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Draft your contracts so you're not paying someone else's bills

Construction Law News | December 2015

As a professional in the building and construction industry, you should ensure that your contracts and any other agreements clearly define precisely who the parties to the contract are, including the identities of payer and payee, whether each party to a contract is an individual or a company, as well as any relevant contact details. This is an important consideration when it comes to serving payment claims and payment schedules in relation to a contract. Section 13(1) of the Building and Construction Industry Security of Payments Act ("SOPA") provides that a person who is or who claims to be entitled to a progress payment may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.

If you are vague or misleading in your dealings with others, this may result in either you or another business entity or individual becoming personally liable or otherwise exposed to payment of a debt under SOPA. The High Court’s decision in Brookfield Multiplex Ltd (A.C.N 008 687 063) v Owners Corporation Strata Plan 61288 [2014] HCA 36 highlights the importance of comprehensive and carefully drafted building and construction contracts to avoid confusion and ensure that the agreed progress of projects between the parties is adhered to as much as possible.

To avoid confusion, unintentional liability or potential disputes between parties, contracts should also demonstrate exactly when and how certain aspects of a project are to be completed, as well as when and how payments are to be made.

Forum Law is uniquely qualified and experienced in all matters of building and construction law. Contact us through our online form or phone us on 02 9560 3388 to discuss any building matter including those concerning the Building and Construction Industry Security of Payments Act and the Home Building Act [NSW].

Forum Law is an active member of several reputable law and industry associations. We have recently obtained ISO9001 accreditation.