Part 2 Payments

Subpart 1—Prohibition of conditional payment provisions of construction contracts

13 Conditional payment provisions ineffective

(1)

A conditional payment provision of a construction contract has no legal effect and accordingly—

(a)

is not enforceable in any civil proceedings; and

(b)

may not be used as a basis for withholding payments that are due and payable under the contract.

(2)

In this section,—

amount owed, in relation to a construction contract, means either the whole or part of any amount of money owing for construction work that has already been carried out under the contract

conditional payment provision of a construction contract means a provision of the contract—

(a)

that makes the obligation of one party (party A) to pay an amount owed to another party (party B) conditional on party A receiving payment from a further party (party C); or

(b)

that makes the due date for payment of an amount owed by party A to party B contingent on the date on which party A receives payment from party C; or

(c)

that is commonly referred to in the construction industry as a “pay when paid” or “pay if paid” clause of a construction contract; or

(ca)

that is of a kind described in section 18I(1)(a); or

(d)

that is of a prescribed kind (if any).

Section 13(1)(b): amended, on 1 December 2015, by section 12(1) of the Construction Contracts Amendment Act 2015 (2015 No 92).

Section 13(2) conditional payment provision of a construction contract paragraph (ca): inserted, on 1 December 2015, by section 12(2) of the Construction Contracts Amendment Act 2015 (2015 No 92).