A fit-out contract sets how the price can change, when you pay, what happens when the work changes and who carries the cost of opening late. For a shop, café, salon, clinic or office in NSW, the law leaves most of those terms to you and the builder, so the contract is where your protection sits.
Most owners first see it after choosing the builder, with the lease already running. This is what to check at that point, under the NSW rules as at October 2026.
Which fit-out contract should a small business use?
A written one, signed before work starts. The choice is between the builder's own form and a published standard form, each written for a particular kind of job.
| Contract | Published by | Written for |
|---|---|---|
| AS 4000:2025 | Standards Australia, June 2025 | Construct-only work run by a superintendent; the new edition keeps the 1997 split of risk |
| AS 4902 | Standards Australia | Design and construct; to be revised to match AS 4000:2025 |
| AS 4905 and AS 4906 | Standards Australia | Simple construct-only jobs (minor works), run by a superintendent or by the owner |
| ABIC contracts | Australian Institute of Architects with Master Builders Australia | Jobs an architect runs, with a commercial version |
| Association commercial forms | Builders' industry associations | Small and medium commercial jobs |
| The builder's own form | The builder | Anything. Read this one most closely |
Two things matter more than the name on the cover. Standard forms put each job's numbers in a schedule to fill in: the completion date, the damages for delay, the security, the defects period. And special conditions, usually a few pages at the back, can rewrite any clause. Read those first, because that's where a balanced form can become one-sided.
Fixed price or cost-plus: which suits a fit-out?
With a fixed price (a lump sum), the builder agrees one price for the work in the drawings and specification. With cost-plus, you pay the actual cost, backed by invoices, plus the builder's margin.
| Fixed price | Cost-plus | |
|---|---|---|
| You know at signing | The price for what's drawn | An estimate and the margin |
| Rising costs fall on | Mostly the builder | You |
| Check | Exclusions and provisional sums | The margin, what counts as a cost, the invoices, a cap |
| Suits | Complete drawings | Work nobody can define yet |
I'd want a fixed price for a small fit-out with complete drawings: you know the number before work starts, and you can compare it with other quotes. It's fixed only for what's drawn, though. Provisional sums and exclusions are where it changes, and our guide to comparing fit-out quotes goes through them.
If cost-plus is the sensible route, say on a refurbishment where the walls haven't been opened, agree in writing the margin, what counts as a cost, your right to see every invoice, and a figure at which the builder must stop and re-estimate.
What should a fit-out building contract say?
Whichever form you sign, check that it covers these, with no blanks:
- The drawings, specification and finishes schedule the price is based on, listed by revision
- The price with GST shown, the provisional sums and the exclusions
- A start date, a date for practical completion and a program
- How the builder claims extra time, and its deadline for giving notice of a delay
- Liquidated damages, as a dollar amount per day or week
- Variations by written instruction only, priced before the work
- Who pays for hidden problems found after the strip-out, such as asbestos or an old drain
- Payment stages, and how many days you have to pay
- Security or retention, the defects liability period, and when the security is released
- Contract works, public liability and workers compensation insurance, with certificates before work starts
- That you appoint the principal certifier
- The steps for a dispute
Practical completion is the finish line, and each contract defines it. In the ABIC simple works form, the work must be substantially complete, with anything left minor enough not to unreasonably affect your use of the space. You appoint the principal certifier, and the builder can't; the free fit-out design guide explains why that matters.
Why don't the home building protections apply to a fit-out?
On a home in NSW, the deposit is capped at 10% of the price. Jobs over $20,000 (incl. GST) need home building compensation cover, which steps in if the builder can't finish or fix defects because of insolvency, licence suspension, death or disappearance. Statutory warranties run for six years on major defects and two on the rest.
All of that is home building law, written for building, altering or adding to a dwelling. A café, shop, salon, clinic or office fit-out is commercial work, so there's no legal cap on the deposit and no government-backed insurance behind your builder.
