Background
For nearly 30 years the AS4000-1997 General Conditions has been consistently used as a benchmark for construction contracts. Now, 28 years after its release, Australian Standards issues the AS4000:2025, to better reflect developments in legislation, common law and industry best practice. Over the past 2 decades the AS4000-1997 has required frequent (and often significant) amending to bring it up to industry standards. In addition to the cost involved, heavily amending the document increases the risk of inconsistencies, particularly between the Standard Conditions and any subsequent amendments or Special Conditions. In response to public consultation and with expert review, the new AS4000:2025 features some of these recurring amendments and this article examines topics that have been kept, changed or omitted.
Risk profiles remain the same
The new version maintains generally the same risk profiles as the older version. Australian Standards has retained a balanced risk allocation between the parties based on principles widely accepted in the industry. Aside from the benefit of familiarity, there may not have been much utility in altering the 1997 version, as the respective clauses are frequently settled between the parties. Developers, head contractors and subcontractors often amend the AS4000:1997 to suit their risk appetite before negotiations and clients regularly seek departures from the indemnity and liability clauses.
Definitions and language and structure are updated
These are welcome and uncontentious changes. Clause 1 has been expanded to add new definitions and collates others that were previously within the operative provisions. The AS4000:2025 also adopts plain English drafting, using ‘must’ instead of ‘shall’ and removes words such as ‘forthwith’ or ‘thereon’. The structure of the clauses is also streamlined or simplified where possible. These changes assist interpretation and ensure consistency with any amendments by parties.
Dispute Resolution
There are significant differences to dispute resolution processes. Under the AS4000:1997 the process involved negotiation and then arbitration (clause 46.2 AS4000:1997). The AS4000:2025 now contains additional options for mediation, expert determination and Dispute Avoidance Boards (DAB’s). DAB’s are a proactive alternative, where boards are appointed by the parties at the outset of a project. These boards then engage with the parties during the project to identify potential issues and can make determinations on disputes which can be binding or interim.
It should be noted that the default process under the new AS4000 is negotiation and then litigation, not arbitration (clause 42.4 AS4000:2025). In some respects, this change incentivises parties to consider and agree on dispute resolution processes to avoid litigation being stipulated in the standard contract. This incentive is expanded under the AS4000:2025 as it provides more options to suit the parties’ needs.
Legislation
The AS4000:2025 features some key clauses which address relevant legislation.
GST: replaces clause 6 (Evidence of Contract)
| 6 | The original Clause 6 stipulated requirements for executing a Formal Instrument of Agreement (FIA). The FIA is now incorporated into the AS4000:2025 and clause 6 is replaced. The new GST clause is thorough and covers GST generally, when GST is payable and Recipient Created Tax Invoices (RCTI’s). |
Health and Safety
| 12.2 | The clause allows users to formally appoint the Contractor to the role of Principal Contractor for a Site or a relevant part of a Site, for the purposes of WHS or OHS legislation. This gives certainty, even where legislation effectively deems the person in control of the site as Principal Contractor. |
Insolvency | 39.11 | The new clause details which circumstances constitute an insolvency event for an individual and for a company. |
PPSA
| 44 | The new clause is general in nature and does not create any specific obligations for either the Principal or Contractor. |
Topics that are commonly amended but are not present in the AS4000:2025
Payment time frames
Clause 37.2 stipulates that after receiving a progress claim the Superintendent has “14 days” to issue a payment certificate. This fixed date does not allow for flexibility for different states’ legislation with respect to payments and payment schedules and it does not address business days vs days. It is frequently amended and a simpler process could be to remove the stipulated timeframe from the Standard Conditions, in favour of allowing the parties to provide time frames in Annexure Part A. This would allow flexibility for variation between the states as well as flexibility for any amendments to the respective legislation.
Standard State Based Annexures and Schedules
Whilst other legislation has been included, there is no mention of state-based Security of Payment legislation, which integrally governs construction contracts. An annexure to allow for state-based legislation could be provided, which not only allows parties to incorporate the state laws with respect to payment, but also other relevant legislation, such as the Design and Building Practitioners Act 2020 No 7 (NSW) or the Queensland Building and Construction Commission Act 1991 (Qld).
General limit of liability
There are no clauses which generally align with the industry’s position of limitation of liability. There may be different elements of the work or liabilities that flow from the work that need to be considered, such as, damage to work as opposed to damages to a third party’s property, personal injury or death or statutory obligations. There are also no provisions stipulating scope and carveouts for consequential loss which is again, a common issue.
Superintendent
In projects, the Superintendent often acts in 2 capacities, one as agent of the Principal and the other as independent valuer or certifier. For example, where a variation is proposed by the Principal, the Superintendent usually gives notice of the variation as agent of the Principal. Then, upon assessing the value of the variation, the Superintendent is required to act independently and reasonably. While the AS4000:2025 provides general obligations for the Superintendent in clause 20, this distinction and the dual roles could be better reflected.
When will it be adopted by the industry?
It may take time for the new AS4000:2025 to be as widely adopted as its predecessor. Parties have invested time and money into amending the AS4000:1997 to suit their purposes and this commitment may present a barrier to adopting the AS4000:2025 in the short term. At some point, documents related to the AS4000 (including AS4902-200) General Conditions of Contract for Design and Construct) will be revised to align with the AS4000:2025, which will encourage users to switch to the newer version. Another significant factor would be whether the AS4000:1997 will be discontinued in the near future, yet there does not appear to be public comment on that for the moment. Irrespective, as noted above, the new format will still require some key amendments which will need to be carefully reviewed in each and every instance.
This article may provide CPD/CLE/CIP points through your relevant industry organisation.
The material contained in this publication is in the nature of general comment only, and neither purports nor is intended to be advice on any particular matter. No reader should act on the basis of any matter contained in this publication without considering, and if necessary, taking appropriate professional advice upon their own particular circumstances.
