Enforceability of Oral Building Contracts in Queensland

Last reviewed and updated: April 2026

On 6 November 2015 the Queensland Court of Appeal handed down their decision in Nichols v Earth Spirit Home Pty Ltd [2015] QCA 219 (Earth Spirit), whereby building contracts which are wholly oral are enforceable, despite it being an offence pursuant to the Queensland Building and Construction Commission Act 1991 (Qld) (the Act) for a builder to enter into an oral building contract.

Earth Spirit involved a family who initially contracted, in writing, Earth Spirit Home to construct 10 houses in south Brisbane. Following a dispute, the parties terminated the contract. The Applicant, Nichols, subsequently engaged Earth Spirit Home to complete the construction for a weekly management fee. As security for the works, Nichols deposited $250,000.00 to the Master Builders Association.

The second contract was never effectively reduced to writing and the parties fell into a dispute in relation to the payment of the weekly management fees. The dispute was heard in the Queensland Civil and Administrative Tribunal and again in its appeals division where the tribunal ruled that despite the fact that it is an offence for a registered builder to enter into an oral building contracts pursuant to section 67G of the Act, there Act does not contemplate the contract being unenforceable.

On appeal to the Queensland Court of Appeal Boddice J, with McMurdo P and Philippides JA agreeing, drew from Freedom Homes Pty Ltd v Botros[2000] 2 Qd R 377 which treated a similar provision to section 67G. That case held that “there is nothing in … the legislation that provides that a registered builder who contravenes its terms is disentitled from recovering payment for the work carried out”.

Boddice J further held that the conclusion that 67G does not impliedly render an oral building contract unenforceable is supported by other provisions in the Act, namely section 67E. Section 67E effectively provides that if by entering into a building contract a party commits an offence, that fact does not have the effect of making the contract void or voidable.

For builders, this judgment means that while a builder may be liable to a penalty for entering into an oral building contract, the penalty or the offence itself does not preclude the builder from being compensated for the work which was done.

In the case of Earth Spirit, the tribunal ordered that the $250,000.00 paid to the Master Builders Association by Nichols must be paid to Earth Spirit Home for the work it carried out under the oral building contract, which was upheld on appeal.

Notwithstanding this decision, his honour also dealt with a number of public policy considerations which arguably may have the effect of rendering the building contract unenforceable on the basis of the illegality of the contract. These considerations namely went to the severity of the illegality of the contract and whether it merits the Court refusing to enforce the contract.

While the enforceability of oral building contracts has been settled by the Queensland Court of appeal in its decision in Nichols v. Earth Spirit Home builders must still exercise caution if they have been engaged to carry out work under an oral agreement, namely as they remain liable to penalties under the Act.

What Does the QBCC Act Require for Written Building Contracts?

Under the Queensland Building and Construction Commission Act 1991 (Qld), a registered builder who enters into a domestic building contract for residential construction work valued above the prescribed threshold is required to have the contract in writing. Section 67B requires that the contract be in the approved form, signed by all parties, and include specific content such as the contractor’s licence number, a description of the work, the contract price, and the commencement and completion dates.

Failure to comply with these requirements is an offence. However, as the Queensland Court of Appeal made clear in Nichols v Earth Spirit Home, committing that offence does not automatically render the underlying contract unenforceable.

The Court’s Reasoning: Offence vs Enforceability

The distinction drawn by the Court of Appeal is a critical one for both builders and property owners in Queensland. The question is not whether the builder acted lawfully in entering into the contract — they did not, because the contract was oral. The question is whether the legislature intended the Act to strip the builder of their right to recover payment for work actually completed.

Boddice J, applying the reasoning in Freedom Homes Pty Ltd v Botros [2000] 2 Qd R 377, held that nothing in the QBCC Act indicated Parliament intended to go that far. Section 67E of the Act specifically contemplates that a contract entered into in breach of the Act is not automatically void or voidable. The Court treated this as a strong indicator that the legislature intended builders to retain their right to recover — subject to the court’s broader discretion on illegality grounds.

The Illegality Defence: When a Court Might Still Refuse to Enforce

Even where an oral building contract is technically enforceable, a court retains a broad discretion to refuse enforcement where the contract was entered into illegally and enforcing it would be contrary to public policy. Boddice J in Earth Spirit acknowledged this discretion, noting that courts consider factors including:

• The severity of the illegality — a minor technical breach (such as failing to include one required clause) will be treated differently from a deliberate, systemic scheme to avoid consumer protections.
• The relative fault of the parties — if both parties knowingly entered into the oral agreement, a court is less likely to excuse the owner from payment entirely.
• The public interest — if enforcing the contract would undermine the specific consumer protections the QBCC Act was designed to create, a court may decline to assist.

In practice, the illegality defence is difficult to run. Queensland courts have consistently held that builders should not be deprived of payment for work actually completed simply because the contract was not documented in the prescribed form.

Practical Implications for Builders and Property Owners

The Earth Spirit decision provides important practical guidance for anyone involved in a Queensland building dispute:

• For builders: You may still recover payment for work completed under an oral contract, but you remain exposed to QBCC penalties for the regulatory breach. You should document all verbal variations and agreements in writing — emails, text messages, and contemporaneous notes all assist in establishing the terms of an oral agreement if disputed.
• For property owners: You cannot simply refuse to pay a builder because the contract was never signed. If work was completed, payment obligations are likely to survive. A dispute about the scope or price of oral work is a factual question — not a legal get-out.
• For both parties: If a dispute arises over an oral building contract, the strength of your position will depend heavily on the evidence available. Invoices, payment records, emails, and witness accounts are all relevant. Legal advice early in the dispute is strongly recommended.

Frequently Asked Questions

Is an oral building contract valid in Queensland?

Yes. An oral building contract is enforceable in Queensland even though entering into one without the required written documentation is an offence under the QBCC Act. The Queensland Court of Appeal confirmed this in Nichols v Earth Spirit Home Pty Ltd [2015] QCA 219.

Can a builder be penalised for an oral building contract?

Yes. A registered builder who enters into an oral domestic building contract may face penalties under the QBCC Act. Enforceability of the contract and liability for the regulatory offence are separate questions.

Can a property owner refuse to pay under an oral building contract?

Generally, no. Where a builder has completed work under an oral agreement, the property owner will ordinarily be required to pay for that work. Refusing to pay because the contract was not in writing is unlikely to succeed in a QCAT or court proceeding.

What evidence do I need to prove an oral building contract?

Courts will consider all available evidence of the agreement, including emails, text messages, invoice records, payment histories, photos of the work, and witness evidence. The stronger and more consistent your documentary evidence, the better your position.

If you are involved in a building or construction dispute in Queensland, Boss Lawyers can help. Contact our construction lawyers Brisbane for practical advice on your options.

How Boss Lawyers Can Help

If you need guidance on this issue, our experienced team can provide practical, strategic advice tailored to your situation. Our practice areas include commercial litigation lawyers, debt recovery lawyers.

Contact Boss Lawyers on 1300 267 711 or visit bosslawyers.com.au.

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Disclaimer: This article provides general information only and does not constitute legal advice. You should obtain specific legal advice relevant to your circumstances before taking any action.

This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances. For expert advice, contact Boss Lawyers on 1300 267 711.