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Defects and demands

Defects and demands

By Harrison Wall

Real Property Securities 

The recent case of Dedert Corporation v United Dalby Bio-Refinery Pty Ltd [2017] VSCA 368 (Dedert) demonstrates that where a principal seeks to have recourse to security under a construction contract in reliance on a bona fide claim for the cost of rectifying defects, not only must it have a contractual right to do so, but it must also satisfy any contractual qualifications or stipulations when exercising that right.
Security as a protection against the risk of defective work
Defects are a common ground of dispute in building projects. Principals protect themselves against the risk of a contractor failing to rectify a defect by requiring the contractor to provide security. The two main forms of security given by contractors under building contracts are:

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