1.9 Contracts
Any residential building work performed by a contractor to the value of more than $1000 must have a written contract arranged by the contractor.
From 16th February 2004, the licence holder must give to the homeowner a copy of the “Consumer Building Guide” published by the Office of Fair Trading. The guide briefly outlines
the rights and obligations of the contractor and homeowner, and offers information on dispute resolution.

1.10 Essentials of a Contract
A contract for residential building work valued at more than $1000 must be in writing and contain the following:
• The names of the parties. i.e. the homeowner and the licensed contractor as shown on the licence (make sure the contractor’s name matches exactly the name on the licence and is not the name of anyone other than the licence holder).
• A checklist of 12 items as provided in Schedule 3 of the Home Building Regulation 2004:
• A caution about signing the contract if the consumer cannot answer yes to all items in the checklist;
• A note about the contractor’s obligation to provide a certificate of home warranty insurance if the work is over $12.000;
• An acknowledgment by the consumer that they have read and understood the ‘Consumer Building Guide’.
• A clause that states that all plans and specifications for work to be done under the contract (including any variations to those plans) are taken to form part of the contract;
• A clause that states that any agreement to vary the contract or any plans and specifications must be in writing and signed by the consumer and contractor;
• A clause that states that all work will comply with (a) the Building Code of Australia, to the extent required under the Environmental Planning and Assessment Act 1979, including any instrument made under that Act, and (b) all other relevant codes,
standards and specifications that the work is required to comply with under any law, and (c) the conditions of any development consent or complying development certificate;
• A clause that the contract may limit the liability of the contractor for any failure to comply with the clause referred to immediately above if the failure relates solely to -

    (a) a design or specification prepared by or on behalf of the owner (not by or on behalf of the contractor); or

    (b) a design or specification required by the owner, if the contractor has advised the owner in writing that the design or specification contravenes the clause referred to immediately above: and
• A conspicuous statement (in the case of a residential building contract) that a 5-day cooling-off period applies to contracts valued over $12,000.
• The contractor’s current (in force) licence number.
• The date and signatures of the parties.
• A sufficient description of the work to which the contract relates (ensure that the contract used by each trade contractor clearly nominates the work to be done by that contractor).  Building contracts should contain a full description of the work to be done. Plans, engineer’s computations and any other relevant professional documentation should be included so that there is a proper understanding by both parties of what is expected.
• The contract PRICE, if known, must be prominently displayed on the front page. If the price is not known, or there may be a variation, the contract must contain a warning to that effect and an explanation of the variation provision (i.e. the Rise and Fall Clause).  Where a contractor wants to charge by an hourly rate without indicating the number of hours, insist on at least an estimate.
• Any statutory warranties applicable to the work.
• Consumers entering into building contracts valued at over $12,000 are entitled to a cooling-off period of 5 clear business days. The consumer may rescind the contract by written notice without penalty within 5 days after receiving a copy of the contract, or, if the consumer has not received a copy of the contract, within 5 days of becoming aware of their entitlement to receive a copy of the contract.  Where a licensed individual or partnership or company has another business or trading name, that business name may be included in the contract, together with the name shown on the license, if the business name is registered with the Office of Fair Trading as a business name and that all contractors/tradesmen must be licensed for that work.  Make sure you also check the following:
• If the value of any contractor’s work is more than $12,000, a Home Warranty Insurance certificate (provided to you by the contractor) must be attached. If it is not attached to the contract, there must be provision made that work will not start, and no deposit can be paid, until the insurance certificate is produced.
• The contractor must give a copy of the contract to the owner-builder within 5 clear working days of entering into the contract.
• The contract MUST NOT contain a compulsory arbitration clause. If it does, the Home Building Act voids it.
Ensure that the contract used by each tradesperson clearly nominates the work to be performed by that contractor.