The Law Handbook 2024

568 Section 6: Houses, communities and the road Contractual terms – major domestic building work The DBC Act places more onerous provisions on builders in contracts for major domestic building work (i.e. where the contract price is more than $10000). These provisions are discussed in this section. Given the requirements of the DBC Act, only certain building contracts are suitable for domestic building work. Consumer Affairs Victoria has prepared a model domestic building contract that can be downloaded from their website (www.consumer. vic.gov.au) . It is important that consumers obtain legal advice before signing any building contract. Foundations data The construction of footings and slabs can sometimes involve additional work, resulting in significant increases to the contract price. To protect consumers against these uncertainties the DBC Act requires a builder to thoroughly investigate the site prior to preparing a footings or foundation design. The DBC Act (s 30) requires a builder to obtain all reports, surveys and test results necessary for the preparation of a proper footings (slab) design and an adequate estimate of the cost of constructing the footings. The DBC Act sets out the matters a builder must take into account in preparing a footings design. The builder’s responsibility for obtaining adequate foundations data is not altered if the builder receives soil information about the site from the consumer. If the builder believes this information is not adequate, they must make their own enquiries. This work is normally paid for by the consumer and carried out before a contract is entered into. A builder cannot require a consumer to pay additional money in respect of footings work if this additional work could have been reasonably ascertained before construction commenced. Some builders allow contingency sums in the contract to cover any additional foundation work – consumers should attempt to minimise these contingency sums. Consumers should insist that the builder comply with the DBC Act and undertake the necessary investigative work and properly prepare and cost a proper footings design. Some builders require owners to enter a prelim­ inary agreement covering items such as foundations data, surveying the site, a structural engineer’s report and design and preparing preliminary designs and drawings. These are important agreements. Owners should ensure that the preliminary agreement does not require them to assign or transfer intellectual property or copyright in any design work to the builder. Unless the owner retains copyright in the work, they cannot give the design to another builder to construct. Important contractual provisions The DBC Act sets out in some detail what must be included in a contract for major domestic building works. Section 31 of the DBC Act requires that the contract, among other things, must: • be in writing; • provide a detailed description of the work; • include plans and specifications; • state the names and addresses of the parties; • state the registration number of the builder; • provide a start date or how that date is to be determined and, if the start date is not known, require the builder to do everything that is reasonably possible to ensure the work will start as soon as possible; • state a date when the work will finish or a number of days that will be required to finish the work once it is started; and • state a contract price. Cooling-off period A consumer may withdraw from a major domestic building contract at any time before the expiration of five clear business days after they receive a copy of the signed contract (this is called a ‘cooling-off period’). Contracts are required to contain a written notice advising consumers of the cooling-off period. If a consumer wishes to ‘cool-off’ they simply complete the notice and serve it on the builder in accordance with the contract provisions. A consumer cannot ‘cool-off’ if they have previously entered into a similar contract for the same work or have received legal advice before entering into the contract. If a consumer withdraws from the contract the builder may retain, out of any money already paid, $100 plus any other out-of-pocket expenses. The builder must refund all other money.