When a delay in a construction project occurs, how a builder handles the delay can be crucial in the event that a dispute over the delay arises in a later stage. Most home building contracts impose strict obligations on the builder to provide written notice of delays and extension of time (EOT) claims, and failing to follow these procedures strictly can lead to serious legal and financial consequences.

This article outlines the significance of notice requirements, potential consequences of non-compliance, and key practical considerations for builders.

Notice Requirements

Under standard home building contracts, builders are generally required to notify the homeowner of any delay within 10 to 14 calendar days after first becoming aware of it. These notices must be in writing and should specify the following information:

  • the nature and extent of the delay;
  • a detailed statement of facts supporting the claim;
  • identification of the specific activities affected by the delay; and
  • explanation of how the delay impacts the project’s progress.

A proper notification is not just a contractual formality, it is often a precondition for the builder to make a valid EOT claim or to recover associated delay damages.

Consequences of Failing to Provide Timely Notice

One of the most serious consequences of failing to provide proper notice is the potential loss of entitlement to claim an EOT. Most contracts stipulate that notice is a mandatory prerequisite, and failure to comply may render the builder’s claim invalid, regardless of whether the delay was valid or legitimate.

Non-compliance with the notice requirements of the contract is one of the most common reasons for disputes between builders and owners. In such cases, Courts and Tribunals will closely examine the following factors:

  • whether the claim includes a clear cause and quantifiable delay;
  • the credibility and sufficiency of the builder’s evidence for the delays; and
  • whether all contractual procedures for notification were followed.

Builders who fail to provide timely notices specifying the details of the delay may find themselves in a weaker position during dispute resolution process.

Exceptions and Legal Flexibility

Although notice requirements are generally strict, there are some exceptions. Firstly, some contracts may allow the discretion to grant EOTs for the benefit of the owner, even if the builder did not lodge a formal claim. Secondly, Courts or Tribunals may take into account the practical circumstances, such as unexpected disruptions or vague contract terms, and may allow late claims if it is considered reasonable and just. However, these exceptions are not guaranteed and should never be relied upon in place of proper procedure.

Key Considerations for Builders

  1. Burden of Proof

The builder always bears the responsibility to prove their entitlement to an EOT, including both the cause of the delay and its impact on project timelines. Even in the absence of counter-evidence by the owner, courts and tribunals expect well-documented and factually supported claims.

  1. Contract Interpretation

Different contracts impose different notice requirements. Some may offer flexibility, while others may enforce strict compliance. It is critical to closely review the wording of your contract to understand the specific obligations and potential consequences of non-compliance.

  1. Practical Implications

Failing to submit timely and adequate notices can negatively affect the following:

  • project cash flow, especially if delay damages are contested;
  • the builder’s ability to claim compensation for prolonged works;
  • professional relationships between the builder and homeowner; and/or
  • risk of dispute escalation, possibly requiring mediation or litigation.
  1. Importance of Documentation

Consistent and thorough documentation, including daily site reports, communication logs, and delay impact assessments, is essential for protecting legal rights. Well-kept records can help substantiate claims and avoid disputes altogether.

Builders should not underestimate the importance of proper and timely notice under their construction contracts. Failing to meet these procedural obligations can significantly limit their ability to claim legitimate extensions and recover relevant costs and damages. As always, understanding your specific contract terms and keeping detailed records is key to managing project delays successfully.

Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our social media accounts.

DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.