BUILDRIGHT: SENSIBLE CONTRACTING IN THE RESIDENTIAL MARKET

Building contracts are essential when building a new house. When undertaking alterations or renovations to an existing house, or installing a new roof, deck, kitchen, bathroom etc building contracts are equally important and written contracts must be used where the value of building work exceeds $30,000.00 (including GST).

When undertaking any building work, there is a lot of information to absorb and many decisions to be made. One of the most important decisions to be made is the form of building contract that will govern the relationship between the client and the contractor. BuildSafe knows, from its extensive experience in the
building and construction industry, how much the contractual arrangements can affect the success and enjoyment of a residential build project. BuildSafe also knows how important it is that any contract is fair and equitable to both parties in terms of allocating and managing risk and that the contract is written in a simple and easy to understand manner.

On 1 January 2015, significant new measures came into effect to protect consumers in relation to residential
building work. These changes are included in amendments to the Building Act 2004 (Part 4A) and include among other things:
 

• mandatory written contracts for residential building work costing $30,000.00 (including GST) or more;
• mandatory terms to be included in all residential building contracts;
• provisions that will apply by default to any residential building contract where the contract does not contain all the minimum requirements, or where there is no written contract;
• a requirement for contractors to provide a checklist and a statement disclosing certain information to potential clients for residential building work if it is likely to cost $30,000.00 (including GST) or more, prior to entering into a residential building contract, or when that information is asked for by a consumer irrespective of the value of the work;
• information regarding current insurance policies, guarantees or warranties, and maintenance that a contractor must provide to a client after the building work is completed regardless of the price of the work; and a 12-month mandatory defect repair period from the date the building work is complete.

BuildSafe prepared the BuildRight Conditions of Contract to comply with the new consumer protection measures and to provide builders, contractors, suppliers, installers and home owners with a straightforward, fair, and easy to understand contract to use on any residential building project.

There are three sets of BuildRight Conditions of Contract available to you for residential building projects. Access to these contracts is free for all BuildSafe users. The contracts include:

1. BCC:2016 General Conditions of Contract. These may be used for any residential construction contract.
2. BCS:2016 Subcontract Conditions of Contract. These may be used for any residential construction contract between a head contractor and a sub-contractor under BCC:2016 or BSPCC:2016.
3. BSPCC:2016 Small Projects Conditions of Contract. These are a slightly more abridged version of the General Conditions of Contract, which may be used for smaller building projects.

There are two parts to each of the BuildRight Conditions of Contract. The first part is the Contract Agreement which contains the basic details about the contract including among other things, the parties’ names and details, the contract price, and the scope of the contract works to be completed. The second part contains the General Conditions of Contract. These set out in detail the rights and obligations of the Parties. The Contract Agreement and the General Conditions of Contract together form the Contract.

It is important that you read the entire Contract. If you have any queries or concerns about the terms of the Contract, you should take independent legal advice before signing it.

The Contractor and the Principal must complete and sign the Contract Agreement, initial each page of the General Conditions of Contract, and have their respective signatures witnessed. The Contractor and Principal must also initial every page of the plans and specifications that describe the contract works, and separately initial any alterations (together the Contract Documents). The parties should each retain a copy of the Contract Documents for their records.

BuildSafe also provides a suite of additional documents for use in relation to the Contract for users of the BuildSafe Security of Payment Scheme. These include templates for, among other things: Payment Claims, Payment Schedules, Site Instructions/Variations, Notice and Certificate of Practical Completion, Notice of Defects, Notice and Certificate of Completion, Notice of Dispute, Notice of Adjudication, and Notice of Request for Adjudication etc.

For more information regarding BuildSafe’s services, please contact us at info@buildsafe.co.nz.