Contract Variation in Construction

Contract variations are common in the construction industry, including when working under the Master Builders Association Head Contract Residential Building (BC4) for NSW. These variations can be both a blessing and a challenge, providing opportunities for growth and adaptation but potentially leading to disputes if mishandled. Here’s a detailed breakdown to help you navigate this aspect of construction law.

What is Contract Variation?

A contract variation, or change in the original terms, refers to an alteration in the construction contract’s scope of work, specifications, or other elements. It can arise due to various reasons, such as changes in design, unforeseen conditions, or client requests. It is important to note that under the Home Building Act 1989 (NSW), any agreement to vary the contract must be in writing and signed by or on behalf of each party involved.

Contract variations in construction are often unavoidable, but understanding how they work under the specific guidelines of the MBA Contract (BC4) will allow you to manage them effectively. With a proper understanding of the reasons for variation, the process, and the legal requirements in NSW, builders can confidently navigate these changes, ensuring successful project completion and reducing the risk of legal disputes. As with any legal matter, consulting with a construction law professional is advisable for tailored advice and support.

Reasons for Contract Variation

Variations may occur due to Design Changes, where the owner or architect may require alterations to meet specific aesthetic or functional needs. Unforeseen circumstances, such as unexpected ground conditions or hidden structural challenges, might necessitate changes. Regulatory requirements may also cause variations, as changes in laws or building codes may require modifications to the original contract. Being aware of these common reasons and proactively addressing them within the Master Builders Association Head Contract (BC4) can help in a smoother construction process.

The Process and Legality

Contract variations under the Master Builders Association Head Contract Residential Building (BC4) for NSW must comply with the legal frameworks outlined in the Home Building Act 1989 (NSW). The process entails writing and signing any agreement to alter the contract, plans, and specifications. Both parties must be fully aware of the variation, which must be documented and signed. This ensures that the modifications are legally binding and prevents potential disputes. Proper understanding and adherence to the legal procedures safeguard the interests of both builders and homeowners in NSW.

Quantum Meruit in NSW

Quantum meruit is a vital legal principle in the New South Wales construction industry, particularly for builders seeking remuneration for work performed outside the contractual requirements. It means “as much as he deserved” and is used to determine the fair value of services rendered.

In the context of the MBA Contract (BC4) in NSW, a quantum meruit claim can become particularly pertinent during variations or when a contract is terminated before the agreed work is completed. Specific requirements must be met for a successful quantum meruit claim, as outlined in recent case law.

In Durastyle Homes Pty Ltd v Gosling; Gosling v Durastyle Homes Pty Ltd [2022] NSWCATCD 106, the criteria were listed as follows:

  1. The work must be outside the original contract requirements.
  2. The owners must have knowledge of the variation as it was executed.
  3. The owners knew that it was outside the contract.
  4. The owners knew that the builder expected to be paid for this work.
  5. The builder must have evidence of the amount claimed as fair value.

Similarly, the decision in Nayak v Rockwall Constructions Pty Ltd [2017] NSWCATAP 18 further clarified the components required for a quantum meruit claim, including the fact that the owner had actual knowledge of the variation and that the builder provided evidence that the amount claimed was fair value.

The principles of quantum meruit are applied with seriousness in NSW. It requires careful adherence to the criteria laid down by courts, ensuring the builder’s rights to fair payment and the owner’s protection against unwarranted claims. It requires a deep understanding of legal rights and obligations, underscoring the importance of professional legal guidance.

Applying quantum meruit in NSW is a complex but essential aspect of construction law, emphasising fair compensation and transparency in builder-owner relationships. Understanding this legal framework is crucial for builders, especially when dealing with variations under the MBA Contract (BC4).

Quantum Meruit as a Remedy

Quantum meruit is a powerful remedy for builders when contractual agreements are unclear or a contract has been terminated without completion. It allows builders to claim reasonable compensation for the work done, ensuring they are not left uncompensated. The principle of quantum meruit emphasises fair value and reflects a commitment to equity within the construction industry in NSW. However, successfully claiming under this principle requires meticulous attention to legal conditions, case law, and the precise circumstances of the work. Engaging an expert in construction law can provide invaluable guidance to navigate this complex area.

Practical Tips for Builders

Here are practical tips for builders for a successful construction: 

  1. Document Everything: Maintain meticulous records of all variations and work outside the contract, including written agreements and communications.
  1. Understand Your Contract: Familiarise yourself with the Master Builders Association Head Contract Residential Building (BC4) for NSW, specifically the variations and quantum meruit clauses.
  1. Communicate Clearly: Ensure open and transparent communication with homeowners about variations or additional work, and confirm understanding in writing.
  1. Seek Professional Guidance: Consider engaging a construction lawyer or solicitor to guide you through the legal complexities of quantum meruit claims and variations.
  1. Assess Fair Value: Maintain transparency and fairness in assessing the value of work outside the contract, aligning with the principles laid down in relevant case laws.
  2.  Follow Legal Protocols: Adhere to the Home Building Act 1989 (NSW) requirements and related regulations to protect your rights and interests.
Builder's Guide to Quantum Meruit & Variations under MBA Contract (BC4)


Navigating the intricate aspects of contract variations and quantum meruit in construction law can be complex and requires a comprehensive understanding of the laws, court decisions, and contractual agreements in place. Professional guidance can make a significant difference if you are a builder looking to understand your legal rights and obligations in NSW. With over 10 years of specialisation in construction law, I am equipped to advise and represent homeowners, builders, and contractors on various legal matters, including Quantum Meruit Claims and Variations under the MBA Contract (BC4). To discuss your specific needs or seek professional legal advice tailored to your situation, don’t hesitate to contact me today.