Are you struggling to try to handle construction contracts and their many different formats? For someone who is not from the law and litigation or construction industry, it can feel daunting or make you feel stuck. As building and construction lawyers in Sydney, we are here to reassure you that this is completely normal and that we are here to assist you.
When hiring a construction lawyer in Sydney, it is always helpful and beneficial to complete some research beforehand. Trusting that your lawyer will take care of everything is essential, but resonating with the lawyer and their language is always a plus. At Eden King, our team of construction lawyers in Sydney are happy to assist you, ensuring that the legal framework regarding your circumstances is strong and valid, creating a swift and stress-free process for you.
Listed below are the different types of construction contracts and their purposes:
Before constructing any home or shelter, a residential contract is required as a state of the law. This contract falls under the Home Building Acts, where the minimum statutory rights of builders, homeowners, and builders are outlined. This act includes all matters relating to residential construction work such as payments, deposits, warranties, insurance, etc. This act also states insurance, the right to transact with licensed builders, and possess the necessary warranties when any defects in the building arise. If these factors are excluded, there will be legal consequences.
When building commercial establishments, a commercial contract is used for these purposes. Since these buildings are not for residential means, a commercial contract refers to shops, building office spaces, hotels and any other private spaces that businesses require. There isn’t a significant difference between commercial and residential contracts except for any additional permits and documentation that is required.
A sub-contractor agreement or contract is issued between the main contractor and the sub-contractor. This is issued for any special work that the main contractor might need a subcontractor to work on. This contract will state that any work completed by a sub-contractor is on behalf of the main contractor.
Lump Sum Contracts
When you issue a lump sum contract, it implies that there is a particular fee agreed upon between the client and contractor before the work is done. Lump sum contracts can apply to both commercial and residential purposes. However, a lump sum contractor poses more risk to the contractor. Why? Simply because when a contractor signs a lump sum contract, they are agreeing to execute a project on a ‘fixed price’. The price will not vary but the construction process involves many last-minute decisions and changes. You can hire a contract specialist or a lawyer in Parramatta that can help determine if your lump sum contract’s ‘fixed price’ is good enough to be agreed upon.
Cost Plus Contracts
A cost-plus contract states that the construction company involved is entitled to additional costs and expenses made during the process of building. These expenses include labour, materials used and an additional payment of a particular percentage of the entire project’s value.
Cost-plus contracts are a substitute or alternative for lump sum contracts. This is beneficial for a contractor since it eliminates the risk of extra work included in their package as we discussed above. This guarantees a profit to the contractors!
Now that you know the essentials of construction contracts, you’re ready to go explore your options. If you’re located in Sydney and searching for assistance regarding contracts in the construction industry, call Eden King Lawyers at (02) 9135 6000 or email us at email@example.com to enquire further.