Freedom of Contract in QLD Construction: The Unwritten Terms Set by Law

Q: My contract says all disputes must go to private arbitration. Can I still go to QCAT?

For domestic building disputes, the jurisdiction of QCAT cannot be excluded by a contract. While your contract might specify a preferred dispute resolution method like arbitration, it cannot prevent you from exercising your statutory right to bring the matter before QCAT. The tribunal will likely have jurisdiction regardless of the clause in your contract.

Q: As a homeowner, can I waive my right to the statutory cooling-off period for a domestic building contract?

No, you cannot. The Queensland Building and Construction Commission Act 1991 (specifically, Schedule 1B, Section 35) provides a homeowner with a cooling-off period of five business days after receiving a signed copy of the contract. Any clause in the contract that attempts to remove or shorten this period is void. This is another example of a non-negotiable consumer protection.

John Merlo
Jan 20
15 min read

In the world of business, the principle of 'freedom of contract' is often seen as paramount—the idea that two parties can negotiate and agree to any terms they see fit, binding themselves to that agreement.

However, in Queensland's highly regulated building and construction industry, this freedom is a qualified concept, not an absolute right. A complex web of legislation exists to protect consumers, ensure industry standards, and secure payment rights, effectively inserting non-negotiable terms into every contract, whether they are written down or not.

The contract you sign is only part of the story; the law is a silent but powerful party to every agreement.

Key Takeaways

Statute is Supreme: In Queensland, legislation like the QBCC Act and BIF Act will always override conflicting clauses in a construction contract.
Payment Rights are Protected: The Building Industry Fairness (Security of Payment) Act provides powerful, non-negotiable rights for contractors to secure progress payments, regardless of contract terms.
Implied Warranties are Non-Negotiable: All domestic building work carries statutory warranties for quality and fitness for purpose that cannot be signed away or limited by a contract.
Legal Review is Essential: Assuming your written contract is the final word is a major risk. Professional legal advice is critical to understand your true rights and obligations under the law.

The Myth of Absolute Freedom of Contract in Construction

The foundational legal principle of 'freedom of contract' suggests that parties are free to negotiate and agree to their own terms. While this holds true in many commercial contexts, the Queensland building and construction industry operates under significant statutory limitations.

This isn't an oversight; it's a deliberate framework designed to address historical industry challenges and balance the power between homeowners, contractors, and developers. This legislative oversight means that no matter what is written in a signed agreement, certain rights and obligations are imposed by law.

Why Your Signed Agreement Isn't the Whole Story

Statutory intervention in construction law is a necessary measure to correct inherent power imbalances and protect vulnerable parties. Historically, the industry has faced issues with builder insolvency, disputes over poor workmanship, and the use of unfair contract terms that leave consumers or subcontractors with little recourse.

To combat this, Queensland legislation was created to establish a baseline of fairness and quality. The primary regulator overseeing this framework is the Queensland Building and Construction Commission (QBCC), which enforces the rules that govern the industry. These laws ensure that fundamental protections, such as the right to be paid on time and the right to have work performed to a competent standard, are not simply bargaining chips that can be negotiated away.

The Hierarchy of Laws in a Building Dispute

When a conflict arises in a construction project, the parties will naturally look to their written contract first to understand their rights and obligations. However, this is only the initial step in any legal analysis. A lawyer will immediately cross-reference the contract's clauses against the overriding legislation that governs the industry.

The order of precedence is clear: statute law trumps contract law. If a clause in a building contract is found to be inconsistent with a provision in an Act of Parliament, the statute will prevail. Key pieces of legislation that frequently override contractual terms include the Queensland Building and Construction Commission Act 1991 (QBCC Act) and the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act). If a contract term attempts to limit a right granted by these Acts, or impose an obligation that the Acts prohibit, that clause will be rendered void and unenforceable by a court or tribunal.

Understanding the QBCC Act's Dominant Role

The QBCC Act is the cornerstone of regulation in the Queensland construction industry. It is this Act that establishes the QBCC and grants it broad powers to regulate the sector, from setting licensing requirements for builders to enforcing minimum standards for all building work.

