Please note that since this book was last published in 1997 some of the laws that have been referenced may have changed. We
are doing our best to update the articles, however, it is advisable that you to consult an attorney before relying on any information contained herein.
When you have accepted a quotation for building or altering
your house, the next stage is to draw up a contract with the
builder setting out the precise conditions under which the
building is to be done and the responsibilities of the builder
and yourself as the client.
Conditions of the contract
The conditions of contracts supplied by building contractors
vary according to the type of work, but are generally drafted so
as to favour the contractor. As the customer, however, you are at
liberty to strike out any clauses to which you object. Although
you may insert your own conditions, this will not always be
advisable; the contract may be a standard document drawn up by
building experts and the deletion of any clause or part of a
clause may give rise to difficulties in the interpretation of
other clauses in the contract later, and the contractor may, in
any event, then be unwilling to accept the job. (You cannot
compel the contractor to agree to the alterations you make to the
contract presented to you. When you change that contract, you are
in effect making a counter-offer, which the contractor is at
liberty to accept or reject. See contracts.)
Typical conditions included in standard building contracts
take away the rights that you would otherwise enjoy under common
law and give the contractor several valuable advantages.
For example, they may exempt the contractor from legal
liability for an inferior standard of work or limit
responsibility for defects and deficiencies discovered within a
short period after completion of work. Likewise, the contractor
may refuse to accept responsibility for damage caused as a
consequence of using defective materials or may limit
responsibility to the compensation that can be recovered from the
manufacturer or supplier. The contractor may refuse to accept
responsibility for injury or damage resulting from work done by
employees or subcontractors, even if this is done negligently. It
is therefore advisable for you or your agent to obtain
public-liability insurance and to ensure that your normal
householder's and homeowner's insurance policies will cover the
risks while building operations are in progress (see house-owner's insurance). The
builder may also reserve the right to increase the price, and
take away your old materials, such as bricks and piping, replaced
during the execution of work.
Contracts containing clauses of this nature may leave you with
little or no common-law protection if the contractor's work
proves to be of an inferior quality. It is important therefore to
take special care when drawing up a contract. A common condition
on many contractors' forms is that any dispute arising out of the
contract must be referred to arbitration.
In some circumstances this is a valuable provision for a customer
since it binds the contractor to a form of dispute settlement
that is swift, decisive and often relatively inexpensive. There
are, however, drawbacks to an arbitration clause; in some cases
it effectively prevents the customer from going to court. (The
threat of court action may be a useful way of attracting damaging
media publicity to the contractor's inferior standard of work -
possibly leading to a speedy settlement of a claim.)
WHEN NO CONDITIONS ARE IMPOSED Many smaller contractors do not
impose conditions of the kind discussed above. In such an
instance, you should record the main terms of the contract in
writing. However, when a dispute arises that is not covered by
the conditions of the contract, the common law will apply. Both the
common law and the National Building Regulations and Building
Standards Act, 1977, require a contractor to work in a competent
and professional manner, that sound and proper materials should
be supplied and that the structure should be fit for the purpose
for which it was intended.
REASONABLE CONDITIONS Ask your attorney
to draw up a contract or draw it up on your own. If you're
dealing with a builder who is a member of the Master Builders and
Allied Trades' Association or the Building Industries Federation
of South Africa (BIFSA), ask for one of the standard forms of
contract of BIFSA.
This standard contract, named the BIFSA Form of Contract for
Minor Works and Dwelling Houses, not only gives the contractor
considerable protection but it also ensures reasonable protection
for the customer. For instance, the contract provides that any
faults that appear within three months of completion of the job
owing to defective materials or work must be made good by the
contractor. In addition, it provides that if within six months,
or when heavy rains occur if that takes longer, a leak becomes
apparent in a roof built by the contractor and causes damage, it
must be repaired at the contractor's expense.
The contract also stipulates that if the contractor stops work
without reasonable cause, fails to proceed with the work with
reasonable diligence or refuses to remove defective work or poor
materials after having received notice in writing to do so, you
may set out this default in a registered letter to the
contractor. If the default continues for 14 days after that, you
may then send a registered letter to the contractor ending the
employment; the contractor will be liable for any damage that you
may have suffered.
