Construction Contract (Australia)
Building and Construction Industry — Security of Payment
This Construction Contract (the “Contract”) is made on [Contract Date] between:
[Principal Name] (ABN [Principal ABN], ACN [Principal ACN]), of [Principal Address], [Principal Suburb], [Principal State] [Principal Postcode] (the “Principal”); and
[Contractor Name] (ABN [Contractor ABN], Builder’s Licence No. [Contractor Licence]), of [Contractor Address], [Contractor Suburb], [Governing State] [Contractor Postcode] (the “Contractor”).
The Principal and the Contractor are referred to collectively as the “Parties”.
BACKGROUND
A. The Principal wishes to commission [Project Type] at the Site located at [Site Address], [Site Suburb], [Governing State] [Site Postcode] (the “Site”).
B. The Contractor is duly licensed to perform building work in [Governing State] and has agreed to carry out the Works on the terms set out in this Contract.
C. This Contract is a “construction contract” for the purposes of the applicable Security of Payment Act in [Governing State]. Both Parties acknowledge their rights and obligations under that legislation, including the right to make and respond to payment claims and to refer payment disputes to adjudication.
NOW, THEREFORE, the Parties agree as follows:
1. DEFINITIONS
1.1 In this Contract:
- “Contract Sum” has the meaning given in clause 4.1.
- “Defect Liability Period” means the period specified in clause 8.1.
- “Practical Completion” means the state at which the Works are complete for all practical purposes and can be used for their intended purpose, with only minor outstanding items that do not affect use or safety.
- “Progress Claim” means a payment claim made by the Contractor under the applicable Security of Payment Act.
- “Site” means the land and property described in clause 2.
- “WHS Laws” means the Work Health and Safety Act 2011 (Cth) as adopted or enacted in [Governing State], and all associated regulations, codes of practice, and safe work method statements.
- “Works” means the construction works described in clause 3.
2. THE SITE
2.1 The Works shall be carried out at the Site: [Site Address], [Site Suburb], [Governing State] [Site Postcode].
2.2 The Principal shall give the Contractor access to the Site on or before the Commencement Date and shall maintain such access throughout the period of the Works.
2.3 The Contractor shall take all reasonable steps to secure the Site and to prevent unauthorised access during the performance of the Works.
3. THE WORKS
3.1 The Contractor shall carry out and complete the following construction works (the “Works”) in a proper and workmanlike manner using materials of good quality and in accordance with this Contract and all applicable laws and building codes:
[Works Description]
3.2 The Contractor shall comply with the National Construction Code (NCC) and all Building Regulations applicable in [Governing State], and shall obtain all necessary building approvals, permits, and consents as required by law.
3.3 The Contractor warrants that all Works will be carried out with reasonable care and skill and that all materials supplied will be of acceptable quality, free from defects, and fit for the purposes for which they are intended, in accordance with the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)).
4. CONTRACT SUM AND PROGRESS PAYMENTS
4.1 In consideration of the Contractor carrying out and completing the Works, the Principal shall pay the Contractor the Contract Sum of $[Contract Sum] ([GST Treatment]), subject to any adjustments for variations.
4.2 Payment stages or schedule (if applicable):
[Payment Schedule]
4.3 Progress Claims — Security of Payment: The Contractor is entitled to make Progress Claims on [Claim Frequency] (the “Reference Date”) in accordance with the applicable Security of Payment Act in [Governing State]. Each Progress Claim must comply with the requirements of that Act, including the endorsed statement (if required) that the claim is made under the Act.
4.4 The Principal must, within [Payment Terms Days] business days of receiving a Progress Claim, pay the amount claimed or issue a Payment Schedule specifying the amount the Principal proposes to pay and the reasons for any difference. If the Principal fails to provide a Payment Schedule within the required time and fails to pay the claimed amount by the due date, the full claimed amount becomes due and payable as a debt.
4.5 Either Party may refer a payment dispute to adjudication at any time in accordance with the applicable Security of Payment Act. The adjudicator’s determination is binding and enforceable as a debt.
4.6 If any payment is not made by the due date, the Principal shall pay interest on the overdue amount at the rate of 10% per annum, calculated daily from the due date to the date of payment.
5. PROGRAMME AND PRACTICAL COMPLETION
5.1 The Contractor shall commence the Works on [Commencement Date] and shall proceed with the Works regularly and diligently.
5.2 The Contractor shall achieve Practical Completion by [Completion Date] (the “Date for Practical Completion”), subject to any extension of time granted under clause 7.3.
