Building & Construction Industry Security Of Payments Act
Powerful Legislation
For Construction Debt Recovery

Construction Contracts

Under the Security Of Payments Act a “construction contract” means a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party.

The Security Of Payments Act is the means by which this Act ensures that a person is entitled to receive a progress payment is by granting a statutory entitlement to such a payment regardless of whether the relevant construction contract makes provision for progress payments.

Section 7 of the Security Of Payments Act says

(1) Subject to this section, this Act applies to any construction contract, whether written or oral, or partly written and partly oral, and so applies even if the contract is expressed to be governed by the law of a jurisdiction other than New South Wales.

(2) This Act does not apply to:

(a) a construction contract that forms part of a loan agreement, a contract of guarantee or a contract of insurance under which a recognised financial institution undertakes:

(i) to lend money or to repay money lent, or

(ii) to guarantee payment of money owing or repayment of money lent, or

(iii) to provide an indemnity with respect to construction work carried out, or related goods and services supplied, under the construction contract, or

(b) a construction contract for the carrying out of residential building work (within the meaning of the Home Building Act 1989 ) on such part of any premises as the party for whom the work is carried out resides in or proposes to reside in, or

(c) a construction contract under which it is agreed that the consideration payable for construction work carried out under the contract, or for related goods and services supplied under the contract, is to be calculated otherwise than by reference to the value of the work carried out or the value of the goods and services supplied.

(3) This Act does not apply to a construction contract to the extent to which it contains:

(a) provisions under which a party undertakes to carry out construction work, or supply related goods and services, as an employee (within the meaning of the Industrial Relations Act 1996 ) of the party for whom the work is to be carried out or the related goods and services are to be supplied, or

(b) provisions under which a party undertakes to carry out construction work, or to supply related goods and services, as a condition of a loan agreement with a recognised financial institution, or

(c) provisions under which a party undertakes:

(i) to lend money or to repay money lent, or

(ii) to guarantee payment of money owing or repayment of money lent, or

(iii) to provide an indemnity with respect to construction work carried out, or related goods and services supplied, under the construction contract.

(4) This Act does not apply to a construction contract to the extent to which it deals with:

(a) construction work carried out outside New South Wales, and

(b) related goods and services supplied in respect of construction work carried out outside New South Wales.

(5) This Act does not apply to any construction contract, or class of construction contracts, prescribed by the regulations for the purposes of this section.