Variations to VIC residential building contracts: written and signed under DBCA section 38

What a variation is

A variation is any agreement between a builder and homeowner to change the scope, materials, finishes or price of work that was set out in the original major domestic building contract. Variations come up on almost every job. Homeowners change their mind about a fixture, the builder discovers an unforeseen site condition, a council condition requires an adjustment.

The Domestic Building Contracts Act 1995 (Vic) takes a strict line. Variations must be in writing and signed by both parties before the work is done. A handshake or a verbal agreement is not enough.

The legal rule

Section 38 of the Domestic Building Contracts Act 1995 (Vic) requires variations to a major domestic building contract to be in writing and signed by both the builder and the homeowner before the variation work is started.

The variation must include sufficient detail to identify the work being added, removed or changed, the price impact (including a cost estimate where the price is not fixed at the time of variation) and the time impact on the contract completion date.

A variation that does not meet section 38 is not enforceable by the builder against the homeowner.

What a compliant variation looks like

A compliant variation document identifies the work being added, removed or changed in enough detail that a reasonable third party reading later can identify what was agreed.

It states the price impact: a specific dollar amount inclusive of GST, or a clearly stated rate where the work is priced hourly or per unit. For variations where the cost cannot be precisely fixed at the time of the variation, the builder must provide a cost estimate.

It states the time impact if any. Variations that affect the program need to extend the contract completion date in writing.

It carries the date and signatures of both parties. Email exchanges that exchange the variation in writing and are countersigned by reply or attached PDF can satisfy the written-and-signed test if both parties have clearly signed.

Consequences of unsigned variations

If a variation is not in writing and signed before the work is performed, the builder cannot rely on it as part of the contract to recover payment. The Domestic Building Contracts Act denies enforcement.

Limited equitable remedies such as quantum meruit may be available outside the contract, but they are harder to win, take longer to resolve through VCAT and produce uncertain results. Recent Victorian court decisions have narrowed the equitable pathway. The safest assumption for a Victorian builder is that if it is not in writing and signed, it is not getting paid as a variation.

Cost estimate requirement

A distinctive feature of the Victorian regime is the cost estimate requirement. Where the variation price cannot be precisely fixed at signing (a prime cost item or an open-priced variation), the builder must give the homeowner a cost estimate before the variation work starts.

The estimate must be a reasonable estimate of the likely cost. If the actual cost differs materially from the estimate when the work is complete, the builder must promptly explain the difference and seek a further written variation if needed.

Failure to provide a cost estimate, or to update the estimate as actual costs become known, exposes the builder to claims that the variation was not properly notified.

Variations to plans and specifications

Section 38 applies to changes to plans and specifications as well as scope or price. A homeowner who asks for a different window manufacturer mid-build is varying the specification. The variation needs to be recorded the same way as a scope change.

This catches builders out where the change is small and seems administrative. A different brand of tap, an upgraded light fitting, a substituted timber species: each is a specification variation and each needs the signed document trail to be enforceable as part of the contract.

Comparison to NSW

The Victorian and NSW variation regimes share the written-and-signed rule but differ in detail.

Section 38 of the DBCA (Vic) requires variations to be in writing, signed by both parties, with cost-estimate provisions for variations where the price is not fixed at signing.

Section 7E of the HBA (NSW) and Schedule 2 require variations to be in writing and signed by or on behalf of each party, but do not have an equivalent cost-estimate provision.

In practice both jurisdictions enforce the same outcome: oral variations cannot be enforced as contract variations.

Practical advice for builders

Three habits make variation administration painless.

Use a numbered variation form. Both HIA and Master Builders Victoria standard contracts include or accompany variation forms with the right structure. Number them so the contract administration trail is clean.

Document and sign the variation before performing the work. Once the bathroom is tiled it is too late to argue about whether the upgrade was agreed. The legal protection for the builder lies in the prior signature, not in the finished workmanship.

For cost-uncertain variations, give a written cost estimate up front. Update the estimate as actual costs become known. The cost-estimate paper trail is the difference between a clean recovery and a disputed claim at VCAT.

Related entries

The choosing-residential-building-contract-nsw entry covers contract selection that includes the variation framework. The variations-residential-building-contracts-nsw entry covers the equivalent NSW rule under HBA section 7E. The cooling-off-residential-building-contracts-vic entry covers a separate consumer-protection mechanism. The statutory-warranties-dbca-vic entry covers warranties that continue regardless of variation arrangements.