed contract, together with a copy of this notice. Both documents
must be readily legible.
2—What are my "cooling off" rights?
You may cancel your building contract, if you act before the "prescribed
time".
If you wish to cancel, you must give your building work contractor written
notice of your intention not to be bound by the contract. You must serve that
notice on the building work contractor either personally or by certified mail
in an envelope addressed to the contractor.
You must do this—
(a)
before 5 clear business days have expired after the making of the contract; or
(b) if
your building work contractor has not complied with relevant provisions of the
Act, before the contractor completes the building work under the contract.
Cancellation is a serious step and should not be taken lightly. You may need
to seek legal advice, or the advice of the Office of Consumer and Business
Affairs, before exercising this right of cancellation. Wherever possible, you
should first discuss your problem with the building work contractor.
3—What should I do?
First, read this notice carefully. Then read the documents that you have
signed. If you are not happy about any aspect, or have any questions, then ask
your building work contractor to explain. If you are not satisfied with the
explanation you have received, then seek advice from a lawyer or from the
Office of Consumer and Business Affairs.
4—Is there anything I should look for in particular?
Most importantly, check to see that the work you want your building work
contractor to do has been fully and accurately set out in the contract
(including the plans and specifications). Do not rely on verbal promises or
agreement. If you want to change the work to be done at a later stage, you
will have to reach agreement with your building work contractor, and your
contractor will usually be entitled to make a separate, additional charge as a
variation to your contract. Not checking now could be very expensive.
5—What about the price I have been quoted? Can it change?
Some building contracts provide for a "fixed price". Others include a "rise
and fall" clause. If your contract includes a rise and fall clause, then the
price you have been quoted (even if it is referred to in your contract) will
most probably NOT be the total amount you will have to pay. Your contract
price can also change due to any variations to the building work in accordance
with your contract.
Note—
Most variations require your written approval in advance, but others may be
unforeseen. You should refer to your particular contract. Certain items in
your contract may be designated "prime cost" or "provisional sums", which may
also lead to a change in the total sum you can be charged.
If your contract includes a rise and fall clause, or other provisions as a
result of which a price set out in your contract may change, or is an estimate
only, then the contract must contain "THIS PRICE MAY CHANGE" or "ESTIMATE
ONLY" adjacent to the price subject to change. If there is more than one such
price, then they must be set out in a single list in the contract.
Those prices that are only estimates must be fair and reasonable estimates.
6—What is a rise and fall clause?
A rise and fall clause entitles your building work contractor to pass onto you
increases (or reductions) in the cost of performing your building work after
you have signed your contract, whether those costs relate to labour (including
relevant overhead) or materials.
The formulae used in building contracts to determine the amount of the
additional costs that can be passed on to you vary. Check your contract
carefully. If you have any questions, ask your building work contractor to
explain, or seek advice.
7—What are "prime cost" items?
Your building work contract may include the supply of certain goods and
services, eg kitchen stoves, bathroom tiling. These items may be designated
"prime cost", so that if the standard of goods you select is higher than that
provided for by your building work contractor, then you may have to pay an
additional cost over and above that provided for, plus a surcharge, which may
be up to 15% of the cost of the item.
8—What are "provisional sums"?
These are amounts your building work contractor has determined as "best
estimates" of the cost of doing certain building work under your contract.
For example, if your building site slopes and no contour survey has been
carried out, your building work contractor may not be able to prepare a final
price for the earthworks needed to provide a level site for your domestic
building work. The building work contractor may include an estimated figure
which is subject to change when a survey plan is provided. That estimated
figure is a "provisional sum".
Provisional sums must be fair and reasonable estimates in the circumstances in
which they are provided.
9—What is a charging clause?
A charging clause in a building work contract is a clause that gives your
building work contractor the right to lodge a caveat over the property on
which the building work contractor is performing building work under the
contract. If a caveat is lodged over the property, you (as owner of the
property) may be restricted from dealing with and registering dealings with
the property at the Land Titles Office.
The interest created by the clause would entitle your building work contractor
to apply to the court for the sale of the property to recover any debt owed by
you for building work performed under the contract.
Check your contract carefully, and, if you are not certain about whether your
building work contract contains a charging clause or the implications of a
charging clause, you should seek independent legal advice.
10—Are there any special problems with package land and building deals?
Yes.
If you have entered into a package deal for land and building work, then it is
likely you have signed a number of documents. The information contained in
this notice relates only to the domestic building work contract you have
signed. It does not apply to your contract for the purchase of land, which is
subject to different rules. You probably have less time to consider those
documents than your building contract.
