As featured in the Clubs Insights magazine
Recently, we have seen many Clubs in Queensland undertake large scale renovations of existing premises or building new facilities. Since the beginning of the pandemic, the building and construction industry has been extremely competitive, with a number of high-profile building companies having been placed into liquidation or administration. This article outlines some key considerations for Clubs to consider when entering into construction contracts and tips to better protect the risk position of Clubs.
Key requirements for construction contracts in Queensland
There is actually legislation in Queensland which impose minimum requirements on commercial construction contracts, which would apply to most of the construction contracts that Clubs enter into for new builds or renovations. Certain requirements for these types of contracts have been set out in the Queensland Building and Construction Commission Act 1991 (Qld) (the Act). The Queensland Building and Construction Commission (the QBCC) is a government body which governs all building work which takes place in Queensland (both residential and commercial).
To assist Clubs in ensuring that their construction contracts comply with the requirements of the Act, below is a checklist considering the minimum requirements for commercial construction contracts in Queensland:
- Is the contract in writing?
- Does the contract contain the name of the builder and the QBCC licence number of the builder that will carry out the works?
- Are the site details (including the address of the land where the building work will be carried out) clearly set out in the contract?
- Does the contract clearly state the scope of works that the builder is required to perform?
- Does the contract clearly state the date for completion of the building work or a timeframe to calculate the completion date?
- Does the contract clearly state the amount the builder will be paid for the work or how this amount is to be calculated?
- Does the contract set out any agreement between the parties about security or retention amounts to be withheld by the Club for the builder’s performance of the works under the contract?
- Does the contract set out payment terms?
- Does the contract provide a process for dispute resolution in the event there is a dispute between the parties under the contract?
If a construction contract for a project does not include terms which deal with the above, there is a risk that the contract will be unenforceable against the builder.
In any event, we always recommend that Clubs seek legal advice prior to entering into a construction contract with a builder. This is necessary as the above only reflects the minimum requirements to satisfy the Act, leaving the Club potentially unprotected against other additional risks which may be encountered during the works. The risk to Clubs is that there may be both time and cost implications if the construction contract does not sufficiently deal with the usual matters which are typically encountered during construction.
In addition to the minimum requirements which are set out above, some additional considerations for Clubs to consider for construction contracts are:
How the building works may be suspended;
- How any late payments are to be dealt with;
- How any unforeseen site conditions (i.e., latent conditions) are to be dealt with;
- How any variations to the works after the contract date and during the course of the works are to be dealt with;
- Does the contract include an appropriate defects liability period for the rectification of any defects by the builder; and
- Does the contract include additional matters which are required to be included pursuant to other legislation in Queensland, including workplace health and safety requirements.
Do you require assistance with a construction contract?
If your Club requires assistance with reviewing a draft construction contract which has been prepared by your builder, drafting further clauses to ensure the contract complies with the Act and other legislative requirements in Queensland, or drafting a bespoke contract, please contact me on (07) 3224 0353 to discuss.