New South Wales Consolidated Acts

HOME BUILDING ACT 1989 - SECT 7BA

7BA Cooling-off period: person may rescind a contract for residential building work within 5 days without penalty

(1A) This section applies to a contract only if the contract price exceeds the prescribed amount or (if the contract price is not known) the reasonable market cost of the labour and materials involved exceeds the prescribed amount. The
"prescribed amount" is the amount prescribed by the regulations for the purposes of this section and is inclusive of GST.

(1) A person who contracts with the holder of a contractor licence for residential building work to be done by the holder of the contractor licence may, by notice in writing, rescind the contract--

(a) in the case of a person who has been given a copy of the signed contract--at any time before the expiration of 5 clear business days after the person is given a copy of the contract, or

(b) in the case of a person who has not been given a copy of the signed contract within 5 days after the contract has been signed--at any time before the expiration of 5 clear business days after the person becomes aware that he or she is entitled to be given a copy of the signed contract.

(2) The notice must state that the person rescinds the contract and must be given--

(a) to the holder of the contractor licence personally, or

(b) by leaving it at the address shown in the contract as the address of the holder of the contractor licence, or

(c) by serving it on the holder of the contractor licence in accordance with any notice or service provision in the contract.

(3) If a notice is given in accordance with this section--

(a) the contract is taken to be rescinded from the time it was signed, but subject to the rights and obligations conferred by this section, and

(b) the holder of the contractor licence may retain out of any money already paid to the holder the amount of any reasonable out-of-pocket expenses the holder incurred before the rescission, and

(c) the holder of the contractor licence must refund all other money paid to the holder under the contract by (or on behalf of) the party who rescinded the contract at or since the time the contract was made, and

(d) the party who rescinded the contract is not liable to the holder of the contractor licence in any way for rescinding the contract.

(4) The cooling-off period may be shortened or avoided by a provision in the contract, but the provision does not take effect unless and until the other party to the contract gives the holder of the contractor licence (or the holder's Australian legal practitioner) a certificate that complies with subsection (5).

(5) A certificate complies with this subsection if it--

(a) is in writing, and

(b) is signed by an Australian legal practitioner, other than--

(i) an Australian legal practitioner acting for the holder of the contractor licence, or

(ii) any other Australian legal practitioner employed in the legal practice of an Australian legal practitioner acting for the holder of the contractor licence, or

(iii) any other Australian legal practitioner who is a member or employee of a firm in which an Australian legal practitioner acting for the holder of the contractor licence is a member or employee, and

(c) indicates the purpose for which the certificate is given, and

(d) contains a statement to the effect that the Australian legal practitioner explained to the other party to the contract the effect of the contract, the nature of the certificate and the effect of giving the certificate to the holder of the contractor licence.

(6) A contract can be rescinded under this section even if work has been done under the contract at the time of rescission.

(7) If a contract is rescinded under this section, the holder of the contractor licence is entitled to a reasonable price for the work carried out under the contract to the date the contract is rescinded.

(8) This section does not apply to any of the following contracts--

(a) a contract that is made between parties who each hold a contractor licence and is for work that each party's contractor licence authorises the party to contract to do,

Note : The exception in paragraph (a) applies to a subcontracting arrangement between licensees, and to a contract between licensees for work to be done on premises that one of the licensees owns.

(b) a contract entered into between the holder of a contractor licence and a developer in relation to the work,

(c) a contract that is supplied and fully prepared by or on behalf of the person who contracts with the holder of the contractor licence and no part of which is supplied or prepared by or on behalf of the holder of the contractor licence,

Note : The exception in paragraph (c) does not apply to a contract supplied and prepared by the person who contracts with the holder of a contractor licence if any terms or conditions are added to the contract by the holder of the contractor licence or his or her representative.

(d) a contract of a class prescribed by the regulations.