As a builder or contractor, providing quality workmanship and products fit for purpose are backed by laws and standards across the country. Paul Cott outlines the laws involved. 

All states in Australia have to some extent standardised laws in respect to the standard that contractors (and builders) are required to uphold for their work. Victoria, New South Wales and Queensland law is similar whereas the other states and territories have laws that are broadly the same in effect and ideas.

Building standards apply whether or not they are written specifically or are even referred to in the contract. The important thing to remember is that there are time limits beyond which, if defects begin to be revealed, the builder or tradesman is ‘off the hook’ as far as potential legal liability is concerned. That time period is often ten years from the date the Occupancy Certificate is issued. This time period also applies when the legal liability risk ‘transfers over’ to subsequent purchasers of the property.

These laws and standards are designed to protect consumers in relation to all types of products and services and provide some protection to ensure that the consumer gets what they pay for.

Warranty insurance is applicable to building projects more than $16,000 in Victoria and only applies to protect an owner in certain specified circumstances.

Those circumstances are where the builder dies, the building company becomes externally administered by a liquidator, or where the builder goes missing and cannot be found. It is a common error to think that this ‘warranty insurance’ applies generally and gives protection to the owner whenever there are defects and/or incomplete works.

The first implied warranty is that the works are performed with reasonable care and skill. That is not a duty to guarantee that the works are done or the goods which are provided will be completely defect-free but that they are performed (or provided) with reasonable care and skill, appropriate to the contractor’s skills, qualifications and experience. The standard required is adaptable to all the circumstances. Often, however, the law makes a distinction as to the possibility of a remedy (such as the right to a refund of money paid, compensation or rectification of the defects) for the consumer or home owner, on the basis of whether the defect(s) are major or minor. This standard is often called the duty to do work in a ‘proper and workmanlike manner.’

The second implied warranty which will apply irrespective of the intentions of the contractor and the owner is the duty to follow the plans and specifications of the contract. Not much needs to be said about this one expect to say that it is a reflection of the concept that a consumer is entitled to receive what they paid for.

The next aim for a contractor is to provide materials or products which are of an acceptable quality. As with the standard of due care and skill, whether you have reached the level of ‘due’ care or skill or ‘acceptable quality’ varies with circumstances, but the products or materials actually have to be fit for purpose. In some instances, the law will require that the materials provided be new.

The arguably most critical requirement is that the contractor’s or builder’s work complies with the law.

Finally, the work should be carried out by the promised due date. Though this duty is not often explicitly stated in the law (although it is in Victoria in the Domestic Building Contracts Act) it is related to the critical element of time. It is also usually the subject of a clause in the contract where there are a specified number of days by which the works must reach practical completion or substantial completion.

It is specified in the contract what the consequences are if this date is not achieved. Liquidated damages may be payable, based on the number of days past the due date the works are complete is an example. A set rate is usually set, such as $250 per week.  There are exceptions to this requirement for the builder to pay such damages, broadly based on factors outside the builder’s control.

Mention should be made of the important topic of certification of works. Certification of works can be implied or actual – usually written, but it can be verbal. The builder can be entitled to final payment claims based on an implied written statement from the architect or inspector.

The most common examples of documentation are final and practical completion certificates. Often, a building contract says that a certificate from an architect is required to indicate that the architect is satisfied that the works carried out are satisfactory in relation to the contract. In general, the certificates referred to in this article are conclusive with respect to compliance of the duties or standards but this can depend on what the contract stipulates.

Final certificates are usually issued at the end of the defects period. However if there are defective works, an owner can still usually, despite the certificate, claim damages. As in all cases, it is the contract and its wording which governs the conclusiveness or otherwise of a final certificate.

Due to the often discrete and technical aspects of this area, it is strongly recommended that if you are faced with allegations that you have done work of sub-standard quality, you seek professional advice.