Construction Contracts Maximum Payment Terms: Know Your Rights

Have you ever been offered 60 or even 90 day payment terms within a construction contract? Many have, and have felt they had no choice but to accept the terms offered for fear of losing work. However, did you know there is legislation that provides protection against payment terms of these durations?

The Construction Contracts Act 2004 (WA) not only provides a mechanism for adjudicating payment disputes but it also prohibits or modifies certain types of clauses within a construction contract. This legislation cannot be ‘contracted out’ of and applies to a wide range of construction contracts.

Recent amendments to the Construction Contracts Act 2004 (WA) now mean that a construction contract entered in to after 3 April 2017 cannot contain payment terms in excess of 42 days. That is, 42 days from the actual claim submission date, and not 42 days from ‘end of month’ or similar.

If you have signed a construction contract after 3 April 2017 that contains longer terms, section 10 of the Construction Contracts Act 2004 (WA) will modify this term to be read as requiring exactly 42 day payment terms.

Have you executed a contract prior to 3 April 2017? Transitional provisions within the Construction Contracts Act 2004 (WA) provide previous levels of protection for these contracts with respect to maximum payment terms. If you have signed a contract prior to 3 April 2017 a maximum payment term of 50 days will apply.

Unsure if your contract complies or when your contract was executed? Get in touch with us for a free no-obligation chat to further discuss your situation.

Michelle Livesey-Giles, Director
0418 199 322