The HC7 Contract
The New Homes contract for works where the contract price is more than $10,000.00 (“HC7”) is typically written to favour Builders, as most domestic building contracts issued by industry associations are.
Therefore, you must be mindful of the terms embodied in the contract, and review them first before signing.
What are “Contract Terms”?
Contract terms represent the written agreement of the parties. In the contract, these terms are organised into different sections called “Clauses.”
They lay out and define each party’s:
- rights
- obligations
- liabilities in case of breach
Binding Effect
Once signed by the parties, the contract becomes the law between them.
It is therefore important to subject the contract to a thorough examination, because each party will be bound by its terms.
Terms to Keep an Eye Out For
Every building project carries risks, and a good way to minimise these risks is to make sure that the contract terms that affect TIME, COSTS, and QUALITY, are fair to both parties.
The following are essential clauses that you need to consider before you sign.
Commencement of Work
Purpose: Sets out the timeline for the home building project
Relevance: This affects other matters like payment and completion of works
Risk mitigated:
- Time
- Cost
Time for Completion
Purpose: Tells parties when the build should be completed
Relevance: This protects your rights against unreasonable extensions, and establishes your right to claim liquidated damages
Risk mitigated:
- Time
- Cost
Extension of Time
Purpose: Lays out the procedure for Builder or tradie to claim extension of time
Relevance: Lets you know if a claim for extension of time is valid or not
Risk mitigated:
- Time
- Cost
Progress Payments
Purpose: Tells when Builder is entitled to claim periodic payments
Relevance: Helps you avoid issues relating to payment
Risk mitigated:
- Time
- Cost
Variations
Purpose: Tells you when variations are allowed to be made, and how
Relevance: So you can be on guard about whether the variations are proper
Risk mitigated:
- Time
- Cost
- Quality
Defects Rectification
Purpose: Tells you when you can demand rectification
Relevance: Establishes your right to have defects fixed
Risk mitigated:
- Time
- Cost
- Quality
Suspension of Works
Purpose: Tells you when Builder can suspend the works, and how
Relevance: So you’ll know whether or not the suspension of works is allowable and if it was done following the proper procedure
Risk mitigated:
- Time
- Cost
- Quality
Termination of the Contract
Purpose: Tells you how each party can terminate the contract, and the procedure for doing so
Relevance: This establishes your right to terminate the contract for cause
Risk mitigated:
- Time
- Cost
- Quality
Dispute Resolution Procedure
Purpose: Tells you how an ensuing building dispute may be resolved, if amicable negotiations don’t work
Relevance: This establishes your remedy in case of dispute
Risk mitigated:
- Time
- Cost
- Quality
How We Can Help You
These are just some of the terms you will find in your MBA HC7 contract. You may want to engage a specialist Construction Lawyer for a more thorough and in-depth Contract Review, which includes recommendations and advice on how you can effectively administer your contract.
Construction Lawyer Melbourne has more than 10 years experience drafting and reviewing domestic building contracts.
Feel free to give us a call if you need expert advice on your Victorian building contract. First consult is free.