The contract, which provides for payment by instalments as
work is completed, gives you the right to withhold an amount not
exceeding five per cent of the contract price from the final
instalment for three months after completion, or until the
contractor has rectified any material faults or defects. The
contract also states that the contractor must insure the building
in progress and all materials on site against fire, earthquakes,
explosions and certain other risks. Should the contractor become
liable to replace or repair work damaged in any of these ways,
this ensures that no financial difficulty is suffered for these
replacements or repairs.
Although BIFSA's contract is intended for the construction of
a complete house, its clauses may be adapted for use in a
contract for the installation of plumbing, for instance, or for
additions to a building.
BIFSA distributes its contracts only to members of master
builders' associations and you may be able to acquire one from a
member. The contracts are also reproduced in books dealing with
the legal aspects of building in South Africa and are
Types of contract
In most building contracts it is agreed that the materials
will be supplied either by the client or by the builder. An
escalation clause giving the builder the right to exceed a quoted
price by the amount of an actual increase in the cost incurred
for labour and materials is usually included if the builder
supplies the materials. BIFSA does not generally distribute
'labour-only' building contracts.
LUMP-SUM CONTRACTS This is the most common form of building
contract, in which the builder undertakes to build the house
according to plans and specifications for a fixed sum.
MEASUREMENT-AND-VALUE CONTRACT This is also known as a
'contract at schedule rate'. It allows for payment at a
determined or 'fair and reasonable' rate. The price is set
according to the amount of work that has been done and
consequently the question of liability for extras is then
unlikely to arise.
COST-PLUS CONTRACT When speed is important, a cost-plus
contract is often drawn up in which the builder undertakes to
finish work by a certain date in return for its reasonable cost
to him plus an agreed percentage of that cost as a fee.
FIXED-FEE OR MANAGEMENT-FEE CONTRACT This is similar to the
cost-plus contract in that it is based on cost to the builder
plus a fee. In the cost-plus contract, however, the fee varies in
proportion to the cost, whereas in this type of contract the fee,
once established, remains fixed on condition that the actual and
estimated costs do not differ by more than an agreed amount. In
addition to this, a bonus is sometimes paid to the builder if the
actual cost is less than the estimated cost.
Certain terms or conditions are implied in the contract and
therefore do not need to appear in writing in order to be valid
In a building contract it is implied that the client or the
architect representing the client will supply the builder with
the necessary plans and specifications and make the site
available for work. There is an implied warranty on the part of
the builder to perform the work in a 'proper and workmanlike
manner' and that the materials used will be of good quality and
suitable for the purpose.
If you decide to supply the materials yourself, the builder
cannot be held responsible for their quality or suitability for
the job. However, a builder who has recommended the materials
that you have supplied at your own expense, may be held liable
for defects in them. It is also implied that the builder will
comply with current local authority building regulations (see building regulations).
Reading the small print
Conditions in builders' contracts are typical of those used by
many other types of contractor and as the customer you may have
to accept them if you want the builder to go ahead and do the
work in question for you - unless you enforce an agreement in
terms of the standard BIFSA contract, which is to the advantage
of both parties.
The provisions of the building contract often attempt, in the
interests of the builder, to regulate the conditions under which
work is carried out by limiting or removing the legal protection
that you would otherwise have. If you then sign the contract or
agree that the work will be done on those terms, the small print
will be binding upon you. (See caveat
Your only realistic alternative is to find a contractor who
does not impose terms of the kind to which you object, or to
negotiate the objectionable provisions with the contractor.
Should you decide to delete certain clauses, you run the risk
that the contractor may then refuse to do the job. Some of the
terms that commonly appear in building contracts are listed
STANDARD OF WORK Defects that appear within three months of
the completion of the work and are proved to have been caused by
a standard of work or materials not in accordance with the
contract will be made good by the builder at own cost.
Notice in writing of the defects must be given to the builder
before the three-month period expires. In the absence of a clause
of this sort, the contractor's legal liability continues for as
long as defects can be positively attributed to improper work or
use of inferior materials and not, say, to subsequent wear and
tear. This is subject to the general rule that a dissatisfied
homeowner must take action against the contractor within three
years of the date on which a claim arose (see debts, recovery of; prescription). If the matter is
referred to arbitration or if
legal action is taken as a result of the disagreement, the
arbitrator or court will decide upon the extent of the
MATERIALS REMOVED Contractors often specify that credit will
not be given for any materials necessarily removed to allow for
the execution of the work. If during the course of the job,
materials such as old bricks have to be removed, this clause
gives the contractor the right to keep them without reducing the
charge given in the quotation. (In cases in which no allowance is
shown on the builder's estimate for materials removed, a clause
of this kind may lead the customer to suspect that materials with
scrap or reuse value generate an added profit for the builder.)
