Importance of terms and conditions for tradies

Author: Megan Adams, Progressive Legal

If you work in the construction industry as a tradesperson, there are no doubt significant business risks attached to the services that you provide. This is particularly true if you offer your services as a small business owner.

As a result, it is important to have clear and comprehensive terms and conditions in place in order to reduce risk and the incidence of legal disputes arising during or after the provision of your services. Clear and comprehensive terms and conditions will also assist you in the event that you do need to resolve a dispute. On this page, we’ll consider some key terms to include in your terms and conditions, limitation of liability, and key takeaways.   

Some key terms to include in your terms and conditions  

Variation to works

Many construction contracts provide for variations.  

A contract variation is where there is a change or adjustment to the originally agreed upon scope of works. For Imexample, the client wishes to increase a part of work provided for under the contract. Variations can be caused by a myriad of factors, including unforeseen circumstances, a change in the client’s desires for the project, or a fault on part of the tradesperson. 

If you regularly experience variations, it is important that your terms and conditions specify the process involved. This could include outlining the steps required such as: notifying you of the proposed change in writing within a certain time frame, having you agree to the variation, and provide a new quote or estimate to ensure that your additional costs are covered.

It is equally important to carve out that you may reasonably reject a variation at your discretion.  

Payment

Your terms and conditions should clearly explain your payment process.  

In identifying what to place in your payment terms, you should consider the following questions: 

1. what are the payment amounts? 
2. do you accept and/or require deposits? 
3. when are payments due? 
4. how do customers make payments do you?  
5. what is the frequency of any payments?  
6. what are the consequences of late payments or non-payments?  
7. do you charge interest for late or non-payment and if so, how is it calculated? and 
8. how will you handle situations where a party terminates the contract prior to the completion of the work? For example, are any outstanding amounts immediate due and payable on termination? 

Delays 

It is important to include time frames for the completion of the project, or parts thereof. In construction, it is often the case that delays may occur. As a result, you should explicitly articulate what you are not responsible for where such delays arise.  You can also state that time frames for completion are guidelines.   

Your terms and conditions should state that you are not responsible for a delay in providing your services in circumstances which are outside of your control. This includes delays which are caused by the client, delays regarding the delivery of materials and/ or weather or other extreme circumstances that are impacting your ability to work. 

It is also important to have terms which cover how you will address situations where the delay is a result of your own actions. Where you have caused the delay, the terms should specify how you will compensate the client for any loss sustained. Such terms could include a reduction in the contract price and/ or an extension to the agreed upon completion date.   

Access to the work site

The ability to access a worksite is essential to ensure that you can provide your services smoothly and without any unreasonable delay. As such, there should be clear terms which indicate when, how and who can access the worksite, as well as any additional permissions needed. Again, it is important to disclaim your liability with regards to any loss or damage sustained because of being unable to access a site. 

Dispute Resolution

It is important to be sure that you have a dispute resolution clause in your terms and conditions.  While states and territories have civil and administrative tribunals that are more cost-effective than going to court, including a dispute resolution clause can reduce your financial risks of disputes further.

Additionally, civil and administrative tribunals often only have jurisdiction when all of the parties are  in the same state or territory, so if you do work for someone who lives in another state or territory, you may not be able to use civil and administrative tribunals.  Advantages of a dispute resolution clause are that you can require mediation, which is often even faster than trying to go to your state civil and administrative tribunal.  

Limitation of Liability  

The Australian Consumer Law imposes an obligation on service providers to provide a refund or repair where there is a defect in the services provided.  

However, if you have provided your services with the requisite skill and care, the limitation of your liability will be favourable to you where customers have suffered damage. In such cases, you will reduce the risk of liability for situations which are the fault of the client and/ or a third party which you are not responsible for. 

Key takeaways 

Having a comprehensive set of terms and conditions is vital if you are a tradesperson in the construction industry. By clearly outlining key terms such as payments and limitations to liability, you increase your protection should disputes arise from the provision of your services. This is particularly true as it is more than likely that during the course of your business, such disputes will eventuate.  

If you require terms and conditions for your construction business or advice on your existing terms from our experienced commercial lawyers, make an enquiry below or contact our office at 1800 820 083. 

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