Legal update - Construction Contracts Act
16 February 2016
The Construction Contracts Amendment Act 2015 (the Act) came into force on 1 December 2015. A key aim of the Act is improving the payment and adjudication processes under the Construction Contracts Act 2002 (the CCA). The Act reforms the CCA in this respect by introducing a number of practical solutions, targeted at increasing clarity and disclosure within the payment regime. All payment claims must now include the notice to payer (found here) and second, must 'state' (rather than indicate) both the 'Claimed Amount' and the 'Due Date for Payment [of the Claimed Amount]'.
Compliance with these new requirements is mandatory and, on the basis that the Act is already in force, required now. While yet to be tested in the courts, our expectation is that any failure to comply with these new requirements will result in invoices being deemed invalid (as is the case in the residential construction context, where an identical regime exists). This is a potentially significant issue from a cash-flow perspective and one that parties issuing payment invoices under the CCA can avoid by reviewing and updating their invoicing procedures.
If you have any questions about the above changes, please get in touch and one of our team will be more than happy to discuss further.