By Amy McDonald

Are you still waiting on an invoice to be paid that you sent ages ago? Have you done all the work but have nothing to show for it? Unpaid invoices can have a devastating impact on builders and subcontractors. Fortunately, the Construction Contracts Act 2002 provides the means to help get invoices paid faster. Here are 7 things to keep in mind when sending your invoice (known as a payment claim) out, to make sure you can get what you’re owed:

1. The payment claim must be in writing

This one is a definite must! Whether the contract is in writing, verbal, or a mixture of both, a phone call will not be sufficient, no matter how extensive or formal it is. Emails are safe! When in doubt, write it out.

2. It should clearly relate to the construction contract

Your payment claim must contain sufficient details to identify the construction contract that the payment relates to.

Make sure the information provided in the payment claim is enough to identify the specific construction contract for which you are claiming payment, especially if you have multiple projects with your client.

Often, identifying the particular work site is sufficient to identify the specific contract.

3. Outline work done and when it was done

Identify the construction work and the relevant period to which the payment relates.

In large projects, you may have arranged scheduled progress payments: the payment claim should identify the period you are claiming payment for. In smaller jobs, identifying the work done and when it was done is generally sufficient.

In any case, make sure you are not vague in your description of the works and identify when the works were done.

 4. Include the amount & date for payment

Clearly state the amount claimed and the date it is due for payment.

The amount indicated in the payment claim should be an exact amount you are owed, rather than a ballpark figure.

The date specified should also be set to a specific day to minimise any confusion.  Check your contract or T&Cs to see if you have already fixed a standard payment period for payment claims.

If you haven’t established anything in particular, the default period under the Act is 20 working days. You’ll need to give your client 20 working days to pay.

5. Show how the amount was calculated

Indicate clearly how you reached the sum owed in the claim.

There should be a clear description of the works carried out and the method used to calculate the amount payable. In smaller jobs, the calculation may be very simple: the bathroom floor has been completed, or you have completed 60% of the works required for the kitchen renovation.

 6. State that the claim is made under the Act

One line – Do not forget to include this sentence in full:

This is a Payment Claim made under the Construction Contracts Act 2002”.

7. It must be accompanied by a written notice commonly known as Form 1:

This notice describes the process for responding to the payment claim and explains the consequences of not responding or not paying. It also explains how to respond to it. This notice may change from time to time. Make sure you always use the latest version.

 

Finally, check the Guides and Resources page our website for more information. You can download a template for a Payment Claim here. If you want to go straight to the source, you can read more in the official legislation website.

About the Author: Amy McDonald

Photo Amy

Hi, my name is Amy and I’m one of the registrars at the Building Disputes Tribunal. We help streamline the process when you need help with a dispute from a construction contract. We also write blogs with the aim of making the things like the Construction Contracts Act easier to understand and use in your daily life. If you work in construction, using the Act can help you out of some tricky situations – and that’s where we can help!

 

 

The information contained in this article is for reference purposes only and does not constitute legal advice. Please consult with a lawyer if you are unsure of your rights and obligations under the Construction Contracts Act 2002 or any other relevant legislation.

 

Send a copy to my inbox

* indicates required



Vicarious liability and subcontractors

By Sam Dorne Liability in tort depends upon proof of a personal breach of duty, with one true exception, vicarious liability. The law of negligence is generally fault based; a defendant is personally liable only for the defendant’s own negligent acts and omissions....

Limitation for payment claims under construction contracts

By Sam Dorne The decision in Hirst v Dunbar [2022] EWHC 41 (TCC) considers the impact of payment provisions in a construction contract, whether through contract or implied terms, and the commencement of the limitation period for payment claims under the contract. It...

Extensions of time in construction contracts

By Jo O’Dea   In an extension of time claim, blame for the delay was a relevant consideration when assessing what was “fair and reasonable”.   In CAJ v CAI [2021] 5 GCA 102, the Singapore Court of Appeal considered the issue of extensions of time in...

Testing the waters: New South Wales Supreme Court considers the prevention principle

By Hannah Aziz  Court provides further confirmation that the prevention principle can be excluded by the terms of a contract.   Introduction Following our recent commentary comparing the operation of the prevention principle in New South Wales and Victoria, the...

Construction contract or product warranty? Not all collateral warranty disputes can be adjudicated

By Belinda Green Collateral warranties might be parasitic on a construction contract, but that doesn’t automatically mean they are one. The individual wording and circumstances need to be considered. In some cases, like in Toppan Holdings Limited v Simply Construction...