DEFECTIVE MATERIAL Materials are supplied subject to
conditions of sale attached by the manufacturer or supplier. If
any materials prove faulty, the builder's liability is limited to
such amount as may be recovered from the manufacturer or
Even though the contractor agrees to provide all the required
labour, materials and equipment and to take reasonable care in
performing all aspects of the job, responsibility is not normally
accepted if materials or goods turn out to be faulty unless the
contract specifies the quality of materials; the contractor's
liability is limited to the amount of money that can be recovered
from the supplier.
NO INTERFERENCE In terms of this type of clause, you are
prevented, either personally or through your agent, from issuing
instructions to, hindering or obstructing any of the contractor's
workers, any subcontractor employed on the work or any other
person employed by or acting on behalf of the contractor. You
then have no right to give instructions to the workers; all
negotiation must be with the contractor or the contractor's
agent. If you give instructions related to the construction work
directly to a worker, the worker need not obey them.
There are many other examples of clauses like this in building
contracts; you should therefore read the entire contract
thoroughly before signing it. If you have any doubts, consult
your attorney or architect (if
you have employed one).
Breach of contract
Failure to complete the work within the contract time is
probably the most common form of breach
of contract by builders. Other forms of breach of contract by
a builder that may entitle you to cancel the contract include:
- Failure to take possession of the site;
- Failure to complete the work, or to complete any stage of
the work timeously according to the conditions of the
- Any departure from the agreed plans or specifications;
- Abandoning the work;
- Doing defective work.
If the builder fails to complete the work or abandons the work
while it is incomplete, you may be able to claim damagesI, the
amount being based on the difference between the unpaid balance
of the contract price and the cost of engaging someone else to
complete the work.
A builder who abandons the work may still be entitled to some
payment, usually on the basis of unjust
enrichment, a doctrine in terms of which no person is allowed
to seek unjustifiable enrichment at the expense or to the
detriment of another. In this instance, you would be enriched by
the builder's work, and cannot therefore expect to receive it for
Encroaching on the property of a neighbour
A builder who departs from the plans might construct part of
your house on the property of a neighbour. The neighbour will
then probably demand demolition of the encroaching portion or the
payment of compensation. A court might rule that demolition would
be unreasonable and direct you to take transfer of that part of
your neighbour's property on which the building has encroached.
Your claim against the builder would then take into account the
ensuing costs and the amount of compensation that you would have
to pay to your neighbour, less the value of the land transferred
to you. (See boundaries, walls and fences; encroachment.)
Guarantee of completion of work
If a builder persistently refuses to guarantee that the work
will be completed, either by himself or by a nominated builder,
you may be entitled to cancel the contract.
Your duty to the builder
Your first duty is to give possession of the site to the
builder. A builder who has been refused permission to be on the
site or who has not been furnished with the relevant plans, can
withdraw from the contract. A builder forced to cancel a contract
in this way may be entitled to sue you for the loss of profit
that could reasonably have been expected had the work been
If the contract provides for the payment of an amount stated
on an architect's inte-rim or progress certificate (a valuation
of the job and instruction that payment be made by the client),
the builder may sue you if you fail to pay the agreed amount
within the specified time. If the contract does not state where
payment is to take place, it should be made at the site where the
work is being done or at the place of business of the building
contractor - the rule being that the debtor must seek out the
creditor if there is an agreement that an amount of money must be
paid by a specified date.
If your house is not finished by the date specified in the
contract, you may be able to claim damages
(monetary compensation) from the builder. Alternatively, the
contract may contain a penalty clause in terms of which the
builder forfeits a certain sum for every day or week that expires
after the time stipulated in the contract for the completion of
Compensation may be claimed only for loss that was reasonably
foreseeable at the time the contract was signed - for example,
loss of profit or the cost of finding alternative accommodation.
You may not claim for loss of rental unless the builder knew or
must have known that you intended to let the house as soon as it
was completed. It is therefore a good idea to advise the builder
with whom you enter into a contract if you intend to let the
property as soon as it is completed.
The builder cannot be held liable for a delay in completion
that has been caused by you or by someone acting on your behalf.
