Which form of Building Contract should I use? 13 Apr 2017

We have a lot of clients coming to us with a building project where the contractor or consultant proposes using a standard form contract. It can be confusing as to which one of these documents is best to use in different situations.

This is because different industry bodies have developed their own forms of standard contract. Sometimes having too many options means that there is confusion over the best one to use. In this article we have described the most common form of construction contracts and building contracts and given a comment about when they are most appropriate to be used. In the second part we have also set out what some of the key issues are that need to be considered every time (no matter what contract is used as a base).

 

Which form of building or construction contract?

 

Below we have set out the most common standard forms of contract. The references are to the most recent forms of each which is an important point to note because sometimes you may be given an earlier version. Generally the latest issued copy has been done for a reason and it addresses some inadequacy in an earlier iteration. So closely check what year the version you are asked to sign was issued.

In addition to those set out above their can be bespoke / one off forms which particular companies many propose be used.  The important point here is that there are a variety of options when it comes to a building contract or construction contract.  Knowing what the options are is a good first step to being able to decide which one would be best for your project.

Key issues to consider in your building or construction contract

 

There are a number of other practical points that should be covered in your agreement.  Even if there is a standard position in one of the contracts above it should be read and ensure that you are comfortable with it.  Key matters to consider include:

Indemnities: These are often “high risk” clauses, because they can trigger a liability to pay a sum of money without the party relying on the indemnity even needing to prove that the other party caused, or contributed to, a loss.  It is important to be clear about what exactly will trigger an indemnity, who it will cover and whether it is reasonable in the circumstances to require one at all.

Building contractors must give consumers a Checklist and a Disclosure Statement published by the Ministry of Business, Innovation and Employment prior to signing a building contract for all residential building work valued over $30,000.00 (including GST), or where the consumer asks for the information irrespective of the value of the building work.

 

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Please contact Tim Rankin at Parry Field Lawyers (348-8480) timrankin@parryfield.com