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Introduction of Construction Contracts Bill

Tuesday May 15 2001 Media Statement

Introduction of Construction Contracts Bill

Associate Commerce Minister Laila Harré introduced the Construction Contracts Bill to Parliament this morning.

The Bill has three aims:

- To facilitate prompt and regular payments within the construction industry

- To provide for the resolution of disputes arising under construction contracts

- To provide remedies for the recovery of payments under construction contracts

Laila Harré says the Construction Contracts Bill will bring about the end of more than a decade of cashflow problems and insolvency within the construction industry, brought about by the repeal of the Wages Protection and Contractors Liens Act in 1987.

"This Bill will promote an efficient flow of cash within the construction industry and encourage responsible and realistic construction contracts that make thorough provision for progress payments to contractors and subcontractors."

It will do this in six ways.

- It invalidates pay if paid and pay when paid clauses in construction contracts

- It sets out default provisions that require the payment of periodic payments within the construction industry, unless the parties to a construction contract have specifically agreed otherwise

- It provides that payment may not be withheld unless the payee gets a notice stating adequate reasons for withholding money

- It establishes a quick and inexpensive adjudication process for resolving disputes that allows a binding but not final determination to be made

- It allows a person who has not been paid without good reason to suspend work until paid

- If a party to a construction contract is owed money for carrying out construction work under the contract, it enables that party to register a charge against the construction site, where the person owns the site is related to the body that owes the money.

"The underlying aim of this Bill is to promote responsible behaviour in the construction industry," Laila Harré said.

ENDS

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