For small builders in the residential construction market, there are numerous standard form contract templates available to perform their work.
Popular templates include: AS4000; AS4902; and AS 4305.
However there are numerous reasons why a builder should not use an Australian Standard contract for residential construction so today we are going to discuss the five common pitfalls with Australian standard contracts for small builders in residential construction.
Firstly, let’s talk about if a small builder in residential construction should use an Australian Standard Contract. Earlier this year, there was a notable study which found that “the Australian Standard forms continue to dominate the Australian construction contracting landscape.” I reckon this is questionable. My experience in building and construction law is that most small builders in the residential construction market use the State Government’s Office of Fair Trading contract(s), Master Builders Association contract(s) or the Housing Industry Association contract(s).
What’s more, the study appears to be skewed toward affiliates with the University of Melbourne or members of the Society of Construction Law Australia or the Australian Construction Industry Forum. I have to say I don’t know any small builder in residential construction who is university educated nor members of the Society of Construction Law Australia. I do however know plenty of residential builders who are skill educated through TAFE and if they hold a membership it is with the Master Builders Association (MBA) or the Housing Industry Association (HIA).
5 Common Pitfalls with Australian Standard Contracts
1 The Australian Standard contracts are lengthy and they deal with many subjects that are beyond the requirements of a standard residential build.
2 The Australian Standard contracts, due to their length and many subjects, can be intimidating to your average person. And it is very often the case that a small builder’s client is a “mum and dad” client.
3 SAI Global are the licensors of the Australian Standards contracts in Australia. Unlike the MBA or HIA, SAI Global are not an industry association that provides free general advice on their templates. Small builders will likely need assistance from a lawyer to properly prepare an Australian Standard contract which will probably not be allowed for in the builders quote.
4 Small Builders need to be familiar with the terms and conditions of any contract they sign. The length and many subjects of the Australian Standards contracts can make contract enforcement more difficult if the terms and conditions are not properly understood and followed.
5 Australian Standard contracts are known to be commonly used for commercial contracting and less commonly used in residential construction.