Be particularly careful about package deals where your building work
contractor is unable to start work immediately because necessary approvals
have not been granted, or services connected, or legal titles granted. Your
building work contractor may be entitled to make additional charges arising
from delays which are the fault of neither yourself or the contractor. If in
doubt, talk to your building work contractor or seek advice.
11—What other rights do I have?
The Act implies certain warranties on the part of your building work
contractor, and these apply regardless of what your contract says.
These warranties are as follows:
(a) your
building work must be performed in a proper manner to accepted trade standards
and in accordance with the agreed plans and specifications; and
(b) the
materials supplied by the building work contractor will be good and proper
materials; and
(c) the
building work will be performed in accordance with all statutory requirements;
and
(d)
unless the contract stipulates a period within which the work must be
completed—the work will be performed with reasonable diligence; and
(e) if
your contract is for the construction of a house—the house will be
reasonably fit for human habitation; and
(f) if
you have made known to your building work contractor the purpose for which the
work is required, or the result you want to achieve in a way that demonstrates
that you are relying on your contractor's skill and judgment, then your
contractor warrants that the work and the materials will be fit for your
purposes, or of a nature and quality that they might reasonably be expected to
achieve that result.
If your building work contractor does work or provides materials which do not
comply with those warranties, then your rights have been infringed, and you
may have a right to take legal action before the courts. If you are not
satisfied, talk to your building work contractor. If you are still not
satisfied, seek advice from a lawyer or the Office of Consumer and Business
Affairs.
12—What about building indemnity insurance?
Your building work contractor must take out a policy of building indemnity
insurance before work commences. The insurance protects you from some of the
losses you may suffer if your building work contractor dies, disappears or
becomes insolvent. Your building work contractor must provide you with a copy
of the certificate of insurance. Keep it for your protection.
Important note—
From 1 September 2002, building work contractors have not been required to
take out a policy of building indemnity insurance in respect of contracts for
the construction of multi-storey residential buildings.
(A multi-storey residential building is a building that has a rise in storeys
of more than 3 and contains 2 or more separate dwellings. A storey
does not include a mezzanine or a space within a building if it is intended
that the space contain only a lift shaft, stairway, meter room, laundry,
bathroom, shower room, water closet, car park or combination of any of the
above.)
13—Am I obliged to pay a deposit in advance of work done?
As a general rule, your building work contractor is entitled only to genuine
progress payments for work done. Your building work contractor may ask you to
pay in advance for money that has to be paid to a third party (eg a council
for planning approval, building indemnity insurance or to an engineer or
surveyor for a report). Apart from money in advance for such fees, the law
prohibits the taking of any deposit on a domestic building work contract in
excess of $1 000, or if the contract price is over $20 000, 5% of the
contract price. If in doubt, seek advice before making any payments.
14—When should I make a progress payment?
The law requires that your building work contractor make a written demand for
a progress payment, so payment should not be made without such a demand.
Progress payments should not be made in advance of the performance of the
building work to which the demand relates. If you have borrowed money from a
recognised lending institution, it is likely to make progress payments on your
behalf.
15—What if I have a dispute with my building work contractor?
First, talk to your building work contractor. Many potentially serious
disputes can be avoided by good communication between building owner and
contractor. Your contract may have clauses relevant to dispute resolution
which may assist both parties in resolving the dispute.
If that does not work, you may need independent advice. You may wish to seek
legal advice, or the advice of the Office of Consumer and Business Affairs.
Some disputes can be resolved by negotiation. Others can only be resolved by
legal proceedings, whether before the courts or by private arbitration as
provided in many building contracts.
Before commencing any legal action over building work, you should seek advice
from a lawyer or from the Office of Consumer and Business Affairs.
16—Where should I go for advice?
First, talk to your building work contractor. If you want or need independent
advice about your building work contract, talk to a lawyer or the Office of
Consumer and Business Affairs. A list of lawyers appears in the telephone
directory under the heading of "Solicitors".
Form 2—Building indemnity insurance certificate
Building Work Contractors Act 1995, section 34
Certificate No:
A policy of insurance that complies with Part 5 Division 3 of the
Building Work Contractors Act 1995 has been issued as follows:
Name of insurer:
Name of building owner:
Brief description of
domestic building work:
Address or description of premises at which work to be
carried out:
Name of building work contractor:
Licence number of building work
contractor:
Signature of employee or agent of the insurer: