The Impact of the Construction Contracts Act

The Construction Contracts Act, which was signed into law in 2016, is designed to bring more certainty to the timing and amounts of payments to be made. It also provides parties a new procedure for resolution of disputes related to payments.

The Act includes mandatory payment provisions for all construction contracts, including the appointment of construction professionals. The payment schedule is particularly prescriptive for subcontractors and subconsultants, who must now be paid on a 30 day payment cycle unless their current contract terms are more favourable

Adjudication is now required to settle a dispute regarding payment under a construction contract. The adjudicator’s decision must be abided by until the matter goes through final dispute resolution or the parties are in agreement on the matter. The adjudicator is expected to make a decision within 28 days unless the referring party agrees to a longer period. This is done in an effort to settle disputes quickly and cost effectively.

Adjudication is commonly used in the U.K., where it has lots of court support. The idea is that adjudication provides a quick answer. Parties generally abide by the ruling or come to an agreement on their own.