Commercial contracts and subcontracts

What is a commercial building contract?

The term 'commercial contracts' includes any of the following contracts to carry out or manage commercial building work:

• head contracts
• subcontracts (including subcontracts for domestic building work)
• sub-subcontracts
• all contracts for commercial building work between developers, builders and subcontractors
• contracts involving an owner builder permit holder.

When a written building contract is required

A written contract is required for any agreement between parties (contracts and subcontracts) for commercial building work work priced above the amount for which a license is required.

Commercial building work includes all non-domestic building work and subcontracts for domestic building work:

• valued over $3,300 (including labour, materials and GST)
• valued over $1,100 where it involves Hydraulic Services Design
• of any value where it involves:
  • drainage
  • plumbing and drainage
  • gas fitting
  • termite management – chemical
  • fire protection
  • completed residential building inspection
  • building design – low rise, medium rise and open
  • site classification
  • mechanical services.

The payment protections and obligations in the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) apply regardless of whether there is a written or oral agreement.

Commercial contract requirements

Contracts must include:

• name, contact details and licence numbers of all parties
• address of the building site
• description of work to be carried out
• completion dates for work
• how much is to be paid for the work
• dates for when a payment claim can be given (the reference date)
• the date when payment is due to be made
• any agreement regarding retentions and securities, including length of defects liability period.

If the contract is not clear or makes provisions inconsistent with BIF Act requirements payment security, the Act provides the following defaults:

• reference dates—the last day of the month the work was carried out
• due dates for payment—10 business days after the payment claim is given.

Top tips for contracts

• By spending a little time preparing and reading over a contract, you could save yourself thousands of dollars and heartache later on.
• Read the fine print carefully—especially if have been given the contract by another party and you are not familiar with it.
• Don’t be afraid to seek legal advice before signing if you have any questions or concerns.
• Confirm all variations in writing before you begin work on them.
• Keep copies of emails, quotes and specifications as well as notes from discussions. These can help in the event of a dispute.
• Avoid verbal contracts as they often lead to disputes and expose you to risk of compliance action and financial loss.

Which contract to use

To comply with the relevant Queensland legislation, you have a few contract options:

• use our commercial subcontract (at present we do not produce a commercial contract)
• use a commercial contract or subcontract developed by a major industry association
• develop your own contract—but you must obtain legal advice to ensure it is compliant.

If you want to use your own written agreement, it’s essential you get legal advice first. You risk prosecution, fines, and financial loss if you go ahead without making sure that it complies with the Queensland legislation.