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Minor Works Agreement

What is a minor works agreement?

A minor works agreement is a document used for simple and basic construction works. It ensures that the instructions of the client about a construction project will be followed and that the rights of the contractor will be protected. By signing a minor works agreement, the contractor agrees to do a construction project following the terms of the agreement while the client guarantees that he will pay the contract price based on the agreed schedule of payment.

A Statement of Work is typically annexed to a minor works agreement to explain in detail how the client wants the work to be performed. To prevent misunderstandings, the client must state in the minor works agreement and the Statement of Work all specifications and instructions for the building or construction project. Other documents such as Specifications and Approved Plans may also be annexed to the minor works agreement to provide more details about the project.

When should I use a minor works agreement?

A minor works agreement should only be used for small-scale construction works. To know if a construction work is considered small-scale or minor, you must consider different factors such as the simplicity of the work, the total construction cost, the period of completion, and whether the help of a specialist will be required.

For example, you could use a minor works agreement when a construction project only involves the installation of an electrical wiring system in a small house. However, a minor works agreement would not be appropriate for a project that involves the construction of a building.

What are the key clauses in a minor works agreement?

A good minor works agreement should include the following:

Parties – these are the basics but its always important to get this right. You will need to clearly define who is the contractor/builder and who is the client.

Works – refers to the construction works to be done by the contractor.

Commencement Date – When will the works begin

Date for Practical Completion – refers to the date when the works should be completed according to the Statement of Work (noting that this generally does not include minor defects – in other words the works can be ‘completed’ even thought there are still some minor defects).

Contract Price – How much will the client pay for the minor works?

Payment Terms – When should the client pay the contractor?

Performance of the Works – The contractor must do the construction works in accordance with the Statement of Work, Specifications, and Approved Plans provided by the client (or those documents that are provided – in case that full suite of documents are not provided).

Defects Liability Period – a period after the completion of the construction during which the contractor is obligated to repair defects in the works.

Expenses – What are the expenses that must be paid by the client for the construction works? These should all be clearly set out.

Conditions – The parties may add other specific conditions about the performance of the works, terms of payment, access to the site, payment of expenses, completion period, insurance, additional work, payment of damages, warranties, confidentiality, notices, termination, and other topics.

Limitation of Liability – The contract will (or should) want to limit its liability for damages and losses that it has caused in connection with the performance of the works.

Intellectual Property – The intellectual property rights of the owner of the plans or designs used in the construction works should be clearly set out so that there is no doubt as to who owns the newly created IP.

Subcontracting – Can the contractor hire subcontractors to help in the construction works? Is the consent of the client necessary in hiring subcontractors? If the contractor hires subcontractors is the contractor still liable for the performance of its subcontractors?

Variations – How can the terms of the agreement be changed? They should always be in writing, but is email agreement of variations enough?

Force Majeure – Generally, a party will not be liable even if he is unable to perform his obligation under the agreement if he is prevented from fulfilling his obligation by circumstances beyond his control. This is a key clause with COVID still front and centre in a lot of people’s minds. So you should ensure that your minor works agreement has a Force Majeure clause.

Termination – How can the parties terminate the agreement? What are the consequences if the termination was done because there was a breach of contract? How about if there was no breach and one of the parties just wanted to end the agreement? What happens then? All of this should be specified.

Disputes – How will disputes between the parties be settled? Is there a mandatory mediation process that must occur before the parties can sue each (which is preferable so that the parties can avoid the unnecessary expense of going to court)+!

Why do I need a minor works agreement?

A minor works agreement is necessary for the efficient completion of basic minor construction projects. It serves as proof of the terms agreed upon by the parties. It outlines the obligations of both parties as well as the conditions that they must follow. A minor works agreement can also be used by the client to provide instructions and specifications about the performance of the construction works. It lessens the risk of having disputes because miscommunications and misunderstandings about the terms of the contract are prevented.

If you have questions about a minor works agreement, you can send us an email or call us at 1800 355 455.