Compliance with the QBCC Act is not optional; its requirements form a non-negotiable baseline for all construction contracts, governing a workforce of over 122,000 active licensees across Queensland. This legislation is a prime example of how statutory limitations directly impact and override the supposed freedom of contract.

Licensing: The First Statutory Hurdle

One of the most fundamental statutory limitations imposed by the QBCC Act is the requirement for a builder or tradesperson to hold an appropriate QBCC licence for the work they perform. This is not merely an administrative formality. Performing building work without the correct licence class is a serious offence and has profound contractual consequences.

The Act can render a contract unenforceable by the unlicensed builder, meaning they may be unable to recover payment for the work they have done. This directly impacts the validity of the contract, irrespective of what the parties willingly agreed to, demonstrating that the law imposes preconditions on the very ability to enter into a binding construction agreement.

Setting Minimum Standards for Workmanship

The QBCC Act and its associated regulations, including the Queensland Development Code, impose minimum standards of construction that apply to all building projects. These standards exist to protect consumers and ensure the safety, health, and amenity of buildings.

Even if a contract were to specify a lower standard of work—perhaps in an attempt to cut costs—the statutory standards would prevail. A builder is legally obligated to meet these minimums, and a homeowner cannot legally agree to waive them. A clause that purports to accept a standard of work below the legal requirement would be void. The builder would remain liable for any defects arising from the failure to meet the statutory standard, highlighting how the law sets an unassailable floor for quality.

Warning: You Cannot Agree to Sub-Standard Work

The QBCC Act and its associated regulations set a mandatory, non-negotiable floor for the quality of all building work in Queensland. Any clause in a contract that attempts to define a standard of work below this legal minimum is void. Homeowners cannot waive their right to compliant work, and builders cannot use a contract to escape their obligation to meet these standards. Attempting to do so can lead to disciplinary action from the QBCC. For advice on these matters, consult a specialist QBCC lawyer.

How the BIF Act Guarantees Your Right to Payment

Dedicated entirely to ensuring cash flows down the contractual chain, the BIF Act is a critical piece of legislation that significantly restricts contractual freedom. It was specifically designed to provide a powerful and rapid mechanism for contractors and subcontractors to claim and recover progress payments.

The Act fundamentally alters the contractual balance of power regarding payments, creating a statutory system for securing payment that operates in parallel with, and often in spite of, the terms written into a contract.

The Power of a Payment Claim

Under the BIF Act, the process begins when a contractor or subcontractor issues a 'payment claim' for work carried out. This is not just a standard invoice; it is a statutory document that triggers strict and unforgiving deadlines for a response. Upon receiving a payment claim, the recipient (such as a principal or head contractor) has a very limited time to either pay the full amount claimed or issue a formal 'payment schedule'. This schedule must detail precisely why any amount is being withheld, with clear reasons for each deduction.

The consequences of failing to respond correctly and on time are severe: the recipient can become legally liable for the entire claimed amount, regardless of any genuine dispute over the value or quality of the work. This mechanism ensures that disputes about payment do not indefinitely starve downstream contractors of essential cash flow.

Can Your Contract Change BIF Act Timelines?

A common and costly mistake is assuming that the payment terms negotiated in a contract can override the BIF Act. The clear warning is that parties cannot 'contract out' of the BIF Act's core provisions. The Act is designed to be paramount and explicitly voids any contractual term that attempts to alter, remove, or limit the rights it provides.

For example, even if a contract specifies a 60-day payment term, a subcontractor can still issue a payment claim under the BIF Act and rely on its much shorter statutory timeframes to demand payment. If the payment is not made or a valid payment schedule is not provided, the claimant can proceed to have the matter decided quickly.

The BIF Act provides a rapid adjudication process specifically for this purpose, offering a faster and more cost-effective path to resolution than traditional court proceedings.

The BIF Act is arguably the most significant restriction on freedom of contract in the industry. It creates a parallel set of rules for payments that operates alongside the contract. Many disputes arise when a principal or head contractor tries to rely solely on their contract's payment terms, not realising the BIF Act gives the claimant a much faster and more powerful path to recovery. Understanding this dual system is critical.