Your protection comes from payments tied to finished work, security held through the defects period and insurance certificates checked before work starts. On a job under $100,000, your business may also count as a consumer under the Australian Consumer Law, which requires services supplied with due care and skill.
How do variations work, and how do you stop them turning into a dispute?
A variation is any change to the work in the contract. On a fit-out, variations come from a change of mind, a request from council, the landlord or a shopping centre that the drawings didn't cover, or something hidden turning up when the old fit-out comes out.
The standard forms handle this in writing. Under the ABIC simple works contract, the architect can ask for a quote for a variation before deciding whether it goes ahead, and a builder that goes ahead with a change affecting time or cost without an instruction to proceed gives up the right to claim for it later.
Whatever the form, these habits keep variations out of the final argument:
- Agree in the contract how variations are priced: a margin on cost, or a schedule of rates.
- Name the one person on each side who can approve one.
- Get each change priced, with its effect on time, before the work is done, and a credit when work comes out.
- Keep a running list of variations, attached to every progress claim.
- Hold a contingency for hidden conditions. Our café and restaurant fit-out cost guide explains who should authorise spending it.
A change agreed out loud on site, with the price left for later, is the kind that gets argued over at the end.
How should the deposit and progress payments work?
There's no legal cap on a commercial fit-out deposit, so ask what it pays for. A deposit tied to ordering shopfront glass, joinery or kitchen equipment with long lead times is easier to judge than a round percentage.
After that, tie each payment to a finished stage of work, which is also what NSW advises home owners. For a small café or shop, the stages could be:
| Stage | Paid when |
|---|---|
| Strip-out | The old fit-out is gone and the space is clean |
| Rough-in | Plumbing, electrical and ducts are in, before the walls close |
| Walls and ceilings | Partitions and ceilings are up and finished |
| Joinery and finishes | Counters, tiling, floors and painting are complete |
| Practical completion | The work is done apart from minor defects, and the trade certificates are with your certifier |
The Security of Payment Act sits underneath this. A builder has a right to progress payments even if the contract says it hasn't, and can claim monthly unless the contract sets other dates. Each claim must come with a statement that the builder's subcontractors have been paid.
Security, or retention, is money or a bank guarantee you hold until the builder has met its obligations. The ABIC simple works form defaults to 5% of the price, with half released at practical completion and the rest after the defects period. On a $200,000 contract (ex GST), that's $10,000, with $5,000 still held while defects get fixed.
What do you do when the builder sends a payment claim?
Under the Building and Construction Industry Security of Payment Act 1999, you're a "respondent" if construction work is done for you in NSW and you don't live, or plan to live, where it's done. A business fitting out its premises usually is.
If you'll pay less than the full claim, even nothing, send a payment schedule. It must be in writing, identify the claim, state the amount you'll pay (nil is allowed) and give every reason for paying less. It must reach the builder within 10 business days of your receiving the claim, or sooner if your contract says so. If the claim goes to adjudication, you can't raise a reason that wasn't in your schedule.
Miss the deadline and you're liable for the full amount claimed. The builder can go to court or apply for adjudication, and you can't defend it with the contract or a cross-claim.
| Step | Business days |
|---|---|
| Your payment schedule reaches the builder | Within 10 of receiving the claim |
| You pay a head contractor's claim | Within 15 of it being made; a contract can shorten this, never lengthen it |
| You respond to an adjudication application | 5 after receiving it, or 2 after the adjudicator accepts, whichever is later |
| The adjudicator decides | Within 10 of accepting |
Ten business days is two working weeks, often while you're trying to open. Treat every claim from the builder as if the clock is running, and pay the part you agree with by the due date.
What happens if the fit-out runs late?
The contract names a date for practical completion, and the standard forms give the builder more time for delays it didn't cause and the contract lists, such as your variations or a slow approval, if it gives notice on time. Under the ABIC simple works form, that's within two working days of the delay starting.
