Payment behaviour in the New Zealand building industry is about to fundamentally change for the better. The proposed Construction Contracts Act will introduce transparency and accountability to the process, as well as removing the most common obstacles to the flow of payments.
At the time of writing the legislation was known as the Construction Contracts Bill 2001, a government bill sponsored by the Associate Minister of Commerce, the Hon Laila Harre. The bill had been unanimously approved by Select Committee and was expected to pass through its final stages by May 2002.
A snapshot of the Act
The Act focuses on improving cash flow, through three main provisions:
> Facilitating regular and timely payments between the parties to a construction contract by providing default payment terms that apply when a contract is silent on a particular aspect. Under the Act, a payer becomes liable for payment of a claim unless he or she provides a written payment schedule before the payment due date. This details how the payment was calculated and, most importantly, states the reasons for any amount(s) not approved for payment or deductions made. The Act also renders any provisions making payment conditional on receiving payment from a third party (the infamous "pay when paid" clause) legally ineffective.
> Providing for the speedy resolution of disputes through a fast-track adjudication process. This allows a party …