What are Special Conditions?
What is the importance of Special Conditions?
It is best for Special Conditions to be incorporated into your contract, to protect you against potentially unfair terms. Standard form construction contracts issued by building and construction industry associations are generally written for the benefit and protection of their builder-members, hence, they tend to be more favourable to themselves than to the homeowner.
You may include special conditions in your contract as a precautionary measure against one-sided stipulations.
What is an example of a construction contract Special Condition?
Examples of Special Conditions are:
- Adding grounds favourable to the owner
- Amending definitions to be more favourable to the owner
- Removing parts of clauses that are detrimental to the owner
How do you write a Special Condition in a building contract?
1. When drafting special conditions, check if there are clauses that favour one party over the other. Important points to look into include:
- whether the clause imposes an obligation, warranty, acknowledgement on a party
- who must comply with the obligation
- the time and date by which the obligation must be complied with
- timelines and penalties
- how the obligation may be satisfied
2. Look into whether there are clauses that give a party a right to terminate the contract.
Also check the circumstances in which the right to terminate may be exercised, the timelines, and the formal requirements in exercising the right to terminate. If the clause appears to be one-sided, you may draft amendments as special conditions, to even the playing field.
3. Use clear, simple language to avoid ambiguity and confusion.
4. If you are a builder or contractor, creating a database of precedents will:
If you are a builder or contractor, creating a database of precedents will:
- scale back the time it takes to draft special conditions every single time
- provide correctly prepared special conditions
- prevent potential disputes
- ensure a smooth execution of the contract
5. Transfer the risk
It is always a good idea to have a specialist construction lawyer go over and review your contract, so they may properly advise you on how to negotiate the contract and make sure that special conditions are in place to minimise your risks.
How to use Special Conditions in construction contracts
HIA Contract
The HIA Contract typically has Special Conditions added by builders, so make sure you really go over them. For example, a Special Condition that says that “The builder reserves the right to alter the specifications and/or inclusions at any time to a product of similar quality,” is something you may need to negotiate or amend, as it seems to give the builder absolute power to just change anything they want on a whim.
Generally, a Master Builders Contract is skewed more towards benefitting the builder or contractor. Typically, it does not allocate the risk to the party who is best placed to manage it. It usually puts the builder in a much more favourable position than the homeowner. Hence, adding Special Conditions would offset the bias towards the builder, and tilt the scales in favour of the owner.
The termination clause of the Fair Trading contract is favourable to builders, hence, you may include, as part of Special Conditions, additional grounds for termination that are favourable to the homeowner.
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