5.3 If the Works are delayed by any cause that is not the fault of the Contractor (including Principal-caused delay, approved variations, inclement weather, or supply chain disruption beyond the Contractor’s reasonable control), the Contractor may apply in writing for an extension of time. Any extension must be agreed in writing by the Parties.
5.4 On achieving Practical Completion, the Contractor shall give the Principal written notice. The Principal shall, within 5 business days, either issue a Practical Completion certificate or provide written reasons for withholding it.
6. DEFECTS LIABILITY
6.1 The Defect Liability Period is [Defect Liability Period] from the date of Practical Completion.
6.2 During the Defect Liability Period, the Principal shall notify the Contractor in writing of any defects, omissions, or damage that appear in the Works and are due to the Contractor’s failure to comply with this Contract.
6.3 The Contractor shall remedy all notified defects within a reasonable time and at its own cost. If the Contractor fails to remedy a notified defect within 30 days of written notice (or such longer period as is reasonable given the nature of the defect), the Principal may engage another builder to remedy the defect and recover the reasonable cost from the Contractor.
6.4 The Defect Liability Period does not limit the Principal’s rights in respect of latent defects or any statutory warranties implied under the Home Building Act 1989 (NSW), Domestic Building Contracts Act 1995 (VIC), Queensland Building and Construction Commission Act 1991 (QLD), or equivalent state legislation, which may extend for longer periods.
7. VARIATIONS
7.1 The Principal may instruct variations to the Works by [Variations Approval]. No oral instructions will be effective.
7.2 The Contractor must not commence any variation until the Principal has issued a written variation instruction. The value of any variation shall be agreed in writing by the Parties before the varied work commences, where reasonably practicable.
7.3 Where prior agreement on variation value is not practicable (for example in an emergency), the Contractor shall notify the Principal in writing of the cost as soon as possible, and the variation shall be valued on a fair and reasonable basis having regard to the rates in this Contract.
7.4 The Contract Sum shall be adjusted accordingly to reflect agreed variations.
8. INSURANCE
8.1 The Contractor shall, prior to commencing the Works and throughout the performance of the Works, take out and maintain the following insurance policies with an insurer authorised in Australia:
- Public liability insurance: not less than $[Public Liability Amount] in respect of any one occurrence or series of occurrences arising from one event;
- Workers’ compensation insurance: as required by the Workers Compensation Act in [Governing State], covering all persons employed by the Contractor in connection with the Works;
- Construction all risks (contract works) insurance: covering the full reinstatement value of the Works and materials on Site against loss or damage.
8.2 The Contractor shall produce certificates of currency for all required insurance policies upon the Principal’s request, before commencing the Works, and at any time during the performance of the Works.
9. WORK HEALTH AND SAFETY
9.1 The primary WHS duty at the Site rests with [PCBU Role]. Each party that constitutes a Person Conducting a Business or Undertaking (PCBU) at the Site has a non-delegable duty to ensure, so far as is reasonably practicable, the health and safety of workers and others at the Site, in accordance with the Work Health and Safety Act 2011 (as enacted in [Governing State]) and associated regulations.
9.2 The Contractor shall: (a) prepare and implement a Construction Phase WHS Plan before commencement; (b) ensure all workers on Site have completed relevant WHS inductions; (c) comply with all applicable Safe Work Method Statements (SWMS) for high-risk construction work; (d) immediately report any notifiable incidents to the relevant WHS regulator; and (e) maintain current records of all WHS incidents, inspections, and SWMS.
9.3 The Principal must not direct or allow any unsafe work practices on the Site and must provide access to WHS information about the Site (including hazards and asbestos registers) to the Contractor before works commence.
10. DISPUTE RESOLUTION
10.1 Security of Payment Disputes: Either Party may refer any payment dispute to adjudication at any time in accordance with the applicable Security of Payment Act in [Governing State]. The adjudicator’s determination is immediately binding and enforceable.
10.2 Other Disputes: For disputes that are not payment disputes under the Security of Payment Act, the Parties must attempt to resolve the dispute through good-faith negotiation within 10 business days of written notice. If not resolved, either Party may refer the dispute to mediation administered by the Australian Disputes Centre (ADC) or a mutually agreed mediator.
10.3 If mediation does not resolve the dispute within 30 days of the mediator’s appointment, either Party may commence legal proceedings in the courts of [Governing State].
