The new Construction Act may be but a distant prospect, but that doesn鈥檛 mean we can鈥檛 make a few educated guesses as to how its payment rules will work
So, parliament has approved the changes to the 11-year old adjudication and payment rules. The bill is ready to become law once a new set of sub-rules (the 鈥渘ew scheme鈥�) is invented. Some say it will not commence for another year. Some say that the change to the payment rules is a mess. For me, the position is simple: parliament has performed precisely as expected.
Now then, I am about to attempt an explanation of the payment rules in what will eventually be the new Construction Act. It鈥檚 just a first shot at what I think the rules intend. Okay? Let鈥檚 go.
Let鈥檚 begin with an overview. When you enter into a commercial building contract the whole idea is to be able to point to an 鈥渁dequate mechanism鈥� showing the how, the what and the when of stage payments and the eventual final account payment. The mechanism produces a magic piece of paper called the payment notice. The mechanism then allows a 鈥減ay less notice鈥� to bite a chunk out of the notified sum just before the final date for payment. And if, after all of this, the cheque doesn鈥檛 turn up, the disappointed payee can postpone or slow down its work until paid.
If the contract doesn鈥檛 contain all this 鈥渁dequate mechanism鈥�, or if it tries some doubtful footwork, the scheme will automatically be said to apply between the payer and payee.
Let鈥檚 have a closer look at what is meant by an adequate payment mechanism. You and the other person to the contract can choose or negotiate the circumstances and periods for interim payment. The mechanism will then indicate the periods or milesto