Statutory Warranties: The Protections You Can't Sign Away

In Queensland, the law automatically implies a set of powerful warranties into all domestic building contracts. These statutory warranties are a critical form of consumer protection, ensuring a minimum standard of quality and durability for residential construction work. They exist automatically, by force of law, regardless of whether they are mentioned in the written agreement. This means that even if a contract is silent on the topic of warranties or attempts to limit them, these protections are still fully enforceable.

What Warranties Are Automatically Included?

The QBCC Act implies several key warranties into every contract for domestic building work. These are non-negotiable promises from the contractor to the homeowner.

The most important warranties include that:

The work will be carried out with reasonable care and skill and in a proper and workmanlike manner.
All materials supplied will be of good quality and fit for the purpose for which they are used.
The work will be carried out in accordance with all relevant laws and legal requirements.
The home will be suitable for occupation when completed.

These warranties cover both structural and non-structural defects, but different timeframes apply. Under Schedule 1B of the QBCC Act, legal proceedings for breach of statutory warranty must be commenced within 6 years for structural defects, or 1 year for non-structural defects (with a further 6-month extension if the breach becomes apparent in the last 6 months of this period). This statutory protection period often extends well beyond the standard contractual defects liability period. Note that the Queensland Home Warranty Scheme insurance coverage periods differ from these statutory warranty periods—insurance covers structural defects for 6 years and 6 months, and non-structural defects for 12 months from completion.

The Queensland Home Warranty Scheme

The power of these statutory warranties is backed by the Queensland Home Warranty Scheme, a compulsory insurance that licensed contractors must take out for most residential construction work over a certain value. This scheme provides a safety net for homeowners if the builder dies, disappears, becomes insolvent, or fails to rectify defective work as directed by the QBCC.

Illustrative Example

Scenario: A homeowner signs a contract for a new deck. The contract includes a clause stating the builder's liability for defects is limited to only 3 months. Nine months after completion, the deck begins to show signs of serious structural failure due to poor workmanship.

Outcome: Despite the contract's 3-month limit, the homeowner is still protected. The statutory warranty period for structural defects under the QBCC Act is 6 years (extendable by 6 months if the breach becomes apparent in the last 6 months), and this legal protection completely overrides the invalid clause in the contract. The homeowner can lodge a complaint with the QBCC within 3 months of becoming aware of the structural defect, and may commence legal proceedings within the 6-year statutory warranty period. The QBCC can direct the builder to rectify the work or, if necessary, a claim may be made under the Queensland Home Warranty Scheme, which provides insurance coverage for 6 years and 6 months for structural defects.

When Contracts and Legislation Collide

The practical consequences of a conflict between a construction contract and Queensland law become most apparent when a dispute arises. What happens when one party tries to enforce a contractual clause that is challenged as being inconsistent with legislation? This section moves from the theoretical to the applied, explaining how these conflicts are identified and resolved, and the crucial role tribunals and courts play in upholding the law over private agreements.

Identifying Unfair or Void Contract Terms

Many disputes hinge on contract clauses that are, knowingly or unknowingly, rendered void by statute. It is vital for both homeowners and contractors to recognise these potential red flags.

Common examples of terms that are often unenforceable include:

Waiving Statutory Warranties: Any clause that attempts to limit, modify, or exclude the implied warranties under the QBCC Act is void. A homeowner cannot sign away their right to have work done to a proper standard.
Contradicting BIF Act Mechanisms: Terms that set payment deadlines longer than those allowed by the BIF Act, or that try to prevent a contractor from making a payment claim, are invalid.
Improperly Assigning Liability: Clauses that unfairly shift all risk onto one party, particularly in a way that contradicts legal principles of negligence or liability, may be deemed void.
Restricting Access to Dispute Resolution: A contract cannot prevent a party from accessing statutory dispute resolution pathways, such as lodging a complaint with the QBCC or filing an application with a tribunal.

Recognising these terms is the first step in understanding your true legal position in a contractual dispute.

The Role of QCAT in Resolving Disputes

For domestic building disputes in Queensland, the resolution pathway often begins with the QBCC, which provides an initial dispute resolution process. However, for more complex matters or where a party is unsatisfied with the QBCC's direction, the case may be escalated to the Queensland Civil and Administrative Tribunal (QCAT).