11. TERMINATION
11.1 Either Party may terminate this Contract immediately by written notice if the other Party: (a) commits a material breach of this Contract and fails to remedy that breach within 14 days of written notice; (b) becomes insolvent, has an administrator, receiver, or liquidator appointed, or enters voluntary administration.
11.2 The Principal may terminate this Contract for convenience on 14 days’ written notice. If terminated for convenience, the Principal shall pay the Contractor for all Works properly performed to the termination date, plus reasonable demobilisation costs and loss of profit on the uncompleted Works on a fair and reasonable basis.
11.3 The Contractor may terminate this Contract if the Principal fails to pay an amount found due under the Security of Payment Act and the Principal has not remedied the failure within 10 business days of written notice.
12. GENERAL PROVISIONS
12.1 Entire Agreement: This Contract constitutes the entire agreement between the Parties regarding the Works and supersedes all prior negotiations, representations, and agreements.
12.2 Amendments: This Contract may only be amended by a written instrument signed by both Parties.
12.3 Notices: All notices must be in writing and given by hand delivery, registered post, or email (with confirmation of delivery) to the addresses specified in this Contract.
12.4 Assignment: Neither Party may assign this Contract without the prior written consent of the other Party.
12.5 Severability: If any provision is invalid or unenforceable, the remaining provisions continue in full force.
12.6 Governing Law: This Contract is governed by the laws of [Governing State], Australia, including the applicable Security of Payment Act. Each Party submits to the non-exclusive jurisdiction of the courts of [Governing State].
EXECUTED as a Contract.
PRINCIPAL
Full name: [Principal Name]
ABN: [Principal ABN]
Address: [Principal Address], [Principal Suburb], [Principal State] [Principal Postcode]
CONTRACTOR
Full name: [Contractor Name]
ABN: [Contractor ABN]
Builder’s Licence: [Contractor Licence]
Address: [Contractor Address], [Contractor Suburb], [Governing State] [Contractor Postcode]
Principal
________________
Signature
Date: ________________
Contractor
________________
Signature
Date: ________________
What Is a Construction Contract (Australia)?
A Construction Contract in Australia sets the scope of works, price, timeframe, and variation and completion procedures between the principal and the builder or contractor under the Corporations Act 2001 (Cth).
The most distinctive feature of Australian construction law is the network of Security of Payment Acts that operate in each state and territory. These statutes give contractors a statutory right to receive progress payments for construction work and related goods and services, independently of any dispute about the underlying contract. The key Acts are the Building and Construction Industry Security of Payment Act 1999 (NSW), the Building and Construction Industry Security of Payment Act 2002 (VIC), and the Building Industry Fairness (Security of Payment) Act 2017 (QLD), with equivalent legislation in every other state and territory. The Acts require construction contracts to contain compliant payment claim procedures and grant contractors the right to refer payment disputes to adjudication — a rapid, binding dispute resolution process — at any time.
Builder's licensing is mandatory across all Australian jurisdictions. In New South Wales, builders are licensed by NSW Fair Trading under the Home Building Act 1989. In Victoria, the Victorian Building Authority (VBA) administers builder registration under the Building Act 1993. In Queensland, the Queensland Building and Construction Commission (QBCC) licenses builders and administers the home warranty scheme under the Queensland Building and Construction Commission Act 1991. Construction contracts must record the contractor's current licence number, and performing unlicensed building work exposes both the contractor and the principal to significant legal consequences.
Work Health and Safety (WHS) obligations are imposed on all parties to a construction project under the Work Health and Safety Act 2011 (Cth) as adopted by each state and territory (except Victoria, which has its own Occupational Health and Safety Act 2004). Every person conducting a business or undertaking (PCBU) at a construction site has a non-delegable duty to confirm, so far as is reasonably practicable, the health and safety of workers and others at the site. These obligations cannot be contracted out of and must be addressed in the construction contract.
The legal framework governing the Construction Contract (Australia) in Australia draws on several key statutes and regulatory bodies. Under the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission (ASIC) regulates companies and financial services. Section 127 of the Corporations Act 2001 governs company execution of documents. The Australian Competition and Consumer Commission (ACCC) enforces the Competition and Consumer Act 2010 (Cth). The Australian Taxation Office (ATO) administers the Goods and Services Tax under the A New Tax System (Goods and Services Tax) Act 1999. The Federal Court of Australia and Supreme Courts of each state have jurisdiction over corporate disputes. Parties executing a Construction Contract (Australia) in Australia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Corporations Act 2001 (Cth) sets the foundational requirements.
