Tax inspector investigating financial documents through magnifyi

Common Amendments in Standard Form Contracts

Ben Johnson ||

Whilst it is clear that standard form contracts are used in Australia and that there is some familiarity with them within the building and construction industry, they are often significantly amended. Theses for this vary, but in a large part it is because of the age of the contracts with some being related two decades ago, changes in legislation, and issues that were not previously contemplated (eg COVID-19).

Professor John Sharkey AM had undertaken a survey and prepared a report in relation to the use of standard form contracts in Australia, which suggested that

  • 54% of those surveyed believe that there is no current standard form capable of being used in Australia without substantial amendment;
  • 68% of contracts reported upon used standard forms and of those 84% were amended from the standard form;
  • Overall, AS4300-1995 was the most widely used form in Australia (used in 23% of projects using a standard form), followed by AS4000-1997 (18%), AS2124-1992 (17%) and AS4902-2000 (14%)

Some key issues that are frequently amended and negotiated between parties in standard form contracts, other than updates to legislation, include:

Clause Why is it amended?
Extension of time (EOT) To limit to expand upon the circumstances in which a contractor is entitled to an EOT (i.e. site closures due to government restrictions, delay in delivery of materials from overseas, COVID-19 issues);

To determine which party has the benefit of the float.

Damages (Delay / liquidated) It is common for construction projects to be delayed, and delays can be very costly where the risk is not properly allocated.

It is of the Principals interest to ensure any delay damage payable to the contract is capped and includes a number of exclusions / conditions, while ensuring liquidated damages are sufficiently calculated to ensure that it can manage its risk and this not be capped.

Conversely, for a contractor, liquidated damages may be a means to limit their liability and they will seek that there is a cap or a lower daily rate charged. On the other hand it may try to resist a cap being imposed on delay damages.

Variations Subject to the scope of works, variations clause may need to be carefully amended / drafted to document:

(1) how and when a variation can be sought; and

(2) the basis of pricing for a variation

Payment terms to specify any pre-conditions for a payment claim;

to identify any entitlements to set-offs;

comply with any conditions of the security of payments legislation or Home Building Act (i.e. maximum deposit).

Site conditions It is not uncommon for the parties to come across latent conditions which may later lead to delays, variations that were not anticipated at the time of entering into a contract. It is important to document:

(1) who bears the risk of latent conditions (i.e. contamination); and

(2) what information was known to the contractor (i.e. any reports provided before the contract?).

Security What type of security is provided:

(1) Principals often seek unconditional / conditional bank cheques;

(2) Contractors may offer retention for better cash flow.

Indemnity It is common for indemnity clauses to be added / amended on construction contracts as it is in the interest of both parties to minimise their risk exposure.

If you have any questions or wish to obtain legal advice for a construction contract, please reach out to a member of Coleman Greig’s Building and Construction team.

Share:

Send an enquiry

Any personal information you provide is collected pursuant to our Privacy Policy.

Categories
Archives
Author

More posts

A guide to intrafamily adoption

Adoption is the process where a parent’s legal rights for their child are transferred to another person. The formal adoption of a stepchild or close relative is known as intrafamily adoption.

Passenger movement and visa data-matching by the ATO

Heading overseas for work or a holiday? Taxation issues, including tax residency, should be on front of mind when departing from or arriving to Australia. Why? Because the Australian Taxation Office (ATO) can follow your footprints and, if you’re not careful, spring unexpected taxes on you.

Is it really necessary for my executor to have so many powers?

People often question why the executor of their estate needs to have so many powers. Simply put – if your executor isn’t given any additional powers by your Will, then they are limited to what is set out in the Trustee Act. One area that this can lead to issues in, is the family home – particularly if beneficiaries aren’t in agreement.

Essential terms of a commercial lease

A commercial lease is a contract that details the rights and obligations of a tenant and landlord. So, what are the necessary terms of a commercial lease?

Responding to data breaches

In the final part of our four-part series on your business’ responsibilities related to cyber attacks and data breaches, Special Counsel John Bennett how businesses should respond to data breaches, including application and requirements of the Notifiable Data Breaches Scheme.

Security of personal information

Part 3 of a four-part series on your business’ responsibilities related to cyber attacks and data breaches where Special Counsel, John Bennett provides an overview of some court decisions and proceedings where ‘security’ of personal information has come into issue.

Parental alienation in Family Law

The concept, Parental Alienation Syndrome, was initially brought about by American psychiatrist Richard Gardner in 1985. The term parental alienation is used to describe a situation where one parent is involved in psychologically manipulating their child to turn against the other parent.

Are you liable for labour hire workers if they are injured?

Many employers (host employers) engage employees of labour hire companies, particularly in the building and construction, hospitality and manufacturing industries. However, what happens when one of these employees gets injured at the host employer’s work site? Who is liable for the injuries?

The risks with cyber attacks and data breaches

Part 1 of a four-part series on your business’ responsibilities related to cyber attacks and data breaches. Cyber attacks and data breaches are the top business risk in Australia according to Aon’s 2023 Global Risk Management Survey.

© 2024 Coleman Greig Lawyers  |  Sitemap  |  Liability limited by a scheme approved under Professional Standards Legislation. ABN 73 125 176 230