What does New Zealand's Construction Contracts Act require of a contractor?
The Construction Contracts Act 2002 is New Zealand's payment law. A payment claim carries the prescribed Form 1 notice, and the payer has 20 working days to give a payment schedule or is liable for the full claimed amount. An unpaid party can suspend work or go to adjudication, and retention money is held on trust.
The payment cycle, in order
- End of the period the contract sets; if the contract is silent, the first part-month then monthly.
- Substantive compliance suffices (George Developments Ltd v Canam Construction Ltd [2006] 1 NZLR 177). The prescribed Form 1 notice goes with every claim.
- The payer gives a payment schedule within 20 working days. Contract time, else 20 Working Days after the claim is served; payer liable for the full claimed amount on the due date if no schedule is given.
- On or after the due date, recoverable as a debt plus actual and reasonable costs; also triggers a notice of intention to suspend work.
- Suspension permitted, without breach, once the amount is still unpaid 5 WD after the notice; an EOT follows. The notice period is 5 working days.
An unpaid party can also go to adjudication. No time limit found in ss 25-28 for starting adjudication (the Limitation Act was not checked); content requirements at s28(2); respondent's rights are in Form 2.
Retention money since 5 October 2023
Retention becomes trust property when the contract allows it to be withheld, whether or not actually withheld; if the contract has no term, when it is actually withheld. As soon as practicable, held at a registered NZ bank, retention money only, with the bank told it is trust money (or a complying instrument). Offence up to $200,000 (party A) / $50,000 per director, with a reasonable-steps defence. The rules are on retention money.
Every duty the library holds from the Act
In the order the library holds them. Each is on the Construction Contracts Act 2002 (NZ) page too, with how it was read.
| Duty | Window and section | If missed |
|---|---|---|
| Hold retention money in a complying trust account | none sets 18D, 18E, 18FB, 18DA | an offenceLapsed compliance |
| Notify use of retention for a defect within 10 working days | 10 working dayss 18C(3)(c), 18DA(3) | the claim is barredDisputes |
| Maintain a ledger of the retention trust account | none sets 18E(4)-(6), 18EA | no penalty statedDisputes |
| Give the retention trust account records to whoever the Act names | none sets 18FC | an offenceLapsed compliance |
| Determine which retention regime applies to the contract | none setSch 1 cl 1 | no penalty statedDisputes |
| Release retention on the terms the Act sets | none sets 18I, 18G | no penalty statedDisputes |
| Report the retention money held every 3 months | 3 monthss 18FD | an offenceLapsed compliance |
| Keep the retention trust account in the status the Act requires | none sets 18B(2)-(6), 18C | no penalty statedDisputes |
| Respond to an adjudication claim within 5 working days | 5 working dayss 36(1), 37(1), 37A, 46(1)(b) | the claim is barredDisputes |
| Give the adjudication notice the Act requires | none sets 28; Regs r 5 | no penalty statedDisputes |
| Agree on an adjudicator within 5 working days of the adjudication notice | 5 working dayss 33(2), 35(1) | no penalty statedDisputes |
| Make a progress claim on the cadence the contract allows | 1 months 20(1), 17(2) | no penalty statedDisputes |
| Make every claim a valid payment claim: identify the work and state the amount | none sets 20(2) | no penalty statedDisputes |
| Attach the prescribed Form 1 notice to every payment claim | none sets 20(3)-(4); Regs r 4, Sch 1 Form 1 | a breach of contractDisputes |
| Issue the adjudicator's determination within 20 working days | 20 working dayss 46(2) | a breach of contractDisputes |
| Be paid within 20 working days where the contract is silent | 20 working dayss 18 | you are liable for the full amountDisputes |
| Recover the amount owed if payment is not made by the due date | none sets 23, 24 | you are liable for the full amountDisputes |
| Make a payment schedule that identifies the claim and the scheduled amount | none sets 21 | the claim is barredDisputes |
| Receive a payment schedule within 20 working days of each claim, or the full amount becomes payable | 20 working dayss 22 | you are liable for the full amountDisputes |
| Give 5 working days notice before suspending work for non-payment | 5 working dayss 24A | no penalty statedDisputes |
In this guide
- Payment claims and schedulesNew Zealand payment claims: the valid claim and Form 1, a payment schedule within 20 working days, the default due date, recovering the debt, suspension.
- AdjudicationNew Zealand adjudication: agree an adjudicator within 5 working days, respond within 5 working days, determination within 20 working days.
- Retention moneyNew Zealand retention money: held on trust, a report every 3 months, 10 working days notice before use on a defect, and void release terms.
What this page is, and is not
It is the section text this library holds for New Zealand's Construction Contracts Act 2002 (NZ), NZS 3910:2013 and Health and Safety at Work Act 2015, with the window and the consequence. The NZS 3910:2023 rows are read from secondary summaries of the draft, not the published text. It is not legal advice, and it is not a substitute for reading the Acts, the contract you signed and any special conditions.
These pages set out the duties the library holds for a New Zealand job.
No library of law is complete, and Demiton never says this one is. An obligation the library does not hold, and you did not add, is not protected. You can add your own to any job.