Monday, June 17, 2024

Construction and Infrastructure Alert | Proposed Update to AS 4000-1997

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The AS 4000-1997 General Conditions of Contract, is being updated by its publisher, Standards Australia.

The AS 4000-1997 is a standard form ‘construct only’ agreement and is widely used throughout the construction industry. However, it has not been updated since 1997. In 2022, Standards Australia began the process of updating the AS 4000-1997 to reflect developments in legislation and case law and to improve the structure of the contract to better align with modern standard form contracts. Standards Australia has made the updated AS 4000-1997 available for public review and feedback until 29 May 2024. If adopted by Standards Australia the new standard form will be titled AS 4000–2024.

The major changes to the AS 4000 are as follows: 
  • A Formal Instrument of Agreement is included as the basis for forming the Contract.This contains the ability to include the contract sum;
  • Clause 1 – Definitions, is amended to include new definitions and principles of interpretation, and to make all definitions self-contained to make the Contract easier to read.Important definitions such as Site and Qualifying Case of Delay are amended for clarity;
  • Clause 2.5 – Adjustment for actual quantities is amended to make clearer the process for adjustment of actual quantities by removing uncertainty about when a Variation occurs;
  • Clause 6 – Evidence of Contract is deleted and replaced with a new GST clause which states that Contract Sum is exclusive of GST;
  • Clause 39 – Default or Insolvency is amended to reflect current legislation relating to bankruptcy and insolvency;
  • Clause 42 – Dispute Resolution is amended to include five options for dispute resolution forums, with negotiation and arbitration being the default if no other option is selected; and
  • A new clause 44 – PPSA Requirements is added to incorporate the Personal Property Securities Act 2009 (Cth).

As well, minor amendments have been made to the AS 4000 as follows: 

  • Clause 8.5 – Confidential Information includes exceptions are added to allow disclosure in circumstances such as where necessary to enable performance of obligations under the Contract and where required by law;
  • Clause 34.6 – Certificate of Practical Completion is amended to provide that a Certificate of Practical Completion can evidence a Date of Practical Completion earlier than the date the certificate is given;
  • Clause 34.7 – Liquidated Damages is amended to specify the process for liquidated damages to be repaid if an EOT is directed after the Contractor has paid, or the Principal has set off liquidated damages;
  • Clause 34.9 – Compensation for Delays is amended to provide clarity on the process for calculating compensation;
  • Style changes have been made throughout the AS 4000 to ensure consistent language; and
  • The Annexures have been amended to allow easy text addition and selection of options.

Standards Australia has indicated they intend to publish the new AS 4000 towards the end of 2024. Following the update to the AS 4000, Standards Australia intends to review and update the complete suite of AS 4000-based documents such as the AS 4902-2000 General conditions of contract for design and construct.

Initial indications are that users will still be able to use AS 4000-1997 once the new AS 4000 is published later this year. This update to the AS 4000 provides an opportunity to consider refreshing your standard form contracts that are based AS 4000.

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Russell Kennedy has developed a suite of standard form construction contracts for use by Principals operating in Victoria and other Australian jurisdictions. Get in touch with Principal, Kyle Gillan and our construction team to discuss your organisations standard form contract needs.

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