Variation Disputes - A building contract Stop "Sign"

Your on site and receive a revised contract drawing from the owner who says "I'd like you to build to this". The drawing adds to, and omits from, the original contract work.

Your site condition should be - no signature, no variation, no changed work.

Law in Point

NSW Home Building Act 1989 (HBA)

The HBA applies to the residential building industry. Section 7E (1) provides that a contract to do residential building work must include (and is taken to include) the terms set out in Part 1 of Schedule 2 of the HBA.

Clause 1 (2) of Part 1 of Schedule 2 includes a term that "any agreement to vary this contract, or to vary the plans and specifications for work to be done under this contract, must be in writing signed by or on behalf of each party to this contract" (Signature Requirement).

The Signature Requirement does not apply to residential building contacts with a developer (Section 7AA HBA).

Standard Form Contracts

The Signature Requirement is, for example, found in:

  • Clause 1 of the NSW Government Home Building Contract for Work over $20,000; and

  • Clause 1 (c) (ii) of the Master Builders Residential Building Contract BC4.

The Signature Site Condition

Legislation, standard contract terms and good contract administration require both the owner and the builder to sign a document to record their agreement to vary the original contract drawings. Unless signed the:

  • Builder will not have a contractual right to increase the contract sum for additional work shown in the altered drawing; and

  • Owner will not have a contractual right to decrease the contract sum for omitted work shown in the altered drawing.

If a disagreement arises as to what is, or is not, a change to the original contract drawings, the self help dispute procedures in the building contract should be used to resolve the matter before resorting to costly litigation before tribunals and courts.

BuilDevelop Legal

Provides access to building and construction contract lawyers who use defensive strategies to avoid disputes arising from variation claims, extension of time claims, defect and other claims for owners, builders and developers. Try our Building Contract "Health Check". Get a FREE initial 45 minute meeting with a barrister or lawyer. And coming soon, BuilDocs interactive documents to help you manage your building contract and be dispute ready. We deal with HIA, Master Builders and other industry standard contract forms.

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