Construction Law glossary
Construction law in Australia combines contract law, security of payment statutes, and industry-specific regulation. Each state has its own Security of Payment Act but with similar core concepts. This glossary covers 40 commonly used terms.
This is a glossary of 40 key terms used in Australian construction law practice. Each entry has a plain-English definition and, where relevant, a citation to the governing statute or standard form.
Definitions
Adjudication
The rapid statutory dispute resolution process under the Security of Payment Acts, producing a binding but reviewable determination of progress claim disputes.
Adjudicator
An independent person appointed by an authorised nominating authority to determine a payment claim dispute under the Security of Payment Acts.
Bank guarantee
A written undertaking by a bank to pay a specified amount on demand, commonly used as performance security in construction contracts.
Builder's warranty insurance
Statutory insurance (also called home warranty insurance) providing cover for homeowners where the builder dies, disappears, or becomes insolvent.
Certificate of occupancy
A certificate issued confirming that a completed building may be lawfully occupied, based on compliance with approved plans and the Building Code.
Concurrent delay
A period during which two or more independent causes of delay occur, one the contractor's responsibility and one the principal's — raising apportionment questions for EOT claims.
Construction contract
A contract under which one party undertakes to carry out construction work, or supply related goods and services, for another party.
Defects liability period
The period after practical completion during which the contractor is obliged to rectify defects notified by the principal.
Delay damages
Damages recoverable by the contractor for delays caused by the principal, calculated by reference to prolongation costs incurred.
Design and construct (D&C)
A contracting model under which the contractor takes responsibility for both the design and construction of the works.
Dispute board
A standing panel of independent experts appointed at the outset of a project to resolve disputes as they arise during the works.
Early contractor involvement (ECI)
A procurement model in which the contractor is engaged early to collaborate on design and constructability before committing to a fixed price.
Extension of time (EOT)
An adjustment to the date for practical completion granted to the contractor in respect of delays for which the principal bears the risk.
Fitness for purpose
A contractual warranty (often implied in consumer building contracts) that the completed works will be fit for their intended purpose.
Force majeure
A contractual clause excusing a party from performance where a specified unforeseen event beyond their control prevents performance.
Head contract
The contract between the principal (owner) and the main contractor for the construction of the works.
Home Building Act
The NSW statute regulating residential building work, providing implied statutory warranties and requiring home warranty insurance.
Independent certifier
A third-party certifier appointed under a construction contract to assess claims for payment, practical completion, and variations impartially.
Insolvency clause
A contract clause allowing the principal to terminate or take further action on the insolvency of the contractor.
Latent condition
A physical condition of the site that could not reasonably have been foreseen at the time of tendering, potentially entitling the contractor to an EOT or variation.
Latent defect
A defect in the works that is not apparent on reasonable inspection at practical completion but emerges later.
Liquidated damages
A pre-agreed amount payable by the contractor for each day of delay beyond the date for practical completion, representing a genuine pre-estimate of loss.
NCC
The National Construction Code — the uniform set of technical provisions for the design and construction of buildings in Australia.
No damages for delay
A contract clause (generally invalid in AU under SOP regimes in some states) purporting to exclude delay damages for contractor delays not the contractor's fault.
Novation
A tripartite agreement substituting one contracting party for another, commonly used to transfer a designer's consultancy from the principal to the D&C contractor.
Payment claim
A written claim under the Security of Payment Acts for payment for construction work or related goods and services, triggering statutory timeframes for response.
Payment schedule
A written response to a payment claim indicating the amount the respondent proposes to pay and the reasons for any amount withheld.
Practical completion
The stage at which the works are complete except for minor defects and omissions, and are reasonably capable of being used for their intended purpose.
Principal
The party engaging the contractor to carry out the works — typically the owner or developer.
Progress claim
A claim by the contractor for interim payment for work performed up to a specified date, typically made monthly under the construction contract.
Prolongation costs
Time-related costs incurred by the contractor as a result of delay, such as site overheads, supervision, and plant hire.
Retention
A percentage of each progress payment withheld by the principal as security for performance, released on practical completion and end of the defects liability period.
Scope of work
The description of the construction work the contractor is obliged to carry out under the contract.
Security of payment
A state legislative regime providing contractors with a rapid statutory entitlement to progress payments, supported by adjudication.
Site instruction
A written instruction issued by the principal or superintendent directing the contractor to carry out specified work, often triggering a variation.
Statutory warranty
An implied warranty under legislation such as the Home Building Act requiring residential building work to be performed in a proper and workmanlike manner.
Subcontract
A contract between the main contractor and a subcontractor to perform part of the works under the head contract.
Superintendent
The person appointed under a construction contract to administer the contract, certify payments, and assess claims between the principal and contractor.
Time bar
A contractual requirement that a claim (such as an EOT or variation) must be notified within a specified time, failing which the claim is barred.
Variation
A change to the scope of work directed by the principal or agreed by the parties, typically resulting in an adjustment to the contract price and time.
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