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ARTICLE · 31 MAY 2024

Increasing construction costs are likely not valid grounds for termination of contract

Rostron Carlyle Rojas
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Cost escalation clauses in the building contract could provide a lawful mechanism to claim increased construction costs.

AustraliaReal Estate and Construction
Paul Rojas
Paul Rojas
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The construction industry is in an incredibly turbulent state. Increased construction costs (primarily of material and labour) are being experienced industry wide. As a result, builders are being forced to pass these increased construction costs onto home owners or developers, or to risk completing jobs for reduced profits or at a loss. In a recent series of articles, we have examined:

  • how cost escalation clauses can be used to pass on these incurred costs (https://rcrlaw.com.au/cost-escalation-clause-guide/); and
  • the recent clarification that the District court has provided regarding how cost escalation clauses must be drafted and implemented to ensure they are legally compliant (https://rcrlaw.com.au/builders-beware-major-changes-for-construction-contracts/).

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