Sunset Clauses

A sunset clause sets a date by which the contract must be completed or can be terminated. In some contracts, if that date passes - even where the delay was the builder’s fault - either party can walk away.

What a sunset clause does

It fixes a long-stop date and gives a right to terminate if the project is not completed by then.

It can operate even on the builder’s own delay

In some contracts the right can be triggered regardless of who caused the delay. Read the clause carefully. Note that the unfair contract terms provisions of the Australian Consumer Law may be relevant where a sunset clause in a standard-form contract operates unreasonably against the homeowner - if a term is found to be unfair, it can be declared void and unenforceable. The prohibitions on unconscionable conduct under the Australian Consumer Law may also be relevant where a builder invokes a sunset clause triggered by its own delay. If your contract contains a sunset clause that appears one-sided, obtain advice about your position before the builder attempts to rely on it.

It sounds reasonable but can be one-sided

A clause that appears protective can, in practice, allow a party to exit an inconvenient deal.

Check the trigger and consequences

Understand what date applies, who can terminate and what happens to money and work if it is used.

Watch it alongside extension-of-time provisions

Extensions can move completion; understand how they interact with the sunset date.

Questions to ask before signing

Is there a sunset clause?

What date applies?

Who can terminate and in what circumstances?

What happens to payments and work if it is triggered?

The key lesson

A sunset clause can sound reasonable and prove devastating. Understand who can use it, and when, before you sign.

Before You Sign

This guide provides general educational information for South Australian homeowners. It is not personalised legal advice. The effect of any issue depends on the wording of your own contract, schedules, Special Conditions, plans, specifications and the facts of the project. A good builder and a well-understood contract should work together. Before committing to one of the largest financial transactions you may ever undertake, consider having the actual contract reviewed so you understand the obligations, notice requirements and consequences before they are tested on site.

Before You Build. One Signature. One Chance.