How to draw up an airtight contractor agreement in Australia

As the saying goes, the devil is in the details. If you’re about to hire a contractor, it should be your prerogative to draw up an airtight contractor agreement according to Australian standards that protect you, the property at hand, and the contractor. To help ensure that all of your i's are dotted and t's are crossed, we’ll walk you through the steps (each of which are equally important) to creating a contractor agreement that’s both legally compliant and serves to mitigate against any unwanted ramifications.

Step 1: Identify and name the two parties entering into the agreement

An agreement must name both parties by their legally-given monikers. If the contract is between an individual and a business, both the business’s name and the relevant employee’s name should be stated. Remember to indicate the type of business you’re entering into a contract with. This may be a Sole Trader, Company, Trust or Partnership. Contact information of both parties must be included too.

Step 2: Detail the scope of work or services to be rendered

Compile a detailed description of the project at hand. Make sure to include all minutiae here – however superfluous these details may seem. Information such as what type of materials should be used, quality standards expected, quality of workmanship, health and safety requirements and specific instructions or preferences need to be stipulated. Also, include the consequences should these requirements not be met.

Step 3: Define the time constraints

Include the time and date that the project will be completed on, as well as the daily working hours during which the project will be worked on. For example, “Between the hours of………… from ____ to ____.” This protects the contractor from working an unreasonable number of hours, and also protects you as it ensures that all work is completed on time. Include a stipulation stating the rate to be paid for work rendered out of the agreed working hours.

Step 4: Identify the location where work will take place

Stipulate the exact address of the premises where work will be executed, as well as the details of the site. For example: “Work will take place at ______________ , specifically, the First Floor bathroom.”

Step 5: Identify the responsibilities and rights of both parties

To avoid a case of “He said, she said”, explicitly state and explain the roles and responsibilities of both the contractor and yourself. For example, a contractor may not be covering his worker's compensation insurance and liability insurance which could form part of the legal requirements in your region.

Step 6: Stipulate terms and conditions of payment

Detail the way in which the contractor will be reimbursed for their services.  For example, the amount may be paid as a lump sum on completion of the project, or it might be paid via weekly, fortnightly or monthly instalments. Also, include terms and conditions for late payment, as well as for the early and late termination of work.  

Step 7: Stipulate the date of commencement and date of termination of services

Include the dates during which the contractor agreement will come into effect, as well as a final date of completion for the project.

Step 8: State the terms of renewal

Indicate whether the contractor agreement will be automatically renewed after a certain period of time, or whether a renewal requires a brand new contract.

Step 9: Include a dispute resolution clause

Detail the prescribed course of action should a dispute between the two parties arise. Make sure to appoint a third party to handle any dispute or conflict that cannot be resolved between the two parties.

Step 10: Confirmation of health and safety compliance

Include a clause that states that the contractor confirms that his employees, machinery and workmanship is conducted in compliance with local and regional health and safety regulations.

Step 11: Sign your agreement

A contractor agreement in Australia is only legally binding if signed by both parties. The onus is on you to ensure that the agreement has been signed by a person who has the lawful authority to do so.

While these guidelines will assist you in compiling a contractor agreement according to Australian standards, bear in mind that a contract with the wrong maintenance agreement could spell disaster for your project.

Whether you're already working with a painting and maintenance contractor, or you're in the process of sourcing providers, our essential guide to WHS contractor management will help you meet Australian industry regulations and ensure site safety. Download it today.