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 docume...
Back-charge
A back-charge is a cost the builder claims against you (rectification by others, cleaning, plant hire, supervision), typically deducted f...
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 excl...
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 whe...
Construction program
The construction program is the builder's schedule of when work happens: usually a management tool rather than a contract document, but t...
Deed of release
A deed of release is a document that surrenders your claims. Builders ask for one before final payment or retention release, and signed u...
Defects liability period (DLP)
The defects liability period is the window after practical completion (typically 12 months) during which the contractor must return and r...
Delay costs
Delay costs are the money side of delay (the site overheads, supervision, plant and preliminaries you keep paying while the job runs long...
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 d...
Force majeure
Force majeure is a contract clause excusing performance when defined events beyond the parties' control (natural disasters, war, pandemic...
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, you...
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 pre...
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 bui...
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, serv...
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 subcon...
Progress claim
A progress claim is a periodic claim for payment for work completed to date. When prepared to engage security of payment legislation, it ...
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 dedu...
Quantum meruit
Quantum meruit ("the amount deserved") is a claim for the reasonable value of work performed outside a contract price, historically signi...
Reference date
A reference date is the date on which an entitlement to make a payment claim arises under security of payment legislation: historically m...
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 for ...
Scope of works
The scope of works is the contractual description of exactly what you are being paid to do. In a dispute, the scope documents decide whet...
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, an...
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 contr...
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. It is present in the large majority of...
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 extingui...
Variation
A variation is any change to the scope of work you priced (additions, omissions, changed materials or methods), which the builder can usu...
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