Can a builder contract to do domestic building work on a cost plus basis?
Cost plus means that the builder charges a fixed price (being the actual cost of the works) plus a fee (based on a fixed amount or percentage), on an agreed basis for his work. There are restrictions on when a builder may enter into a cost plus agreement for domestic building work and penalties exist for infringing these restrictions. Essentially, a builder is not permitted to enter into a domestic cost plus arrangement unless: A. the reasonable estimate of the cost of the job is $500,000 or greater; or B. the work to be carried out under the contract involves renovation, restoration or refurbishment of an existing building and it is not possible to calculate the cost of a substantial part of the work without carrying out some domestic building work It is to be emphasised that for B to apply, you must be able to show that a substantial proportion of the work could not be costed before commencing works. This does not mean that the work is difficult to price, but almost impossible. There
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