Guide
The Construction Contracts Act explained
How payment claims, payment schedules and adjudication work under the Construction Contracts Act 2002, and what to do when a claim lands on your desk.
What the Act does
The Construction Contracts Act 2002 keeps money flowing on construction projects. It gives contractors a right to progress payments, sets strict rules and timeframes for claiming and responding, and offers adjudication as a quick way to resolve disputes. Its approach is often described as "pay now, argue later".
It applies to most contracts for construction work, whether written or oral, commercial or residential. Since 1 September 2016 it has also covered work by architects, engineers and quantity surveyors.
Payment claims
A payment claim is a contractor's claim for a progress payment for work done. It must be in writing and:
- identify the construction contract it relates to
- identify the work, and the period it covers
- state the amount claimed and the due date for payment
- show how the amount was calculated
- state that it is made under the Construction Contracts Act 2002
- include the prescribed information explaining how to respond and what happens if you do not
Payment schedules
If you are paying, you can respond to a payment claim with a payment schedule. It must be in writing, identify the payment claim, and state the amount you will pay (the scheduled amount). If that is less than the claimed amount, the schedule must show how you calculated it and the reasons for the difference.
The schedule must be provided within the time set in the contract or, if the contract is silent, within20 working days of the payment claim being served.
Adjudication
Either party to a construction contract can refer a dispute to an adjudicator. Adjudication is much faster than court, with decisions typically made in weeks, and the process has strict notice and timing steps.
- A determination that an amount is payable is binding and enforceable.
- For contracts entered into since 1 December 2015, determinations about the parties' rights and obligations can also be enforced through the District Court.
- The time to oppose a determination being entered as a District Court judgment is short: five working days.
- The underlying dispute can still be decided finally in court or arbitration.
Received a payment claim? Five steps
Note the date it was served
Your response deadline runs from service: the contract period, or 20 working days if the contract is silent.
Check it is a valid claim
Does it contain everything the Act requires? An invalid claim may not trigger the regime, but do not rely on that without advice.
Work out what you will pay, and why
Value the work done, any variations, and the cost of fixing defective work.
Send a payment schedule in time
State the scheduled amount, how you calculated it and your reasons for any difference.
Pay the scheduled amount by the due date
Then dispute the balance by negotiation or adjudication, if needed.
Construction Contracts Act: common questions
Does the Construction Contracts Act apply to my contract?
It applies to most contracts for construction work in New Zealand, written or oral, commercial or residential. Since 1 September 2016 it has also covered design, engineering and quantity surveying work on construction projects.
Does a payment claim have to be in a particular form?
No particular form is required, but it must be in writing and contain the information the Act requires, including the contract it relates to, the work and period it covers, the amount claimed and how it was calculated, the due date, and a statement that it is made under the Act. Every payment claim, including one to a homeowner, must be accompanied by the prescribed information (Form 1).
How long do I have to respond to a payment claim?
The time in your contract or, if the contract is silent, 20 working days after the payment claim is served.
What happens if I do not provide a payment schedule?
You can become liable to pay the full amount claimed, which the contractor can recover as a debt in court. You lose the chance to dispute the amount at that stage.
Is an adjudicator’s decision final?
A determination about the amount payable is binding and enforceable, but the underlying dispute can still be decided finally in court or arbitration later. For contracts entered into since 1 December 2015, determinations about the parties’ rights and obligations can also be enforced through the District Court.
Do the rules differ for homeowners?
Mostly no: residential contractors can use the same payment and adjudication processes, and every payment claim must be accompanied by the prescribed information (Form 1). One difference: contractors cannot obtain charging orders over a home occupied by its owner.
These answers are general information, not legal advice for your situation.
This guide is general information about the Construction Contracts Act 2002, not legal advice for your situation. Read the Act at legislation.govt.nz.
Need help with a payment claim or adjudication?
The first consultation is free and confidential. Bring any reports, contracts or correspondence you have, and we will explain your options and the likely time limits.
We aim to reply within 24 hours. Every enquiry is held in strict confidence.