Resolve Business Disputes and Select and Prepare a Construction Contract

1. Resolve Business Disputes and Select and Prepare a Construction Contract Lesson One Introduction Cert IV - M. S. Martin January 2012

2. Todays Lesson • Course Overview • Where to obtain information on resolution of disputes • Establish the procedure • Overview of contracts • Types rules and principles of contracts • Begin some activities Cert IV - M. S. Martin January 2012

3. Cert IV - M. S. Martin January 2012

4. Assessment Documents and Text • Look at the “elements” (what you will be learning) • You will be assessed by simulated or project based assessments • Disputes – 1 x research based written assignment • Disputes – 1 x combined end of semester written test • Contracts – 1 x contact based written assignment • Contracts – 1 x combined end of semester Cert IV - M. S. Martin January 2012

5. Lesson 1 - Disputes Cert IV - M. S. Martin January 2012

6. Dispute Resolution Procedure OFT Step 1: Talk about it Step 2: Client letter Step 3: Contact Fair Trading 3. If the client and the contractor cannot resolve the dispute themselves, the next step is to contact Fair Trading for dispute resolution assistance 1. The first step to resolving a dispute with a builder or tradesperson is through discussion of concerns with both parties, as soon as anyone becomes aware of a problem. 2. Following the conversation, the client is advised by OFT to write down the details of the discussion in a letter and be sure to include an outline of what was agreed to be done and by when, and send it to the contractor Step 8: Claim on home warranty insurance Step 4: Notify the insurer 8. Home warranty insurance provides a set period of cover for loss caused by defective or incomplete work in the event of the death, disappearance or insolvency of the contractor 4. In order for the client to safeguard their position under the home warranty insurance policy, if they become aware of defective or incomplete work, they must immediately notify the insurer Step 7: Home Building Advocacy Service Step 5: OFT Building inspections 7. Macquarie Legal Centre – fair trading funded lawyers for the client (home owner) 5. Fair Trading Building Inspectors do not undertake a general inspection of the work. They visit the site to look at the specific items that are the subject of the dispute. Step 6: Rectification Order 6. if issued, it will list the work that is to be rectified/completed and the conditions that both parties are to meet in complying with the Order Cert IV - M. S. Martin January 2012

7. Dispute Resolution • In these notes, there is a copy of the Office of fair trading resolution procedure's • In the legal competencies text, there are some extended notes on the subject • Over the coming weeks we will look at both in some detail, as well as look at their link with contract conditions and any legal ramifications Cert IV - M. S. Martin January 2012

8. Lesson 1 - Contracts Chapter 1 – Contract Law Cert IV - M. S. Martin January 2012

9. By Definition • A contract is an agreement between ‘parties’ which is legally recognised or legally enforceable by the court. Do not assume all contracts will be legally enforceable in court. • A ‘party’ or ‘parties’ is a person or persons, business, or organisation that an agreement can be made with. • A contract can be verbal but the great weakness of verbal contracts is that it becomes difficult to prove what was said and agreed to in any dispute. • Already we have a link with dispute resolution ? Cert IV - M. S. Martin January 2012

10. A Building Contract • A building contract is where one person, the builder, agrees to supply labour and materials for the construction of a building (or other building works) for the benefit of the client who agrees to pay for such works. • Contracts are vital to the construction process • A builder’s only obligation to build is created by a contract • More often than not, the contract is the builder’s only record of right to payment • Contracts direct and rule every move • Contracts involving large sums of money like building contracts should always be in writing Cert IV - M. S. Martin January 2012

11. Contracts and Disputes • By writing a contract and each party knowing its rights and responsibilities • if there is a dispute, it may be resolved without going to court; or if it does go to court it will be sorted out quicker and therefore more cheaply • A contract involves an agreement which gives rise to rights and obligations that are enforceable by law. • A person who breaks a contract promise may be sued • may have to pay the other person compensation for loses if sued, or comply with some other court order. Cert IV - M. S. Martin January 2012

12. Rules of Law • Much of the rules of contract law are based on the principles of fairness or ‘equity’ and also on principles from the ‘common law’ • Common law is the law built up through the decisions of judges over many years • The common law side of things we look at in the Legal competency prior to this class Cert IV - M. S. Martin January 2012

13. Legal Principles and Builders • Understanding contracts and how to use them requires a more detailed look at some legal principles, therefore: • builders should never attempt to create their own contract templates • Contracts is an area for specialists like lawyers • This subject will only give you a simplified understanding of contracts, and contract law • You wouldn’t ask a lawyer to build you a house would you? So why would expect a builder to write his own contract template. Cert IV - M. S. Martin January 2012

14. Contract Templates • There are a number of standard contracts available which suit various types of building job that you should use these • You have a copy of two of these OFT contracts at the back of your text notes. • You can also get contracts from organisations like the HIA • You should also be aware now by the changes in legislation that early this year there will be another provision for jobs under $5000.00 • The specifics of the contracts themselves, we will look at, at a later date. Cert IV - M. S. Martin January 2012

15. Cert IV - M. S. Martin January 2012

16. References • Competency text for ‘Resolve Business Disputes and Select and Prepare a Construction Contract’ • Websites as listed below:   http://www.business.gov.au/Howtoguides/Thinkingofstartingabusiness/Whatplanningtoolscanhelpme/Pages/Businessplanguidesandtemplates.aspx http://www.ato.gov.au/businesses/ http://www.fairtrading.nsw.gov.au/Tradespeople.html http://www.google.com.au/search?tbm=isch&hl=en&source=hp&biw=1600&bih=751&q=building+contracts+NSW&gbv=2&oq=building+contracts+NSW&aq=f&aqi=g-S1g-mS5&aql=&gs_sm=12&gs_upl=3518l20306l0l22899l37l37l7l2l2l0l268l5864l3.2.23l28l0 Cert IV - M. S. Martin January 2012