Have your say on the new AS4000-2024
After 27 years, the Australian Standard General Conditions of Contract, AS4000, is receiving an update.
The proposed update has just been released for public comment until 29 May 2024 and is accessible via the Standards Australia website here. [i]
Although a lot has changed in 27 years, the amendments to AS4000 are not radical. The drafting and layout of the document has been improved in a number of areas, with amendments such as:
- the adoption of consistent language for time periods with the use of ‘as soon as practicable’, rather than various other terms;
- the use of ‘must’ instead of ‘shall’; and
- including all defined terms in clause 1, rather than spread throughout the contract.
Beyond these drafting changes, some of the key additions or changes that are proposed include:
1. Formal Instrument of Agreement (FIA)
The AS4000-2024 now includes a standard form of a FIA for ease of execution but maintains the option for parties to constitute the contract without using an FIA, such as by a letter of acceptance.
2. New legislative provisions
Provisions have been added to address legislative obligations under the Personal Property Securities Act 2009 (Cth) and A New Tax System (Goods and Services Tax) Act 1999 (Cth), neither of which existed in 1997. However, the contract does not deal with any security of payment legislation given it differs amongst the states and territories.
3. Dispute resolution
A complete overhaul of clause 42, Dispute Resolution, provides more options for parties and clearer avenues for dealing with disputes. Under the proposed drafting, parties will select a dispute resolution regime in Item 36 of Annexure Part A which will determine which dispute resolution options apply, including negotiation, mediation, arbitration, expert determination (with the option to make it interim binding or final and binding) and appointing a dispute avoidance board. If the parties do not select these options, then the existing default provision of negotiation and then arbitration will apply.
4. Email notice
Provision for notices under the contract to be provided via email have been included.
5. Deed of Novation
A pro forma deed of novation for novating subcontractors to the principal has been included as Annexure Part D.
6. Guidance notes
Guidance notes have been inserted for some items in the Annexure Part A. For example, in Item 28 regarding liquidated damages, there is a note that specifying damages as “$Nil” or Zero is likely to result in no liquidated or general damages being payable. Specifying “N/A” or “Zero” could lead to uncertainty and should be avoided. It is also noted that liquidated damages are not a taxable supply for GST purposes.
Some may be disappointed that after so many years further changes were not made to reflect current trends in project delivery, such as relationship contracting and the option for different or incentivised remuneration models. However, the brief to the Standards Australia Committee MB-010[ii], who are responsible for AS4000, did not extend to any changes to risk allocation, therefore the current risk allocation in terms of the obligations of the parties and entitlements to claim remain as per the 1997 version of AS4000. Accordingly, the practice of amending the contract to alter risk allocation will likely continue under the proposed revision. Similarly, given the contract does not deal with any state or territory specific legislation, parties may still see the need to amend the contract to address legislation such as security of payment or safety and environment to make them contractual obligations.
For now, Standards Australia welcomes industry feedback until 29 May 2024. Pending that feedback, it is expected that the revised AS4000 will take effect later this year after which it is proposed to revise further documents in the AS4000 suite such as the AS4902 -2000 General Conditions of Design and Construct.
[i] Users may need to register for a Standards Australia account in order to access
[ii] Michael Rochester represented an industry association on MB-010. Any comments or views in this article are of McCullough Robertson and not of MB-010.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.
