Maximum 50-day payment term for construction contracts
Building Commissioner Peter Gow has issued a warning to Western Australian companies who fail to pay contractors, subcontractors and suppliers on time that they may be in breach of the Construction Contracts Act 2004.
Mr Gow said the maximum payment term for a construction contract covered by the Act is 50 days.
“If payment is not made within 50 days, the party claiming money can seek rapid adjudication of the payment claim,” he said.
“The claimant would have 28 days from the conclusion of the 50 day maximum payment term to apply for rapid adjudication.”
Mr Gow said that while contractors, subcontractors or suppliers were within their rights to insist the 50 day maximum was included in a construction contract before they entered into it, the Act still protected them.
“The Act requires payment to be made within 50 days after it is claimed regardless of whether a longer period is provided for in the construction contract,” he said.
Contractors and suppliers who believe they may be covered by the Construction Contracts Act should seek their own legal advice if needed.
A construction contract is defined in the Act as a contract or other agreement, whether in writing or not, under which a person has an obligation to carry out one or more of the following:
- construction work;
- supply goods related to construction work to the site where the construction work is being carried out;
- provide professional services that are related to the construction work on or off the site where construction work is being carried out; or
- provide on-site services that are related to the construction work on or off the site where construction work is being carried out.
Some exclusions to the Act apply, including on-site work related to drilling and the construction of plant for the purposes of discovering or extracting oil, natural gas or mineral deposits.
The Building Commission has issued Industry Bulletin 65: Maximum 50 day payment terms for construction contracts, which can be viewed at: www.commerce.wa.gov.au/publications/building-commission-industry-bulletins-complete-list.
For information about the Act, including how to make a payment claim and the rapid adjudication process, visit www.commerce.wa.gov.au/building-commission/payment-disputes or phone 1300 489 099.
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