QCAT is an independent tribunal that hears and decides a wide range of matters, including building disputes. In these proceedings, QCAT's role in resolving building disputes is to apply the relevant laws to the facts of the case and make a binding decision. When a contract term is in direct conflict with a provision of the QBCC Act, the BIF Act, or another relevant statute, QCAT will consistently uphold the statutory provision. The tribunal will treat the conflicting contractual term as if it never existed.

Navigating this process can be complex, and the assistance of a construction dispute lawyer can be invaluable in preparing and presenting your case effectively.

Navigating the Specifics of Domestic Building Contracts

The Queensland Building and Construction Commission Act 1991 (QBCC Act) provides a comprehensive regulatory framework for Queensland's building industry. Within this same Act, Schedule 1B imposes strict requirements specifically on contracts for residential construction work through its domestic building contract provisions.

These provisions mandate that all domestic building work valued over $3,300 must be documented in a written contract that includes essential elements such as the contractor's licence details, detailed scope of work, contract price, completion dates, and statutory warranties, ensuring consumer protection and industry standards are maintained.

These provisions demonstrate how limitations on contractual freedom become even more pronounced in the consumer space, where the law provides extra protection for homeowners. Schedule 1B governs everything from the formal requirements of the contract itself to the rights of parties to terminate the agreement.

Formal Requirements for a Valid Contract

The QBCC Act dictates that a domestic building contract must meet several formal requirements to be valid. This illustrates that even the formation of the contract is heavily regulated and not left to the discretion of the parties.

Key mandatory requirements include:

The contract must be in writing, dated, and signed by both the builder and the homeowner.
It must contain a full and detailed description of the work to be carried out, including plans and specifications.
It must clearly state the contract price or the method for calculating it (e.g., for a cost-plus contract).
The builder's name and QBCC licence number must be prominently displayed.
It must include specific warnings and information for the homeowner.

Failure to comply with these formal requirements can have serious consequences for the builder, potentially limiting their ability to enforce the contract.

Understanding Your Right to Terminate

The right to terminate a contract is one of the most contentious areas in construction law. While a contract will typically outline specific grounds for termination, statutory rights can provide an alternative basis for ending the agreement that may not exist in the contract itself.

For example, a significant breach of a statutory warranty—such as the warranty that work will be done with reasonable care and skill—can give a homeowner legal grounds to terminate the contract.

However, this is a complex area of law. Understanding the precise legal grounds for terminating construction contracts is crucial. Wrongful termination (terminating without sufficient legal cause) can have severe financial consequences, potentially exposing the terminating party to a claim for damages from the other side.

Recent Legislative Changes Impacting Your Contracts

The legal landscape of the construction industry is not static. Legislation is regularly reviewed and amended to respond to industry trends, challenges, and technological advancements. Staying informed about these changes is crucial for ensuring your contracts and business practices remain compliant.

The 2024 Pause on Project Trust Accounts

A significant recent development concerns the Project Trust Account (PTA) regime under Queensland's Building Industry Fairness (Security of Payment) Act 2017. The PTA framework was designed to protect payments for subcontractors by requiring head contractors to hold funds in a dedicated trust account for certain projects. The plan was to progressively expand this regime to cover more projects.

However, effective 31 January 2025, the Queensland Government paused the planned expansion of the PTA regime through a Proclamation, pending a comprehensive review by the Queensland Productivity Commission. This means that the current financial thresholds for requiring a trust account (projects valued at $10 million and above for private sector work) will remain in place while the government evaluates the framework's effectiveness and impact on industry cash flow. Contractors and principals should monitor official announcements from the Queensland Government regarding the outcome of this review and any future rollout plans.

This pause directly affects financial administration and contractual obligations on applicable projects, providing temporary relief for smaller contractors while the regulatory framework is reassessed.

What the 2025 QBCC Amendment Bill Means for You

The Queensland Building and Construction Commission and Other Legislation Amendment Act 2025, which was passed by Parliament on 20 November 2025, introduces several modernizing changes that are now being implemented across the industry. A key procedural change is the move away from mandatory physical, hard-copy licences.

This transition supports the QBCC's broader shift towards digital service delivery, allowing for more efficient licence management and verification. The Act also streamlines safety notification processes related to gas and electrical work.

