A builder had been in business for many years, and often carried out work on the basis of quotes only, or sometimes only handshakes. 

All was well until he ran into a dispute regarding whether particular work he had carried out was within the original scope of work he quoted for or not. The builder claimed he had been asked to carry out work beyond the agreed scope, but the home owner disagreed and thought all work should be included as part of the original quote. 

As the builder had no written terms, and his quote did not include enough detail about the scope of works, it led to a lengthy dispute regarding what was agreed and what was payable.

While many builders, painters, plumbers and other contractors only issue quotes for work, there is a legal requirement to have a written contract if you are carrying out work to a residential property where the work costs $30,000 or more.

You are not legally required to have a written contract for work valued below $30,000, however, it is strongly recommended to have one as it will set out each party’s rights and responsibilities.  Having this certainty helps avoid disputes later.

There are Building Regulations around what your contract must include, detailed below:

• The names and contact details (addresses, phone numbers, and email) of the parties;
• The address of where the building work will be carried out;
• The date(s) when the contract was signed by both parties;
• A description of the building work covered by the contract including –

o   The materials and products to be used (if known);

o   The person carrying out the building work;

o   The person who will be supervising the building work (if there is one);

o   Which party will be responsible for obtaining any consents or approvals for the work;

• The expected start date of the building work;
• The expected completion date of the building work;
• The contract price, or the method by which the contract price will be calculated (e.g. fixed hourly rate with materials invoiced separately);
• The number of payments under the contract, and if there is more than 1 payment –

o   Payment schedules, amounts, mechanisms to ensure payment;

• Terms prescribing how payments will be invoiced, made, and receipted;
• Terms describing how notices are to be given under the contract;
• Mechanisms for negotiating and agreeing on variations to the building work;
• Terms describing how possible delays will be dealt with (e.g. delays as a result of natural disasters or civil unrest);
• Terms prescribing how any defects in the building work will be remedied, including a reference to the existence and application of the implied warranties in the Building Act;
• How a dispute between the parties will be resolved; and
• An acknowledgement that the building contractor has supplied, and the client has received, the disclosure and checklist that was referred to earlier.

In the event that some of the above information is missing from your contract and your contract is for $30,000 or more, default terms from the Building Regulations will apply. The default terms may not be more favourable to you than if you had negotiated and specified the terms yourself.

While the above terms are basic requirements, we recommend you also consider adding terms about termination, confidentiality, access arrangements, and health and safety policies.

It pays to seek legal advice from a legal professional to ensure you and your projects are protected when contracting for any building work.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Claire Tyler and Hanifa Kodirova

Commercial lawyer and law clerk
Wellington