When Do You Need a Construction Contract (Australia)?
A written Construction Contract is necessary for virtually any construction project of significance in Australia, and for residential projects it is frequently mandatory. Australian consumer protection and building laws impose strict requirements on residential construction contracts, and the absence of a written contract may render the arrangement unenforceable and expose both parties to significant risk.
Under the Home Building Act 1989 (NSW), a written contract is required for all residential building work with a contract price of more than $20,000. The contract must include specific statutory warranties (that the work will be done with due care and skill, that materials will be suitable and of good quality, and that the dwelling will be reasonably fit for occupation) and must provide certain minimum terms. Similar requirements apply in Victoria under the Domestic Building Contracts Act 1995, which requires written contracts for domestic building work costing more than $10,000. In Queensland, the QBCC Act imposes extensive requirements on domestic building contracts.
For commercial construction projects, a written contract is essential because of the Security of Payment Acts. If a construction contract does not contain compliant payment terms — particularly the reference dates for payment claims and the timeframes for payment schedules — the statutory Scheme for Construction Contracts will be implied into the contract, potentially on terms that neither party anticipated.
A construction contract is also needed when engaging subcontractors for any element of the works. Head contractors owe duties to subcontractors under the Security of Payment Acts, and must have compliant subcontract arrangements in place. The retention trust obligations introduced under the Building Industry Fairness Act 2017 (QLD) and equivalent reforms in other states require head contractors to hold subcontractor retention money in trust accounts.
From a practical risk management perspective, a written construction contract is indispensable because it establishes the agreed scope, price, and programme; provides a clear variation procedure; allocates the risk of delay between the parties through liquidated damages and extension of time mechanisms; specifies the insurance obligations of each party; and provides a clear dispute resolution pathway — including the right to adjudication — if things go wrong.
What to Include in Your Construction Contract (Australia)
A well-drafted Australian Construction Contract must include several key provisions to comply with state legislation and protect both parties.
Licensing and Registration — The contract must identify the contractor's building licence or registration number for the relevant state or territory. In NSW, this is issued by NSW Fair Trading; in VIC by the VBA; in QLD by the QBCC. Performing residential building work without a current licence is a criminal offence and may make the contract unenforceable against the homeowner.
Progress Claims and Payment Schedules — The contract must specify a reference date for progress claims that complies with the applicable Security of Payment Act. The principal must respond to each payment claim within the prescribed timeframe (10 business days in NSW and VIC; 15 business days in QLD) with either payment or a compliant payment schedule explaining any reduction. Failure to respond correctly means the full claimed amount becomes immediately due and payable as a debt, and the contractor may apply for adjudication or seek summary judgment.
Adjudication — Every construction contract should acknowledge the parties' statutory right to adjudication under the relevant Security of Payment Act. The right to adjudicate cannot be contracted out of, and any provision that purports to limit or restrict it is void. The contract should specify an authorised nominating authority (ANA) for the appointment of adjudicators.
Practical Completion and Defect Liability — The contract must clearly define practical completion and the procedure for certifying it. The defect liability period (typically 12 months for residential work; 6 to 12 months for commercial projects) begins on practical completion. The contractor's obligation to remedy notified defects during this period must be clearly stated, along with the principal's right to engage others to remedy defects if the contractor fails to do so within a reasonable time.
Liquidated Damages — A liquidated damages clause provides certainty about the financial consequences of delay. The rate must represent a genuine pre-estimate of the principal's actual losses from delay. Australian courts have consistently enforced liquidated damages clauses in construction contracts where the rate is commercially justifiable, following the approach in Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd (2002).
Retention — Retention of a percentage of each progress payment is common in Australian construction contracts. The typical rate is 5%. Half is released on practical completion and the remainder on expiry of the defect liability period. In Queensland, the Building Industry Fairness Act 2017 requires project bank accounts for head contracts above $1 million (for state government projects) and imposes retention trust obligations for certain projects.
WHS Obligations — The Work Health and Safety Act (as adopted in each state and territory) imposes non-delegable duties on all PCBUs at a construction site. The contract must address WHS responsibilities, including the preparation of a Construction Phase WHS Plan, compliance with Safe Work Method Statements for high-risk work, and incident notification obligations. The forms-legal.com Construction Contract (Australia) template covers the mandatory elements under Corporations Act 2001 (Cth).
