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, and in most Australian subcontracts the drafting allows it without prior notice.

The practical effect: the first you learn of a deduction is a smaller payment. Broad drafting goes further, allowing set-off of claims arising under OTHER contracts between the same parties - a dispute on one job bleeding into the cash flow of another.

Why it matters to subbies

Nearly every contract analysed for the Index allows set-off without notice - it is one of the most consistent findings in the dataset. The market-credible asks: written notice with particulars before any deduction, and set-off limited to this contract only.

General information for Australian subcontractors, not legal advice - contract drafting and state legislation vary and change; your document and your state's Act govern. Written by Mat Kennedy at The Construction Contracts Co.