Domestic Building contracts may either be:
or
- Standard form contracts are issued by industry associations, or by Consumer Affairs Victoria (a government body), and are pre-printed. Parties just need to fill them out with the particulars.
- Custom contracts, on the other hand, are drafted from scratch and customized according to one party's preference.
Standard Form Contracts: Fast Facts
1. Some examples of standard form home building contracts are:
Housing Industry Association – Victorian New Homes Contract
Master Builder New Homes Contract (HC-7)
Consumer Affairs Victoria Domestic Building Contract
ABIC Simple Works- Domestic Victoria – Australian Building Industry Contracts (ABIC) are jointly published by Master Builders Australia Limited and the Australian Institute of Architects; for projects administered by an architect
2. Standard form contracts for domestic building must be lump sum.
- Lump Sum - under a lump sum contract, the builder must carry out the work for an amount that is agreed upon by the parties before executing the contract.
Domestic building contracts by law must be fixed-price or lump-sum contracts.
3. ABIC SW Housing – this is a Simple Work contract issued by the ABIC; for small to medium sized projects.
4. ABIC MW Housing – this is a Major Works contract exclusively for housing projects, wherein payment in stages is adopted. The difference between this and the SW contract, is the added features/clauses that are absent from SW contracts.
Which Domestic Building Contract is Right for Me?
- Generally, it’s the builder who presents the domestic building contract to the homeowner - whether it’s standard form or custom.
- Custom contracts may sound attractive, but actually, they’re the least favorable especially to homeowners. Since they aren’t made by any industry association, or by the government, there is a chance that they contain risky provisions that may or may not be compliant with industry standards.
- Standard form contracts tend to benefit the builder, if they are issued by industry associations like Master Builder and Housing Industry Association. This is because industry associations are founded for the benefit and protection of industry members like builders, contractors, suppliers, and the like; therefore, their issuances would naturally skew towards benefitting said members.
- ABIC are also standard form, but they tend to benefit the homeowner more. However, these contracts are for building contracts that are administered by an architect.
- Standard contracts issued by Consumer Affairs Victoria would appear to be the most prudent choice for a homeowner. Consumer Affairs Victoria is a government body that protects the rights of small businesses and consumers. They do not make contracts that benefit one party over another.
- That said, it would be advisable to choose the contract issued by Consumer Affairs Victoria, which appears to be the most objective and fair to all parties concerned; and to avoid the builder's custom contract, or to at least proceed with caution.
Key Takeaways
- HIA, Master Builder, and ABIC are issued by industry associations, hence, would generally favor members of their industry.
- HIA and Master Builder contracts may be more beneficial to builders and contractors, while ABICs benefit homeowners with upscale home building projects administered by architects.
- Contracts issued by the Victorian Building Authority would probably be the most favorable to all parties, as they are issued by the Victorian government, and hence carry the presumption of impartiality and fairness.
- In any case, it always helps to be prudent and to do your own research. Review the proposed contract, or have it reviewed by a specialist construction lawyer to make sure you don’t run into snags later on.
How We Can Help
Regardless of what domestic building contract you choose, we can help you. Construction Lawyer Melbourne has a team of specialist construction lawyers who can make an in-depth review of your contract and advise you accordingly.
