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| Faster Payments for Building Contractors |
| Legislation regulating construction contracts is designed to significantly improve the cash flow situation for building contractors. The legislation imposes unique remedies by enforcing strict time limits for payment of invoices and providing a means of obtaining payment when the debtor may have insufficient funds. |
When drawing up invoices, building contractors need to include the words "this is a claim under the Building and Construction Industry Security of Payment Act 1999" to ensure that a series of time limits takes effect from the date of receipt of the invoice. |
If, within 10 working days of receiving the invoice the other party has not provided a payment schedule, a building con-tractor can then sue to recover payment and, by giving two business days notice, suspend performance of the contract until the invoice is paid. |
A payment schedule must be in writing and it must be served before the expiration of 10 business days after the payment claim has been received. The payment schedule must identify the payment claim, show the amount being paid, and the reasons for not paying the money claimed. |
Building contractors who receive a payment schedule then have five business days in which to serve an adjudication application on an authorised nominating authority. Failure to apply for adjudication within the time limit means that the right to adjudication is lost. |
The party receiving notice of the adjudication application has five business days to make a submission or two business days after receiving a notice from the adjudicator of their acceptance of the adjudication application. An adjudicator then has four business days in which to accept an adjudication application and 10 business days in which to make a decision on the dispute. The party owing money has two business days in which to pay the amount of the decision or lodge security for payment. |
The legislation provides a unique method of obtaining payment on account of a claim or security for payment. If there is doubt about whether the other party has funds to meet the payment, a building contractor can pursue a parallel claim under the legislation. If the con-tractor adheres strictly to the schedule of time limits, the con-tractor could expect payment or security for payment within 26 business days after serving a payment claim. |
