Construction Contracts Act 2002

Last updated: 16 August 2023

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The Construction Contracts Act

The Construction Contracts Act:

• protects retention money withheld under commercial construction contracts
• helps to ensure a fair, balanced and timely payment regime
• provides a fast and cost-effective adjudication process for people with disputes
• provides enforcement mechanisms to recover any unmade payments.

The Construction Contracts Act 2002 is available on the New Zealand Legislation website.

2015 changes relating to payment and dispute resolution

The Construction Contracts Amendment Act 2015 amended the provisions in the Construction Contracts Act relating to payment and dispute resolution.

Key changes relating to payment and dispute resolution included:

• residential and commercial construction are treated the same under the Construction Contracts Act, with the exception of charging orders. This gives parties to residential contracts full access to the Act’s dispute resolution and payment regimes
• design, engineering and quantity surveying work is included under the scope of the Construction Contracts Act. This gives parties to construction contracts for this type of work full access to the Act’s dispute resolution and payment regimes
• the adjudication process is streamlined
• the enforcement process is strengthened.

Read the fact sheet about changes relating to adjudication and enforcement [PDF 414 KB].

'Understanding the Construction Contracts Act' on the MBIE Corporate website has further information.

Contracts covered by the Construction Contracts Act

If you have entered into a contract for construction work, your contract is covered by the Construction Contracts Act.

Construction work includes work on:

• buildings and other structures that form part of land, including temporary structures
• fittings in the building, such as heating, lighting and fire protection
• infrastructure that forms part of land, such as roads, utilities and land drainage.

Construction work includes constructing or installing, altering, maintaining and removing the building, fittings or infrastructure. It includes work integral to the construction work, such as excavation, scaffolding and prefabricating components. It also includes design, engineering and quantity surveying work.

This description of construction work is illustrative only. For the full meaning of ‘construction work’, see section 6 of the Construction Contracts Act.

How the Construction Contracts Act applies to your contract

The Construction Contracts  Act provides you with default payment provisions and bans the use of 'pay when paid'. The Construction Contracts Act also provides fast-track adjudication of disputes about your contract, along with ways to enforce payment.

Payments

You can make payments in two ways under the Construction Contracts Act:

• over several instalments (known as 'progress payments')
• as a single payment.

You should make the payment obligations clear in your contract. If you don’t, default provisions of the Construction Contracts Act will apply, which provide for monthly progress payments.

You can make a payment claim for any amount you believe is due under the contract. You must include a notice (Form 1) with all payment claims you make. The notice outlines:

• the processes for responding to the payment claim
• the consequences of not responding to or paying a claimed or scheduled amount.

If you entered into a construction contract on or after 1 December 2015, you will need to include a notice (Form 1) with any payment claims you make.

Disputes

The Construction Contracts Act provides you with a fast-track adjudication process for disputes under your construction contract. This includes disputes about:

• payments
• rights and obligations.

You should get advice from your lawyer before you begin an adjudication process. They will be able to give you more information about what the process will involve.

If you decide to refer your dispute for adjudication, you must serve a written notice on the other party. Your notice must include information (Form 2) which details:

• the respondent's rights and obligations
• an explanation of the adjudication process.

Once the adjudicator has been chosen, they must confirm their role as adjudicator by giving a notice of acceptance.

The adjudicator will be able to make a timely decision about your dispute because all parties must operate within the tight timeframes set out in the Act. The adjudicator’s decision is binding and is enforceable in court. You must comply with the adjudicator’s decision, even if you are intending to contest that decision in court.