While these changes are primarily administrative, they will alter day-to-day operational procedures and reporting obligations, which may need to be reflected in company processes and subcontractor agreements. These modernizing efforts aim to reduce red tape but do not alter the fundamental statutory limitations on contracts discussed previously.

For a detailed breakdown of how these changes affect your specific circumstances, it is always best to consult with an expert building and construction lawyer.

Conclusion

In the Queensland building and construction industry, the law is a silent but powerful party to every contract. The principle of 'freedom of contract' is heavily qualified by a robust legislative framework designed to ensure fairness, quality, and financial security. Relying solely on the written word of an agreement without a deep understanding of this framework is a significant and costly risk.

Legislation like the QBCC Act and the BIF Act inserts non-negotiable terms, warranties, and payment procedures into your projects. These statutory provisions will always override any conflicting clauses you may have negotiated.

For homeowners, contractors, and developers alike, the key takeaway is that compliance is not optional, and ignorance of the law is no defence. The only way to truly understand the full scope of your rights and obligations is to ensure your contracts are not only clear and comprehensive but also fully compliant with Queensland law.

Seeking professional legal advice before signing any agreement is not a luxury—it is an essential step in managing risk and ensuring a successful project outcome. For tailored advice on your specific situation, contact an expert building and construction lawyer.

FAQs

Can I agree in my contract to have a longer defects liability period than the one set by the QBCC Act?

Yes, you can. The statutory warranties under the QBCC Act set a minimum standard of protection. A contract can provide for a longer defects liability period (e.g., 24 months for non-structural defects instead of the statutory 12 months), and this would be enforceable. The law prevents you from offering less protection than the statutory minimum, but it does not prevent you from offering more.

What happens if my builder isn't licensed with the QBCC?

If a person carries out building work without the required QBCC licence, they are committing an offence. From a contractual perspective, the unlicensed builder may be unable to enforce the contract to recover payment for the work performed. Furthermore, you will not be covered by the Queensland Home Warranty Scheme, leaving you significantly exposed if defects arise. You should always verify a contractor's licence on the QBCC website before engaging them.

Does the BIF Act apply to verbal agreements or only written contracts?

The BIF Act applies to any "construction contract," which is defined broadly to include written, oral, or partly written and partly oral agreements. This means a subcontractor working under a verbal agreement still has the full protection of the Act and can issue a valid payment claim to secure payment for the work they have performed.

My contract says all disputes must go to private arbitration. Can I still go to QCAT?

This is a complex area of law. While QCAT has statutory jurisdiction over domestic building disputes, whether an arbitration clause can be enforced depends on several factors, including when the clause was agreed to, the sophistication of the parties, and the specific wording of the clause. Recent case law suggests that properly drafted arbitration clauses may be upheld in certain circumstances, even for building disputes.

For domestic building disputes, you must first attempt resolution through the QBCC's dispute resolution process before proceeding to QCAT or any other forum. It is essential to obtain specific legal advice about your particular arbitration clause and circumstances before deciding how to proceed, as wrongly choosing one path over another could have significant consequences.

As a homeowner, can I waive my right to the statutory cooling-off period for a domestic building contract?

Generally, no—you cannot waive your cooling-off rights for most domestic building contracts (such as new builds, renovations, or extensions). The Queensland Building and Construction Commission Act 1991 (specifically, Schedule 1B, Section 35) provides a homeowner with a non-waivable cooling-off period of five business days after receiving a signed copy of the contract.

However, there is one important exception: if your contract is specifically a repair contract (including alterations, improvements, or replacements necessary or reasonable to carry out instead of a repair), you may waive your cooling-off rights under Section 39 of Schedule 1B. Any such waiver must be in writing, signed by you, and delivered to the builder.

For all other domestic building contracts, any clause in the contract that attempts to remove or shorten the cooling-off period is unenforceable. This is a mandatory consumer protection.

Also note: You cannot exercise cooling-off rights if:

(1) you previously had a substantially similar contract with the same builder for the same site, or

(2) you received formal legal advice about the contract before signing.

This guide is for informational purposes only and does not constitute legal advice. For advice tailored to your specific circumstances, please contact Merlo Law