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Australian Standard®

Subcontract conditions

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AS 2545—1987
(Incorporating Amendment No. 1)
 This Australian standard was prepared by Committee OB/3, General Conditions of Contract.
It was approved on behalf of the Council of the Standards Association of Australia on
16 March 1987 and published on 6 April 1987.

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The following interests are represented on Committee OB/3:
Association of Consulting Engineers, Australia
Australian British Trade Association
Australian Electrical and Electronic Manufacturers Association
Australian Federation of Construction Contractors

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Australian Institute of Quantity Surveyors
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Australian Mining Industry Council

Building Industry Specialist Contractors Organization of Australia
Building Owners and Managers Association of Australia
Confederation of Australian Industry
Department of Housing and Construction
Electricity Commission of New South Wales
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Electricity Supply Association of Australia
Institution of Engineers, Australia
Master Builders Federation of Australia
Metal Trades Industry Association of Australia
National Association of Australian State Roads Authorities
National Public Works Conference
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Public Works Department, New South Wales

Railways of Australia Committee
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Royal Australian Institute of Architects

State Electricity Commission of Victoria
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Review of Australian Standards. To keep abreast of progress in industry, Australian Standards are subject to
periodic review and are kept up to date by the issue of amendments or new editions as necessary. It is important
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therefore that Standards users ensure that they are in possession of the latest edition, and any amendments thereto.
Full details of all Australian Standards and related publications will be found in the Standards Australia Catalogue
of Publications; this information is supplemented each month by the magazine ‘The Australian Standard’, which
subscribing members receive, and which gives details of new publications, new editions and amendments, and of
withdrawn Standards.
Suggestions for improvements to Australian Standards, addressed to the head office of Standards Australia, are
welcomed. Notification of any inaccuracy or ambiguity found in an Australian Standard should be made without
delay in order that the matter may be investigated and appropriate action taken.
 AS 2545—1987
(Incorporating Amendment No. 1)

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Australian Standard®
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Subcontract conditions
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First published . . . . . . . . . . . . . . . . . . . . . . . . . . . 1982

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Second edition . . . . . . . . . . . . . . . . . . . . . . . . . . . 1987

Reissued incorporating Amendment No. 1 (October 2000)
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PUBLISHED BY STANDARDS AUSTRALIA

(STANDARDS ASSOCIATION OF AUSTRALIA)
1 THE CRESCENT, HOMEBUSH, NSW 2140
ISBN 0 7262 4525 9
 AS 2545—1987 2

PREFACE
This standard was prepared by the Association’s Committee on General Conditions of Contract to
supersede AS 2545—1982 and to provide a set of compatible subcontract conditions for subcontracts
involving site work on projects where AS 2124—1986, General Conditions of Contract, is in use as the
head contract between the main contractor and the principal.
This Standard incorporates Amendment No. 1 (October 2000). The changes required by the Amendment
are indicated in the text by a marginal bar and amendment number against the clause, note, table, figure
or part thereof affected.

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Standard conditions of contract currently available including those in this group of standards and
applicable to a wide variety of engineering and construction contracts including supply of equipment with
or without erection, are as follows:
AS 2124—1986 General Conditions of Contract.
AS 2125—1986 General Conditions of Tendering and Form of Tender.
AS 2127—1986 Form of Formal Instrument of Agreement.
AS 2545—1987 Subcontract Conditions (compatible with AS 2124—1986).
AS CZ20—1970* Conditions of Contract for the Supply of Electrical and Mechanical Equipment, Plant

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and Machinery without Erection.

AS CZ21—1973* Conditions of Contract for the Supply and Erection of Electrical and Mechanical
Equipment.
AS CZ23—1970* Conditions of Tendering for use with AS CZ20 and AS CZ21.
AS CZ24—1970* Form of Formal Instrument of Agreement for use with AS CZ20 and AS CZ21.
AS CZ25—1970* Payment Certificate (recommended for use with AS CZ20 and AS CZ21).
This edition of this standard (AS 2545—1987) has been specially prepared to be compatible with
AS 2124—1986, AS 2125—1986 and AS 2127—1986, and is therefore recommended for use in
subcontracts under main contracts for which these editions are to be used.
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As far as possible, clause numbers in these subcontract conditions are parallel with the corresponding
provisions in AS 2124—1986.
There are many changes in this edition from the previous 1982 edition, most of which have been
necessitated by the changes in AS 2124—1986 from its previous 1981 edition. For an account of these
changes see the Preface to AS 2124—1986.
A Form of Formal Instrument of Agreement, which was not part of the 1982 edition is now included as
an annex at the end of AS 2545—1987. Attention is drawn to the desirability for the parties to this
contract to execute the Formal Instrument of Agreement at the earliest opportunity, immediately after the
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necessary documents to form part of the Subcontract are prepared. (See Clause 6.2 in this standard in
relation to the procedure for execution of the Formal Instrument of Agreement.)
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These conditions use the concept of ‘secondary subcontract’ and ‘secondary subcontractor’, defined in
Clause 2, instead of the concept of sub-subcontract and sub-subcontractor used in the 1982 edition.
Clause 10 now provides for the procedure for the use of Designated, Selected and Nominated
Subcontractors for secondary subcontracts largely following the procedure for the use of Designated,
Selected and Nominated Subcontractors for main contracts in Clause 10 of AS 2124—1986.
Attention is invited to the provisions of Clause 47 in terms of which the details of services and facilities
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to be provided are to be agreed between the parties and indicated in the Annexure.
A1  WARNING

 Legislation has come into force in some jurisdictions dealing with security of payments. Parties
 intending to use this Standard should seek expert advice as to their rights and obligations under
 such legislation.
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* In course of revision.

