Wellington Lawyers: Building Contracts: Essential Components You Should Know
For many contractors, verbal agreements and handshake deals were the norm for years. However, a lack of written terms can lead to disputes, as one builder discovered when work scope disagreements emerged. To avoid such situations, it’s crucial to have a comprehensive building contract in place, especially for residential projects valued at $30,000 or more.
The Legal Requirement
While written contracts aren’t mandatory for projects below $30,000, they are highly recommended to outline both parties’ rights and responsibilities, preventing disputes. For projects over this value, a written contract is legally required. Complying with Building Regulations, your contract should include the following:
- Parties’ Information:
- Names, addresses, phone numbers, and email addresses of all parties involved.
- Project Details:
- Project address.
- Signing date.
- Work Description:
- A detailed description of the building work, including materials and products, supervisors, and responsibilities.
- Expected start and completion dates.
- Financial Terms:
- Contract price or pricing method (e.g., fixed hourly rate with materials billed separately).
- Payment schedule and mechanisms.
- Invoicing, payment, and receipting procedures.
- Notices:
- How notices under the contract will be communicated.
- Variations:
- Procedures for negotiating and agreeing on changes to the building work.
- Delays:
- How possible delays, such as those due to natural disasters or civil unrest, will be handled.
- Defects:
- How defects will be rectified, including references to implied warranties in the Building Act.
- Dispute Resolution:
- The process for resolving disputes between the parties.
- Acknowledgment:
- Confirmation that the building contractor has provided the required disclosure and checklist to the client.
Compliance and Beyond
If certain information is missing from the contract and the project value exceeds $30,000, default terms from the Building Regulations will apply. These default terms may not be as advantageous as terms you could negotiate yourself. Additionally, consider including terms related to termination, confidentiality, access arrangements, and health and safety policies for added protection.
Seek Legal Guidance
To safeguard your interests and ensure your projects are protected, it’s advisable to seek legal advice from a professional when contracting for building work. Legal professionals can guide you in creating comprehensive contracts that minimize the risk of disputes and keep your projects on track.
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