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The definition of a construction contract according to the Security Of Payment Act NSW is:

“construction contract” means a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party.

The “contract or other arrangement” may be entirely written, part written and part oral, or entirely oral.

If the contract is a formal instrument of agreement (a highly detailed written document) parties entering into such a legally binding contract are best advised to ensure that they understand both their rights and their obligations under such a contract. Where large sums of money are involved it is suggested that professional advice is obtained before executing such a document.

If the contract is a simple oral agreement it is strongly recommended to create a written record of the agreement and send it to the other party by email or sms text message to avoid dispute in the future as to the nature of the agreement.