© Copyright STANDARDS AUSTRALIA

Users of Standards are reminded that copyright subsists in all Standards Australia publications and software. Except where the Copyright Act
allows and except where provided for below no publications or software produced by Standards Australia may be reproduced, stored in a
retrieval system in any form or transmitted by any means without prior permission in writing from Standards Australia. Permission may be
conditional on an appropriate royalty payment. Requests for permission and information on commercial software royalties should be directed
to the head office of Standards Australia.
Standards Australia will permit up to 10 percent of the technical content pages of a Standard to be copied for use exclusively in-
house by purchasers of the Standard without payment of a royalty or advice to Standards Australia.
Standards Australia will also permit the inclusion of its copyright material in computer software programs for no royalty payment
provided such programs are used exclusively in-house by the creators of the programs.
Care should be taken to ensure that material used is from the current edition of the Standard and that it is updated whenever the Standard is
amended or revised. The number and date of the Standard should therefore be clearly identified.
The use of material in print form or in computer software programs to be used commercially, with or without payment, or in commercial
contracts is subject to the payment of a royalty. This policy may be varied by Standards Australia at any time.
 3 AS 2545—1987

CONTENTS

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1 CONSTRUCTION OF SUBCONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2 INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3 NATURE OF SUBCONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

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4 BILL OF QUANTITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5 SECURITY, RETENTION MONEYS AND PERFORMANCE UNDERTAKINGS . . . . . . . . . . . . . . . . 8
6 EVIDENCE OF SUBCONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7 SERVICE OF NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8 SUBCONTRACT DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9 ASSIGNMENT AND SUBCONTRACTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10 DESIGNATED, SELECTED AND NOMINATED SUBCONTRACTORS . . . . . . . . . . . . . . . . . . . . . . 11

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11 PROVISIONAL SUMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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12 LATENT CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13 PATENTS, COPYRIGHT AND OTHER INTELLECTUAL PROPERTY RIGHTS . . . . . . . . . . . . . . . . 14
14 STATUTORY REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15 PROTECTION OF PEOPLE AND PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16 CARE OF THE WORK AND REINSTATEMENT OF DAMAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
17 DAMAGE TO PERSONS AND PROPERTY OTHER THAN THE WORKS . . . . . . . . . . . . . . . . . . . . 16
18 INSURANCE OF THE WORKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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19 PUBLIC LIABILITY INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
20 INSURANCE OF EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
21 INSPECTION AND PROVISIONS OF INSURANCE POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
22 CLERK OF WORKS AND INSPECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
23 MAIN CONTRACTOR’S REPRESENTATIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
24 DIRECTIONS BY OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
25 SUBCONTRACTOR’S REPRESENTATIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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26 CONTROL OF SUBCONTRACTOR’S EMPLOYEES AND SUBCONTRACTORS . . . . . . . . . . . . . . . 19

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27 SITE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
28 SETTING OUT THE WORKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
29 MATERIALS, LABOUR AND CONSTRUCTIONAL PLANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
30 MATERIALS AND WORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
31 EXAMINATION AND TESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
32 WORKING HOURS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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33 PROGRESS AND PROGRAMMING OF THE WORKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

34 SUSPENSION OF THE WORKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
35 TIMES FOR COMMENCEMENT AND SUBSTANTIAL COMPLETION . . . . . . . . . . . . . . . . . . . . . . 25
36 DELAY COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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37 DEFECTS LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
38 CLEANING UP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
39 URGENT PROTECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
40 VARIATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
41 DAYWORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
42 CERTIFICATE AND PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
43 PAYMENT OF WORKERS AND SECONDARY SUBCONTRACTORS . . . . . . . . . . . . . . . . . . . . . . 31
44 DEFAULT OR INSOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
45 TERMINATION BY FRUSTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
46 DISPUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
47 SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
 AS 2545—1987 4

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ANNEXURE PART A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
APPROVED FORM OF UNCONDITIONAL UNDERTAKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

ANNEXURE PART B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
CERTIFICATE OF SUBSTANTIAL COMPLETION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
FORM OF FORMAL INSTRUMENT OF AGREEMENT FOR SUBCONTRACT . . . . . . . . . . . . . . . . 45

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INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

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AS 2545-1987 (Reference Use Only), Subcontract

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