The builder is also not liable if the delay is due to unforeseen
circumstances such as continuous heavy rain (you should therefore
keep a daily logbook of weather conditions as it will be
difficult or impossible later for you to determine the amount of
delay caused by rain) or sometimes, if agreed, the
non-availability of essential building materials.
Extras and variations
It may happen that, while construction of the building is in
progress, variations are made to the original plans and the
builder is asked to do work that was not specified in the initial
contract. To make provision for such an eventuality, the contract
should contain a clause dealing with liability for such extras
and stating that these may be carried out only on your written
authority. The builder is obliged to work in strict accordance
with the plans and specifications and may not deviate from them.
Generally, claims may not be made for any unauthorised extras.
If, however, you knew that the builder was doing extra work from
which you would benefit and you allowed this extra work to
continue, a court might uphold the builder's claim for additional
payment on the basis of implied agreement even if the work was
not within the scope of the original written contract.
Various aspects of building are dealt with by specialist
contractors who install electrical wiring, plumbing,
air-conditioning or roofing, or who paint the interior or
exterior of your house.
You may enter into a contract directly with a contractor of
this type, but it is more common for the main contractor or
builder to employ whichever specialist subcontractors are
considered necessary. Subcontractors are usually paid by the
builder, although the contract may provide for you to pay them
directly and deduct the payments so made from the amount that you
owe the main contractor. It should be a condition that payment to
a subcontractor is due, or released, to the subcontractor only
after an architect has approved the work. A certificate of
approval from the local authority should be obtained before
payment is made for plumbing, sewerage or electrical
If the builder goes insolvent, a subcontractor who previously
looked to the builder for payment may not claim payment directly
from you. The liquidator or trustee of the builder's estate has a
claim against you for the full agreed price for work done (up to
the date of liquidation or sequestration), and the subcontractor
must lodge a claim against the builder's insolvent estate. (See insolvency.)
At common law you have the right to deduct from the contract
price the amount it will cost to rectify defective work caused by
poor work or the use of unsuitable materials, provided that this
has been agreed upon first. If the full sum has already been
paid, you are entitled to claim damages based on the cost of
repairs and reasonable related costs.
The contract should contain a clause obliging the builder to
make good any defect that may appear within a specified time
after the work has been completed. Defects that fall within this
ambit are usually limited to those arising from default on the
part of the builder.
If approval of the work before final payment is not provided
for, payment even with knowledge of defects will not necessarily
prevent you from taking action against the builder, although it
may be advisable to withhold payment if you are aware of defects.
That will both provide an incentive for the builder to remedy the
defects and obviate any possibility of an argument later that, by
paying, you have agreed to accept the work in its defective
state. You may take action against the builder for defective work
even after the period specified in the contract for the execution
of repairs has elapsed.
A maintenance clause, or repair and upholding clause, requires
the builder to maintain the house for a specified period in the
condition in which it was on completion or acceptance. Such a
clause cannot, however, be used to compel the builder to repair
defects that were present either on completion or on acceptance
of the work.
Disputes and arbitration
Although a contract may stipulate that an architect's decision
is binding in a dispute with the builder, most contracts provide
for the dispute to be referred to arbitration.
Standard building contracts usually stipulate that if a
dispute arises between you (or your architect acting on your
behalf) and the builder, the builder may ask for the architect's
decision to be conveyed in writing. If the builder objects to the
decision within 14 days of receiving it, the matter will be
referred to an arbitrator for a final decision. Note, however,
that you as owner do not have the right to refer your architect's
decision to arbitration.
The arbitrator, in terms of the standard building contract,
can be anyone over the age of 18 and may be chosen by agreement
between the architect and the builder or may be appointed by the
president of the Institute of South African Architects.
An arbitrator's decision is final and binding and the courts
will refuse to enforce it only in exceptional cases - for
example, when it can be shown that the arbitrator exceeded his or
her powers or has been guilty of improper conduct, or that the
award was improperly procured. (See arbitration.)
Approval of the work
A building contract usually stipulates that the work must be
completed to the satisfaction of the owner, his or her architect
or a named third party. You may not withhold your approval of the
work unreasonably or dishonestly.
If the architect who must approve the work issues a final
certificate, this will be taken to be a certificate of approval.
The builder will thereupon be entitled to payment of whatever
amounts are still due and will at the same time be released from
any further responsibility.
Withholding full payment
After completion of the work, it is usual for a customer to
withhold full payment as security, to ensure that defects which
may later become apparent will be made good by the builder.
