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11 Consumers 395Types of contracts[11.750] Fixed price contractsA fixed price contract is intended to be for a“fixed price” or specified amount. A fixedprice contract will state a price for the entireproject and will usually specify when pay-ments (progress payment schedules) are tobe made. These types of contracts do notusually remain fixed throughout the entirebuild due to variations (see section [11.790]of this chapter for variations).Other types of contracts[11.760] Cost plus contractsA cost plus contract is only used in extremelylimited circumstances, usuallywhere the price cannot be determinedupfront. It is a contract where the tradespersonis reimbursed for the direct and indirectcosts of the work plus a tradesperson’spercentage or fee. It is essential that thecosts are monitored extremely closely, otherwisethe final amount often may end upbeing significantly higher than what theconsumer intended.[11.770] Design and constructcontractsA design and construct contract covers boththe design and construction of a residentialproperty. Further investigations should bemade with NSW Fair Trading or a privatesolicitor before entering into these types ofcontracts.Note: Architectural designs are not coveredby the HBA.[11.780] Deposits forcontractsSection 8 of the HBA sets the maximumdeposits payable for home buildingcontracts. For contracts entered into after thecommencement of the Home Building AmendmentAct, the maximum deposit a tradespersoncan charge is 10% of the price, regardlessof the contract price. For contractsentered into before the HBAA 2014, themaximum deposit a tradesperson can chargeis 10% for contracts under $20,000 and 5% ifthe contract price is more than $20,000.[11.790] Variations oncontractsVariations are any changes (additions ordeletions) that are made to a contract after ithas been signed. Variations can be requestedby either the tradesperson or the consumer.It is the obligation of the tradesperson to putall variations in writing to the consumer andto obtain the signature of both parties priorto the commencement of the variation work(HBR Schedule 2, Reg 1(2) and HBAA 2014,Sch 2(1), (2)). The variation should contain:• a written description of the work• any plans or specifications for the work• the extra cost, and any extra time requiredto complete the work.The Australian Standards (AS 2124 – 1992)also detail how variations should be conductedso as to be legally binding. Thetradesperson may need to vary the contractbecause of unforeseen circumstances such asthe possibility of a hazard to the health orsafety of any person, to the public ordamage to property (HBA, s 6(2A)). If the