Liquidated damages are what a late finish costs the builder: a fixed amount per day or week past the adjusted date. The ABIC user guide says the rate should be a reasonable estimate of what you'd actually lose, and that form has no default. Leave the box empty and the clause does nothing.
Work the rate out from your own costs. Say rent and outgoings are $3,000 a week ex GST. Four weeks late is $12,000 before the first customer, plus wages for staff you've already hired. A rate of $100 a day (damages carry no GST) covers $2,800 of it.
Then match the completion date to your rent-free period; the café fit-out timeline guide covers the lease side.
Can a builder's standard contract be unfair?
It can be. Since 9 November 2023 there are penalties for proposing, using or relying on an unfair term in a standard form contract with a small business (fewer than 100 employees or turnover under $10 million). A standard form contract is prepared in advance and offered take it or leave it, so a builder's own contract with no room to negotiate can be one.
Terms that let one side change or end the contract, decide alone whether there's been a breach, or limit the other side's right to sue can be unfair. The upfront price isn't tested, and only a court can declare a term unfair and void. Treat the law as a backstop, and raise one-sided clauses before you sign.
What this means for you
- Get complete drawings and an itemised quote first. Our guide to choosing a fit-out builder covers licences and insurance.
- Ask for the contract with the quote, and read the special conditions first.
- Fill every blank: completion date, damages rate, security, defects period and payment days.
- Agree who approves variations on each side.
- Check the dates against your lease.
- Send payment claims to one inbox, with a reminder well before day 10.
- Have a solicitor who works on construction contracts review it before you sign. If a dispute comes later, the NSW Small Business Commission offers low-cost mediation between businesses.
Our fit-out construction team builds commercial fit-outs to our architects' drawings or yours, on a written building contract with progress payments tied to stages of the work. If you need the design and approvals first, see fit-out design.
Questions people ask
How much deposit can a builder ask for on a commercial fit-out in NSW?
There's no legal limit. The 10% cap applies to residential building work, so on a shop, café or office fit-out the deposit is whatever you agree. Ask what it pays for, tie it to something you can see, such as an order for joinery or equipment, and check the builder's insurance certificates before you pay.
Does home warranty insurance cover a commercial fit-out?
No. Home building compensation cover, formerly called home warranty insurance, is for residential home and renovation projects over $20,000 including GST. A shop, café or office fit-out is outside it, so nothing government-backed pays out if your builder goes broke. Staged payments and the security you hold are what limit your exposure.
Can a builder charge for a variation I didn't approve in writing?
Your contract decides, so read its variation clause. Standard forms tie variations to a written instruction; under the ABIC simple works contract, a builder that goes ahead without an instruction to proceed gives up the claim. It can still appear in a payment claim, so if you dispute it, give your reasons in a payment schedule within 10 business days.
Can a builder stop work if I don't pay?
Under the Security of Payment Act, yes, if by the due date you haven't paid the full claim (having sent no schedule) or the amount in your own schedule, or if an adjudicated amount is unpaid after 5 business days. The builder must give 2 business days' written warning, isn't liable for your losses while work stops, and must restart within 3 business days of being paid.
Sources
- Responding to a payment claim, NSW Government, 2026
- Security of payment: progress payments and key deadlines, NSW Government, 2026
- Making a payment claim, NSW Government, 2026
- Contracts for residential building work, NSW Government, updated 29 April 2026
- General building work licences, NSW Government, updated 3 September 2026
- Home building compensation cover, Service NSW, 9 September 2024
- New unfair contract penalties a win for small business, NSW Small Business Commissioner, 13 September 2023
- Unfair contract terms, Queensland Office of Fair Trading, updated 9 December 2025
- Standards Australia updates AS 4000:2025, Standards Australia, 30 June 2025
- ABIC SW 2018 Simple Works Contract User Guide, Australian Institute of Architects and Master Builders Australia, 2018
