The Construction Contracts Amendment Act 2015 was introduced by the New Zealand government to provide better protection to those involved in construction projects, particularly in the areas of payment and dispute resolution.
One of the key changes brought about by the act was the introduction of mandatory adjudication for payment disputes. This means that parties in a construction contract must include provisions for adjudication in their agreements, and that parties can apply for adjudication when payment disputes arise. Adjudicators are appointed by an authorized nominating authority and have the power to make binding decisions on payment disputes.
The act also introduced changes to the way construction contracts can be varied. Previously, variations could only be made in writing and signed by both parties. The amendment act allows for variations to be made orally or via electronic communication, as long as they are recorded in writing within a reasonable time frame.
Another major change brought about by the amendment act was the introduction of retention money trust accounts. This means that retention money withheld from a contractor must be held in trust by the party withholding it, and cannot be used for any purpose other than as security for defects liability. This provides greater protection for contractors and ensures that they are paid promptly for work completed.
Overall, the Construction Contracts Amendment Act 2015 has provided significant improvements to the construction industry in New Zealand, particularly in the areas of payment and dispute resolution. By mandating adjudication for payment disputes, introducing more flexible options for contract variation and requiring retention money to be held in trust accounts, the act has provided greater certainty and protection for all parties involved in construction projects.