The contract terms that move your money, in plain English
Every term below is defined for one reader: the Australian subcontractor deciding whether to sign, claim, or push back. No law-firm hedging - what it means, and why it matters to your money.
Adjudication
Adjudication is the fast statutory process under security of payment legislation for resolving payment disputes - a decision on the docum...
Back-charge
A back-charge is a cost the builder claims against you - rectification by others, cleaning, plant hire, supervision - typically deducted ...
Bank guarantee
A bank guarantee (or unconditional undertaking) is security provided instead of cash retention - the bank promises to pay the beneficiary...
Business days
Business days are working days excluding weekends and public holidays - and under security of payment legislation the definition also exc...
Condition precedent
A condition precedent is a requirement that must be satisfied before a right or entitlement comes into existence at all - in subcontracts...
Consequential loss
Consequential loss is loss beyond the direct and natural result of a breach - lost profits, loss of opportunity, financing costs - and wh...
Construction program
The construction program is the builder's schedule of when work happens - usually a management tool rather than a contract document, but ...
Deed of release
A deed of release is a document surrendering claims - commonly required before final payment or retention release, and capable of extingu...
Defects liability period (DLP)
The defects liability period is the window after practical completion - typically 12 months - during which the contractor must return and...
Delay costs
Delay costs are the money side of delay - the site overheads, supervision, plant and preliminaries you keep paying while the job runs lon...
Extension of time (EOT)
An extension of time is a formal adjustment of the completion date for a delay the contract recognises - it protects you from liquidated ...
Force majeure
Force majeure is a contract clause excusing performance when defined events beyond the parties' control - natural disasters, war, pandemi...
Head contract
The head contract is the contract between the principal (client) and the head contractor (builder) - the document above your subcontract,...
Indemnity
An indemnity is a promise to make good another party's loss - and subcontract indemnities are routinely drafted wider than your fault, yo...
Latent conditions
Latent conditions are physical site conditions that differ materially from what a reasonable contractor would have anticipated at tender ...
Liquidated damages (LDs)
Liquidated damages are a pre-agreed daily or weekly rate the contractor pays for finishing late - enforceable if the rate is a genuine pr...
Novation
Novation replaces one party to a contract with another - the whole contract, rights and obligations, transfers to the incoming party with...
Pay-when-paid clause
A pay-when-paid clause makes the builder's obligation to pay you conditional on the builder first being paid by the principal - and it is...
Payment claim
A payment claim is a claim for payment made under security of payment legislation - unlike an invoice, it starts a statutory clock the bu...
Payment schedule
A payment schedule is the builder's formal response to a payment claim, stating what they will pay and every reason for paying less - ser...
Practical completion
Practical completion (PC) is the point at which the works are complete except for minor defects and omissions, and can be used for their ...
Prime cost item
A prime cost (PC) item is an allowance for the supply cost of a specific item not yet selected - tapware, fixtures, equipment - where the...
Principal
The principal is the party at the top of the contracting chain - the owner or developer who engages the head contractor - and, for a subc...
Progress claim
A progress claim is a periodic claim for payment for work completed to date - and when prepared to engage security of payment legislation...
Provisional sum
A provisional sum is an allowance in the contract price for work not yet fully defined - when the work is performed, the allowance is ded...
Quantum meruit
Quantum meruit ("the amount deserved") is a claim for the reasonable value of work performed outside a contract price - historically sign...
Reference date
A reference date is the date on which an entitlement to make a payment claim arises under security of payment legislation - historically ...
Repudiation
Repudiation is conduct showing a party is unwilling or unable to perform its contract - and it is the label a court gives a subcontractor...
Retention
Retention is money withheld from each progress payment - commonly 10% of each claim until 5% of the contract sum is held - as security fo...
Scope of works
The scope of works is the contractual description of exactly what you are being paid to do - and in a dispute, the scope documents decide...
Security of payment
Security of payment is the family of Australian statutes giving construction contractors a fast statutory right to progress payments and ...
Set-off
Set-off is the builder's contractual right to deduct amounts it says you owe - back-charges, defect costs, LDs - from money it owes you, ...
Site instruction
A site instruction is a direction issued on site by the builder's representative - and whether it entitles you to extra money depends not...
Statutory declaration
A statutory declaration in construction is the signed declaration - usually that workers and sub-subcontractors have been paid - that con...
Superintendent
The superintendent is the person the contract appoints to administer it - certifying payments, assessing claims and directing the works -...
Suspension of works
Suspension of works is the statutory right to stop work for non-payment under security of payment legislation - exercised correctly it is...
Termination for convenience
Termination for convenience lets the builder end the contract on notice without any breach by you - present in the large majority of Aust...
Time bar
A time bar is a contractual deadline for giving notice of a claim - miss it and, under the common absolute drafting, the claim is extingu...
Variation
A variation is any change to the scope of work you priced - additions, omissions, changed materials or methods - which the builder can us...