The Act gives contractors the right to claim monthly progress payments where progress payments are not provided for in the construction contract.

However, to obtain payment under the Act payment claims must:

  • Be in writing;
  • Sufficiently identify the construction contract to which it relates;
  • Identify the construction work and the relevant period to which it relates;
  • Indicate an amount claimed
  • Provide a due date for payment;
  • Indicate the manner in which the amount was calculated; and
  • State that the payment claim is made under the Construction Contracts Act 2002.

If a payment claim is validly made but the party who the claim is made from disputes the claim that party must issue a valid payment schedule within 20 working days of receiving the payment claim giving reasons why the claim is disputed. To be valid, a payment schedule must:

  • Be in writing;
  • Identify the payment claim to which it relates; and
  • Indicate a scheduled amount (the amount that party is willing to pay).

If the scheduled amount is less than the amount claimed under the payment claim, the payment schedule must also indicate:

  • How the payer calculated the scheduled amount;
  • Why there is a difference between the amount claimed and the scheduled amount;
  • If the difference is because the payer is withholding payment on any basis, the payer’s reason(s) for doing so.

If no payment schedule is issued or the payment schedule issued is invalid, a contractor can suspend work or enforce the claimed amount as a debt due.  The payer will generally be unable to defend a claim on the basis that a set off applied.  For example, for defective work.

If the contract is for clients who live in the dwelling on which the work is being carried out, a progress payment claim can only be made if the contract provides for them.

If your payment claim does not comply with the Act or you are unable to identify whether a payment schedule is valid you risk compromising your ability to ensure that you are paid.

To give you comfort that your payment claims can be depended upon should the principal or the head contractor fail to pay, we can advise you on whether your payment claims are compliant with the Act.  We can also assist with a precedent form of contract which includes a payment claim and payment schedule.