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Construction Contract (Australia) (Australia) [Legal document template]. Forms Legal. https://forms-legal.com/australia/business/construction/construction-contract-australia
"Construction Contract (Australia) (Australia)." Forms Legal, 2026, https://forms-legal.com/australia/business/construction/construction-contract-australia.
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title = {Construction Contract (Australia) (Australia)},
year = {2026},
howpublished = {\url{https://forms-legal.com/australia/business/construction/construction-contract-australia}},
note = {Free legal document template. Based on Corporations Act 2001 (Cth)}
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Frequently Asked Questions
Each Australian state and territory has enacted a Security of Payment Act that gives contractors and subcontractors statutory rights to receive progress payments promptly for construction work and related goods and services. The key Acts are: the Building and Construction Industry Security of Payment Act 1999 (NSW), the Building and Construction Industry Security of Payment Act 2002 (VIC), the Building Industry Fairness (Security of Payment) Act 2017 (QLD), the Building and Construction Industry (Security of Payment) Act 2009 (SA), the Construction Contracts Act 2004 (WA), the Building and Construction Industry Security of Payment Act 2009 (TAS), the Building and Construction Industry (Security of Payment) Act 2009 (ACT), and the Construction Contracts (Security of Payments) Act 2004 (NT). These Acts give contractors the right to make payment claims on reference dates, require the principal to respond with a payment schedule within a prescribed timeframe, and allow disputes to be referred to adjudication at any time. A construction contract that does not include compliant payment terms will have the statutory scheme implied into it.
A builder's licence is mandatory for residential and commercial construction work in all Australian states and territories, though the licensing body and categories vary. In New South Wales, builders are licensed by NSW Fair Trading under the Home Building Act 1989. In Victoria, builders are registered by the Victorian Building Authority (VBA) under the Building Act 1993. In Queensland, licensing is managed by the Queensland Building and Construction Commission (QBCC) under the Queensland Building and Construction Commission Act 1991. In Western Australia, the Building Services Board administers builder registration. In South Australia, licensing is provided by Consumer and Business Services under the Building Work Contractors Act 1995. Performing unlicensed building work is a criminal offence, and an unlicensed contractor cannot enforce a construction contract for residential work in many states. A construction contract should always record the contractor's licence number for the relevant state.
Practical completion is the point at which the construction works are substantially complete and fit for their intended purpose, even though minor outstanding items (defects or omissions) remain. It is a legal concept rather than a contractual term, and its precise meaning can be contentious in Australian courts. In Multiplex Constructions Pty Ltd v Abgarus Pty Ltd (1992) 33 NSWLR 504, the NSW Supreme Court held that practical completion does not require absolute perfection — it means the work has reached a state where the owner can have beneficial use and possession. Practical completion is significant because it triggers a number of legal and contractual consequences: the defect liability period commences; retention is partially released; liquidated damages for delay stop accruing (unless the completion date has already passed); and home warranty insurance obligations may be activated. The contract should specify a clear procedure for the contractor to notify practical completion and for the principal to issue or withhold a practical completion certificate.
Home warranty insurance (also called residential building indemnity insurance or domestic building insurance) protects homeowners against loss arising from a builder's failure to complete residential building work or to remedy defective work — typically where the builder has died, disappeared, or become insolvent. The requirement and thresholds vary by state: in New South Wales, the Home Building Act 1989 requires home warranty insurance for residential work with a contract price of more than $20,000; in Victoria, the Domestic Building Contracts Act 1995 requires domestic building insurance for contracts of more than $16,000; in Queensland, the Home Warranty Scheme is administered by the QBCC and applies to licensed builders. A builder must give the homeowner a certificate of insurance before accepting any deposit or commencing work. Failure to obtain required insurance can render the contract unenforceable and expose the builder to criminal penalties.
Adjudication is a rapid, informal statutory dispute resolution process available to any party to a construction contract in Australia. A contractor who has made a valid payment claim and received a payment schedule for less than the claimed amount (or no payment schedule at all) may apply for adjudication. The application must be lodged with an authorised nominating authority (ANA) within the timeframe prescribed by the relevant Act — typically within 10 to 20 business days of the due date for payment. An adjudicator must be appointed and must make a determination within strict timeframes, typically 10 business days (NSW) or 10 business days extendable (QLD). The adjudicator determines the amount payable based on the payment claim, the payment schedule, the construction contract, and submissions by the parties. The determination is a debt immediately due and payable, and can be enforced as a judgment debt. Adjudication is a pay-now-argue-later mechanism — it does not finally determine the parties' rights, which can be re-litigated in arbitration or court proceedings.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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