Victorian Consolidated Legislation

Building and Construction Industry Security of Payment Act 2002 - SECT 10A

Claimable variations

10A. Claimable variations



(1) This section sets out the classes of variation to a construction contract
(the claimable variations) that may be taken into account in calculating the
amount of a progress payment to which a person is entitled in respect of that
construction contract.

(2) The first class of variation is a variation where the parties to the
construction contract agree-

   (a)  that work has been carried out or goods and services have been
        supplied; and

   (b)  as to the scope of the work that has been carried out or the goods and
        services that have been supplied; and

   (c)  that the doing of the work or the supply of the goods and services
        constitutes a variation to the contract; and

   (d)  that the person who has undertaken to carry out the work or to supply
        the goods and services under the contract is entitled to a progress
        payment that includes an amount in respect of the variation; and

   (e)  as to the value of that amount or the method of valuing that amount;
        and

   (f)  as to the time for payment of that amount.

(3) The second class of variation is a variation where-

   (a)  the work has been carried out or the goods and services have been
        supplied under the construction contract; and

   (b)  the person for whom the work has been carried out or the goods and
        services supplied or a person acting for that person under the
        construction contract requested or directed the carrying out of the
        work or the supply of the goods and services; and

   (c)  the parties to the construction contract do not agree as to one or
        more of the following-

   (i)  that the doing of the work or the supply of goods and services
        constitutes a variation to the contract;

   (ii) that the person who has undertaken to carry out the work or to supply
        the goods and services under the construction contract is entitled to
        a progress payment that includes an amount in respect of the work or
        the goods and services;

   (iii) the value of the amount payable in respect of the work or the goods
        and services;

   (iv) the method of valuing the amount payable in respect of the work or the
        goods and services;

   (v)  the time for payment of the amount payable in respect of the work or
        the goods and services; and

   (d)  subject to subsection (4), the consideration under the construction
        contract at the time the contract is entered into-

   (i)  is $5 000 000 or less; or

   (ii) exceeds $5 000 000 but the contract does not provide a method of
        resolving disputes under the contract (including disputes referred to
        in paragraph (c)).

(4) If at any time the total amount of claims under a construction contract
for the second class of variations exceeds 10% of the consideration under the
construction contract at the time the contract is entered into, subsection
(3)(d) applies in relation to that construction contract as if any reference
to "$5 000 000" were a reference to "$150 000".

Example A building contractor enters into a construction contract. The
consideration (contract sum) under the contract at the time the contract is
entered into is $3 million. The contract contains a dispute resolution clause.
The contractor undertakes work at the direction of the other party. The
contractor claims (the new claim) that the work is a variation to the
contract. The other party does not agree that the work constitutes a variation
to the contract (disputed variation). The contractor has already made a number
of claims for disputed variations under the contract. The new claim brings the
total amount of claims for disputed variations under the contract to $350 000.
This amount exceeds 10% of the contract sum. As the contract sum exceeds $150
000 and the contract contains a dispute resolution clause, the disputed
variation in the new claim and all subsequent disputed variations under the
contract will not be claimable variations under this Act.