Payment Provisions And The Construction Act

The infamous phrase in the 1994 Latham Report that "cashflow is the lifeblood of the construction industry", and the backdrop of high rates of contractor insolvencies at that time, sets the scene for the legislative interventions which remain at the heart of payment obligations in construction industry.

As well as setting non excludable minimum standards that construction contracts must adhere to in terms of rights for interim payments, they also introduced the statutory right to adjudicate construction disputes, by which those rights may be rapidly enforced. The core objective was to promote and protect cashflow.

Payment provisions are arguably one of the most important elements in any construction contract, and must be carefully considered by both parties when negotiating and performing a construction contract.