The percentage to be withheld in the 'retention fund' depends
on the contract, but it is usually 10 per cent if the total
contract price is not above R30000 and 10 per cent or a
negotiated amount if the cost exceeds R30000. The retention money
is usually deposited in an account opened jointly in the names of
the client and the builder, with interest accruing to the
The builder is usually entitled to half of the retention money
when work is completed, while the remainder is normally paid out
once the architect has issued the penultimate and final
A lien, or right of
retention, is a form of security for the builder; for example, it
entitles the builder to refuse to hand over a newly-built house
to the customer until the full sum due on completion of the work
has been paid, less the money in the retention fund.
To exercise a lien, the builder must be in actual physical
possession of the house. In the eyes of the law, possession will
not be lost due, for example, to temporary absence at night. You
may not take possession from the builder by force, fraud or any
other illegal act. If you do, the builder may apply to have
possession restored immediately by order of court.
A lien ends or is 'extinguished' when the builder relinquishes
or loses possession of the property, or is in receipt of all of
the money due.
What to do about work of a poor standard
Anyone who engages a contractor to do a job and discovers that
it has been done badly is entitled to have the work brought up to
standard. This principle applies to a wide range of building,
repair and maintenance work.
In terms of the law, as soon as a contractor accepts a job and
the customer agrees to pay for it, a contract comes into force,
even if nothing is set out in writing (see contracts). Although the
customer's rights under the contract depend on the terms agreed
upon, two conditions apply in almost every case.
First, the customer is entitled to have the work done as
requested, with the measurements, materials and finishes
specified. A contractor who wishes to make changes to the agreed
specifications must obtain the customer's agreement before going
Second, the customer is entitled to have the work done in
accordance with professional standards.
When a contractor fails to do what is asked or does the work
badly, your first step should be to point out the defects and
asked that they be rectified. Confirm this request in writing and
don't forget to keep a copy of this correspondence.
If the defect is the result of unnoticed shoddy work carried
out by an employee, it will probably be repaired without delay.
The contractor cannot charge extra for this, or for repairing any
damage resulting from work of an inferior standard. The best
action to take against a contractor who refuses to accept
responsibility for shoddy work and refuses to make repairs, or
who demands extra payment for repairs, would be to hire an
attorney and be prepared, if necessary, to go to court.
If you're not prepared to spend your time or money taking
legal action, you can deduct the cost of repairs from the
contractor's bill, appoint an arbitrator (if provision has been
made for this) or appeal directly for assistance to the Master
Builders' and Allied Trades Association or to the National
Association of Homebuilders if the contractor is a subscribing
member of the relevant organisation.
DEDUCTING FROM THE BILL If the work has not been paid for, the
quickest method is to have the defect remedied by another
contractor and to deduct the cost for this from the original
contractor's bill. It is, however, important to follow the
- Stage one: As soon as you suspect an inferior standard of
work, ask the contractor to repair it. Confirm the
request in writing and keep a copy of the letter.
- Stage two: If the contractor refuses to remedy the fault,
do not pay for the work until it is completed as agreed.
By refusing to pay, you will place the contractor in the
position of having to choose whether to remedy the fault
or to sue you. Generally, because it is easier to do so,
the contractor will repair the fault, which is exactly
what you wanted.
It is important to ensure that you would be able, if it became
necessary, to prove in court that the work carried out was of an
inferior standard. How you do this will depend on whether the
contractor has failed to do the work agreed upon or has simply
done it badly. If you believe that the contractor has not
followed instructions, check the written contract if there is
one, or the quotation, or your copy of the letter commissioning
the work. Any of these may provide proof that the contractor has
failed to follow instructions.
When there is no such written proof or the written evidence is
unclear on the point in dispute, the advice of an attorney will
be essential. If, on the other hand, your complaint revolves
around defective work, you will need an expert assessment.
Suppose you build an extra room into the roof of your house
and you find that a few days after the builder leaves, parts of
the roof work surrounding the window of the new room break loose
in a thunderstorm and water damages the interior. When you lodge
a complaint, the builder denies being at fault, puts in a bill
and demands payment in full. Unless it was a freak storm or you
damaged the roof yourself, bad workmanship would be the most
likely cause of damage.
To confirm this, you should call in an expert who can report
on the cause of the damage and the likely cost of repair. The
expert may be an independent specialist of high standing, such as
an architect or a well-respected builder. The builder should be a
person more experienced than the original contractor, and
preferably a member of the local master builde