Unfair Contract Terms

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Victoria has laws to prevent unfair terms in consumer contracts, including contracts to build a house, and renovate, extend, or repair an existing house.

Make sure your contract does not include these illegal terms:
• A clause requiring any dispute to go to arbitration (a compulsory arbitration clause)
• A caveat (a warning of some right or interest on the land title) on the building site land
• Any statement that restricts or denies your rights to implied warranties (see building warranties and insurance)
• A cost escalation or ‘rise and fall’ clause unless the contract price exceeds $500,000. The onus is on the builder to calculate into the contract price any likely rise in costs caused by inflation, wage increases and the like. If the builder wants to include a cost escalation clause, the Director of Consumer Affairs Victoria must approve it. The director has not yet approved any cost escalation clauses
• An agreement to pay the builder by a cost-plus method, if your contract is less than $500,000. An example of a cost-plus method is when a builder charges by the hour and you do not have a fixed price for your contract. You can use a cost-plus contract if you are renovating an existing house, but only in very limited circumstances. Get legal advice before you sign any cost-plus contract
• The expression ‘practical completion’. If you find it in your contract, delete it and insert ‘complete in accordance with the plans and specifications’