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ALERT TO CONTRACTORS - LAW CHANGES THAT WILL IMPACT THE CONSTRUCTION INDUSTRY

The construction industry faces proposed changes to the Construction Contracts Act 2002 and new consumer laws for residential building contracts under the Building Act 2004.

Under the Construction Contracts Amendment Bill, it removes the distinction between residential and commercial construction contracts. This means that residential building contracts will be subject to:

  • The default payment provisions of the Act;
  • A contractor's right to suspend works for non-payment; and
  • A contractor's right to enforce an adjudicator's determination as judgment by the court for any debt outstanding or non-performance of any rights and obligations under the contract.

Contractors will need to also provide certain regulatory information attached to their invoices. The consequences of failing to comply with this requirement will result in an invalid payment claim.

The Bill further extends the scope of the Act to include design, engineering and quantity surveying work. This means that contractors of these areas of expertise will be subject to the Act's default payment, adjudication and enforcement provisions.

New consumer laws for residential building contracts await the consent of the Governor General by Order in Council on or about 1 January 2015. Consumers will be protected by:

  • The disclosure of certain pre-contractual information and checklists by the building contractor before the consumer is allowed to enter into the contract;
  • A residential building contract must contain certain statutory provisions within the contract;
  • New implied warranties;
  • Remedies for breach of an implied warranty by a building contractor;
  • One year defect repair period from the date of completion; and
  • The disclosure of certain post contractual information by the building contractor.

Contractors will need to revise their terms of trade, building contracts, invoice statements and procedures to prevent non-compliance of the proposed law changes. The consequences for non-compliance are serious. 

Written by Alister Moran at 09:00

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