Liquidated damages
Most, but not all, domestic building contracts contain a provision for liquidated damages. This is a daily compensation payment the contractor agrees to pay the home owner in the event they fail to complete the contracted work by the agreed date for practical completion.
Terminating a contract
IMPORTANT: Termination of a contract is a significant step that should not be undertaken without first obtaining legal advice from an experienced lawyer.
Terminating a building contract for any reason is a very serious matter, which can cause major financial and legal issues for a party wrongly terminating.
Your failure to properly terminate a contract may reduce the amount of cover available to you under the Queensland Home Warranty Scheme. For example, cover for non-completion will not be available.
In a written contract, proper termination usually requires strict adherence to documentation and procedures for termination, as set out in the General Conditions/Terms and Conditions of the actual contract.
In most circumstances, domestic building contracts require two (2) written notices be sent to the contractor. These are a:
- Notice of breach—calling on the contractor to remedy the breach or breaches described in the notice, with a warning that the contract will be terminated unless the breaches are remedied (meaning fixed or repaired) within the period prescribed by the contract (commonly 10 business days) or a longer period if the prescribed period is insufficient.
- Termination notice—a second written notice (sent after the time stipulated in the first notice has passed) referring to the first notice and stating that as the breach or breaches have not been remedied the contract is now terminated.
In rare circumstances a written contract may be terminated by a single written notice, for example in the case of bankruptcy or when a company goes into liquidation, as these situations often cannot be quickly rectified.
Any correspondence relating to the termination of a building contract should be written by, or at least checked by, a practicing lawyer experienced in building disputes. Be aware that not all lawyers have the required experience.
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