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The Construction Contracts Act 2004 (the ‘Act’) introduced laws to facilitate prompt payment for building work. As a result of the Act, note that ‘pay if paid’ and ‘pay when paid’ clauses in construction contracts are void. A contract term requiring payment to be made more than 50 days after the payment is claimed is read as requiring payment to be made within 50 days of the claim.
Where there is no written contract term covering basic payment provisions the Act implies terms into the contract including:
The Act sets out strict requirements for progress payment claims. Before any entitlement to payment arises, a payment claim must be given to the party whom the claim is against. The claim must comply with the requirements of the Act and it is to:
If a contractor gives a progress payment claim, the contractor is not prevented from making other claims for payment under the contract.
A party that has been given a payment claim must pay the claim in accordance with the contract. To dispute the claim, unless the contract otherwise has written provision, that party has 14 days from receiving the claim. A notice of dispute must comply with the Act. If the claim is not disputed, unless the contract otherwise has written provision, payment must be made within 28 days of receiving the claim.
Note that HIA has prepared some sample notices to assist members in complying with the procedural requirements of the Act where a payment dispute proceeds to rapid adjudication.
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