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You must give your client a copy of the Domestic Building Consumer Guide before they sign a major domestic building contract. For more information, view our Domestic Building Consumer Guide page.
About preliminary agreements
You may ask a client to sign a document before entering into a contract for construction work.
Such a document is often used to obtain a soil report and foundation data, or to develop design, plans and specifications for the construction or renovation of a home.
Sometimes the document is called a pre-construction contract, preparatory work agreement, quote, order, preliminary contract, estimate, provisional quote, authorised tender acceptance, or contract request.
No matter what it is called, the document is a contract. If the contract is to carry out domestic building work, and the price is more than $10,000, that contract must comply with the Domestic Building Contracts Act 1995 (DBCA).
Your obligations when using a preliminary agreement
This information does not provide a detailed analysis of your obligations as a builder under the DBCA. Its purpose is to provide guidance on how section 31(1) of the DBCA applies to a major domestic building contract.
It is Consumers Affairs Victoria's view that the Supreme Court's judgment about section 31 (1) clarifies the operation of this section and will assist builders in the preparation of building contracts that comply with all the requirements of the DBCA.
How section 31(1) of the DBCA applies to preliminary agreements
Contracts described as preparatory work agreements or preliminary agreements that deal with works in preparation for the construction of a home such as design and specification works, have been regarded by some builders as being outside the scope of the DBCA. However, in a 2009 decision the Supreme Court of Victoria has determined that preparatory work agreements or preliminary agreements are building contracts under the DBCA.
As a result of the Supreme Court’s decision in Director of Consumer Affairs v Glenvill Pty Ltd  VSC 76, a builder's obligations to comply with all the requirements of section 31 (1) of the DBCA will be determined by the type of building work the builder undertakes to perform. The requirements of section 31 (1) of DBCA are only applicable to a major domestic building contract which is defined as a contract for the carrying out of domestic building work, in which the contract price is more than $10,000.
The Supreme Court has implied the words "where applicable" into the sub clauses of section 31(1). This means that a builder will not be required to comply with all of the sub clauses of section 31(1) unless that clause is applicable to the building work contemplated by the major domestic building contract. However, it should be noted that a builder must still comply with all the other provisions of the DBCA.
Minimum requirements for a major domestic building contract to comply with section 31(1)
A major domestic building contract must be in writing, in English and be legible - 31(1) (a) & (m). It must include:
- the details of all the terms of the contract - 31(1) (b)
- the definition of the key words and phrases used in the contract - 31(1) (o) & (p)
- the names and addresses of the parties to the contract - 31(1) (e)
- a description of the building works to be carried out - 31(1) (c)
- the contract price - 31(1) (j)
- the builder’s registration number - 31(1) (f)
- the date the contract is made - 31(1) (k)
- a notice of the owners right to a cooling-off period - 31(1) (n)
- details of the warranties implied into the contract by sections 8 and 20 of the DBCA - 31(1) (q)
- an approved checklist; however, some of the items listed in the checklist might not be applicable depending on the type of building work to be carried out - 31(1) (r)
- any other requirement as set out in the Domestic Building Contracts Regulations 2007. For example, a change to the progress payment schedules as fixed by section 40 of the DBCA - 31(1) (s).
A major domestic building contract may also include:
- plans and specifications for the building work containing enough information to enable the obtaining of a building permit - 31(1) (d). This requirement may not be applicable where the contract is to carry out the preparation of plans and specifications
- details of insurance - 31(1) (l). This requirement is dependent upon the value of the major domestic building contract. Major domestic building contracts over $16,000 are an insurable domestic building contract and in those circumstances the contract must include details of insurance to comply with section 31 (1)
- a start and finish date of the building work with allowances for delays in time estimates -31(1) (g) & (i). Depending on the building work, it may not be possible for the builder to be certain of a start and finishing date of the building work, such as a contract to provide plans and specifications. In those circumstances, a statement that the builder will do everything that is reasonably possible to start and finish the design and specification work would satisfy the requirements of section 31(1) (h) (g) & (i).
Model domestic building contract for new homes
You can use our free model domestic building contract when planning to build a new home. The contract balances your and your client’s rights and obligations. If a dispute arises, the contract provides a clear path to the requirements of the law.
Download a copy of the building contract for new homes (Word, 1.2MB)