Trade Contract Basics: What Belongs in Yours
A quote says what you're doing and what it costs. A contract says what happens when the job doesn't go to plan — who pays for what, when you get paid, and how either side gets out.
A quote and a handshake covers most call-outs. It stops covering you the moment a job is big enough to have deposits, stages, delays and someone else's subbies on site. That's what a contract is for: not the good version of the job, the bad one. This guide covers when you actually need a contract, what belongs in it, and the handful of clauses that get pulled out every time something goes wrong.
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When a quote stops being enough
This is general information, not legal advice. Contract law and the rules for building contracts differ by state, and what suits a small residential job won't suit a commercial one. Use this to work out what your contract needs to cover, then have a lawyer review the document before you rely on it.
A quote with a proper scope already does a lot of a contract's work. It says what's included, what isn't, and what the number is. Where it runs out is everything that happens after something changes — a delay, a variation nobody wrote down, a client who stops paying halfway through.
The signals that a job has outgrown a quote are usually about money and time rather than trade or complexity:
- There's a deposit or a progress claim. Any time money moves before the work is finished, both sides need it written down.
- The job runs over weeks rather than days. Long jobs accumulate changes, and changes are what contracts are for.
- The client is a business — a builder, a property manager, a strata committee. They will have their own terms, and if you don't have yours, theirs apply by default.
- You're subcontracting part of it. Your agreement with the client and your agreement with your subbie need to line up.
- It's residential building work. Most states require a written contract in a prescribed form above a set value. The threshold and the form differ by state, so check with your state's building authority rather than assuming your own document qualifies.
The most common contract in a trade business isn't a contract at all — it's your terms and conditions attached to the quote. For everyday residential work that's the proportionate answer, and it's the thing to get right first. A separate contract is for jobs where the money or the duration makes the risk worth a document of its own.
What belongs in a trade contract
A trade contract doesn't need to be long. It needs to answer, in order, who, what, how much, when, and what happens if.
| Section | What it has to do |
|---|---|
| The parties | Full legal names and ABNs of both sides — not a first name and "the client" |
| The work | Scope, exclusions and assumptions. Reference the quote by number and date rather than retyping it |
| The price | Fixed price, hourly rates or cost-plus — and GST inclusive or exclusive, said once and clearly |
| Payment terms | Deposit, progress claim points, invoice due days, and what happens when payment is late |
| Variations | How extra work gets approved and priced, before it gets done |
| Timing | Start, expected duration, and what extends it — weather, access, lead times, other trades |
| Site and access | Who provides access, at what hours, and what has to be cleared before you arrive |
| Client-supplied items | Who buys them, and who wears it when they arrive late, wrong or damaged |
| Insurance and licences | What cover you carry and your licence number — commercial clients will ask for both |
| Defects and warranty | What you'll come back for, for how long, and how the client makes a claim |
| Termination | How either side ends it, and what's payable for work done and materials already ordered |
| Disputes | Talk first, then mediation — a step before anyone reaches for a lawyer |
| Signatures | Names, positions and dates, from both sides |
The clauses that actually get used
Most of a contract sits there doing nothing for years. Three or four clauses do all the work, and they're the ones worth spending your effort on:
- Variations. The single most valuable clause in a trade contract. It should say that extra work is approved in writing before it starts, and how it gets priced — a rate, a rate plus margin, or a quoted sum. Without that, every extra is a negotiation after the fact, when you've already done the work and lost your leverage.
- Payment and suspension. Due dates, and a right to stop work while payment is overdue. That right is one of the few practical pieces of leverage a trade business has. Separately, each state has security of payment legislation that gives a statutory route for progress claims — worth knowing it exists and asking your lawyer how it sits alongside your contract, because it isn't something a template can answer.
- Delay and extension of time. Weather, late deliveries, another trade running over, a client who hasn't cleared the room. Say which of those extend your dates, and whether any of them cost the client money.
- Termination. Both directions. What you can do if they stop paying, what they can do if they change their mind, and what's payable for work completed and materials already on order.
Write the payment clause as if the client will be slow, because eventually one of them will be. A clause you wrote while imagining a good client is a clause that does nothing when you meet a bad one.
Building your own
- Start from the jobs you actually do. Write down the last five arguments you've had with clients. Nearly every one of them points at a clause you're missing.
- Write it in plain English. A contract nobody reads is a contract nobody follows. "You approve extra work in writing before we do it" beats three lines of borrowed legalese, and it holds up better because both sides understood it.
- Get it checked once. This is the step not to skip. A lawyer reviewing a draft you wrote is far cheaper than one drafting from scratch, it's a one-off cost, and it applies to every job you run through the document afterwards.
- Version it and date it. Put a version number in the footer. When a dispute lands two years later you need to know which wording that client actually signed.
- Get it signed before you start. A contract signed halfway through a job protects nobody. Signature before mobilisation, every time — and send the client their copy.
Where trade contracts go wrong
- Signing theirs without reading it. Builders, property managers and facilities companies will send their own terms. Back-to-back payment clauses, retention, liquidated damages and unlimited variations at your cost all live in those documents, and signing is a decision worth ten minutes of reading.
- The contract and the quote disagree. If the contract restates the scope in different words, you now have two versions of the truth. Reference the quote instead of duplicating it.
- A template written for somewhere else. Plenty of what you'll find online is drafted for the UK or the US. The structure travels; the law doesn't.
- No copy for the client. An agreement only one party can produce is an agreement you'll struggle to rely on.
- Terms that never get updated. Your rates, your lead times and your insurance change. If the document hasn't been touched in five years, it's describing a business you no longer run.
ServiceYak keeps your standard terms and scope wording on every quote you send, so what the client accepts is the same wording every time — and the accepted quote, the job and the invoice all point at one agreed scope instead of three versions of it.
Frequently asked questions
Do I need a written contract for every job?
No. For a call-out or a half-day job, a quote with solid terms and conditions attached is proportionate. Move to a contract once there's a deposit, progress payments, several weeks of work, or a commercial client. For residential building work most states set a value above which a written contract in a prescribed form is required — check with your state's building authority rather than guessing.
What's the difference between a contract and terms and conditions?
Terms and conditions are the standing rules that apply to every job you do, usually attached to or printed on the quote. A contract covers one specific job. Most trade businesses get more value from tightening their T&Cs than from drafting contracts, because the T&Cs apply to all of the work rather than the few biggest jobs.
Can I use a contract template I found online?
As a checklist of the sections, yes. As a finished document you rely on, no — most of what's freely available is written for another country's law, and the clauses that matter are exactly the ones that differ. Use one to see the shape, write your own in your own words, then pay a lawyer to review it once.
Who should write it — me or a lawyer?
Both, in that order. You write the first draft, because nobody understands your jobs, your variations and your usual arguments better than you do. A lawyer then checks it against current law and fixes what needs fixing. That's cheaper than a from-scratch drafting job and far better than an unchecked document.