The arrangement regarding payment should be dealt with prior to accepting a tender. Agreement on a price for the job is one thing, but paying for work to the satisfaction of both parties is a different matter.
On larger projects sub‑contractors are entitled to progress payments, i.e. they are paid for the amount of work done, normally on a weekly basis. They may also be entitled to payment for materials delivered to site but not yet used, but they are not entitled to any 'up‑front' payments for work not done or materials not delivered.
Other agreements can be made as to the method of payment, but like all business agreements both parties should indicate their acceptance in writing of the arrangement prior to work commencing.
You have gone to a lot of trouble and care to select a sub‑contractor to achieve the best result. This should not be spoiled in the end by disagreements over payment of money for work done.
All sub-contractors provide a warranty for their work. However, if you are an owner builder, care and vigilance must be exercised in supervising other sub‑contractors working on the job. For example, if a plumber or electrician has knocked a hole in the brickwork or caused cracks to a wall, don't expect the bricklayer to repair it for free because it is still in the warranty period. Take special note of areas where the work of different sub-contractors may conflict and schedule the tasks to avoid problems.
In NSW all residential building and specialist work over $200 in labour content must be covered by a written contract. Once you decide on a quote, you should get a written contract to sign. Since 1 May 1997, the law states that all contracts for work with a labour content over $1000 in the residential building industry must contain the following:
- The contract must be dated and show the name of the contractor and the consumer, the contractor's licence details (the name on the licence card and licence number) and a sufficient description of the contracted work, including any plans and specifications.
- The contract price must be prominently displayed on the front page, and there must be a warning if it is subject to change.
- The contractor must give the consumer a copy of the contract within 5 working days of entering the contract.
- There can be no compulsory arbitration clause in any home building contract.
- The contractor must provide certain statutory warranties about the work, the materials used, compliance with the law, completion time, and that the work is fit for its intended purpose – these items must be included with the contract.
Note: If a builder or sub-contractor wants you to sign a contract that does not meet all of these requirements, you should not sign it.
Proceedings for a breach of Statutory Warranties must be commenced within 7 years from:
- The completion of the work, or
- If the work is not completed, the date for completion or the date of the contract.