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Construction Contracts Act may hold solutions for builders' slow paying clients

By Geoff Hardy - 3 May 2017

Could payment claims help you in your projects? If you're a builder seeking payment from a tardy client, the Construction Contracts Act 2002 has provisions that could help. We set out the steps below:

1. The builder serves a payment on the client. A payment claim is a document that states:

  • how much the builder believes is owed
  • when it is payable
  • how the account was calculated
  • what work it relates to
  • what period it relates to

It must also state that it is issued under the Construction Contracts Act 2002 and must have a prescribed form attached to it which explains what the client is to do.

2. The client has 20 working days (unless varied by the contract) to either pay the claimed amount or serve a payment schedule on the builder disputing it.

If this is not done, or the payment schedule is invalid, the amount claimed becomes a due debt. This means the builder can recover the unpaid amount and costs of recovery awarded against the client in Court.
The builder can also serve a notice on the client of its intention to suspend work.
If the payment schedule is valid, the client must pay the undisputed part of the payment claim by the due date. If the client fails to pay, the unpaid amount also becomes a due debt and is recoverable in Court. Failure to pay the scheduled amount also gives the builder the right to suspend works.

3. If this is not done, or the payment schedule is invalid, the amount claimed becomes a due debt. This means the builder can recover the unpaid amount and costs of recovery awarded against the client in Court.

4. The builder can also serve a notice on the client of its intention to suspend work.

5. If the payment schedule is valid, the client must pay the undisputed part of the payment claim by the due date. If the client fails to pay, the unpaid amount also becomes a due debt and is recoverable in Court. Failure to pay the scheduled amount also gives the builder the right to suspend works.

For help with your payment claims, contact Geoff Hardy or Kiren Narayan.

 

 

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