SKILLS MAINTENANCE REVIEW DEFINES FOUR ... - PlaceMakers

9. InsuranceHaving appropriate insurance cover isa requirement that must be addressedbefore the project begins. The contractshould state who is responsible forinsuring the contract works and whois to be named as ‘insured’ under theContract Works Policy.10. Price and payment claimsBeing clear about how the contractprice is calculated is crucial. Clients hatesurprises when it comes to costs!It is also important to state when andhow often payment claims can be issued.If this is not stated in writing, the fallbackposition (under the ConstructionContracts Act 2002) is that paymentclaims will be issued monthly.A reminder about payment claims:If you wish to take advantage ofthe enforcement provisions in theConstruction Contracts Act 2002,your payment claims must be servedon the payer and must:• Be in writing.• Contain details to identify thewritten construction contract towhich the payment relates.• Identify the construction work andthe period to which the paymentrelates.• Describe the claimed amount anddue date for payment.• Describe how you calculated theclaimed amount.• State that the payment claim ismade under the ConstructionContracts Act 2002.If a payment claim is made ona residential client, it must beaccompanied by a written noticedescribing the process for respondingto the payment claim, and explainthe consequences of not respondingif full payment is not made by the duedate. There is an online form you canuse for this.11. Due date for paymentIt is also important to state whenpayments are due. If this is not statedin writing, the fall-back position (underthe Construction Contracts Act 2002)is that payments are due 20 workingdays after the payment claim wasserved. The payment section shouldalso include whether interest is payableon late payments.12. DefeCT repair periodYour contract should include a defectsrepair period, during which you areresponsible for repairing or rectifyingdefects that appear in the contract works.This usually begins upon practicalcompletion of the works and runs fora specified time frame (one, two orthree months are common periods forsmall to medium projects).13. DisputesContact informationIt is important to set out an agreedmethod for resolving disputes, shouldthey arise. Negotiation and mediationare commonly used dispute resolutionprocesses. Arbitration is also commonlyincluded in construction contracts, butthis can be a very expensive and timeconsumingprocess.It is also very helpful to include a clausethat says, even if there is a dispute, thepayer cannot withhold payment from you.We will keep you updated in relation to the proposed changes to the Building Act2004 and the requirement to have a written construction contract in future articles.If you have any questions about these issues, or would like to discuss them in moredetail, please contact Jo-Anne Knight at jo-anne.knight@simpsongrierson.com,or Andrew Tetzlaff at andrew.tetzlaff@simpsongrierson.com.The information in this article is intended as a general guide only and is notintended to be legal advice.Detailed legal advice should be obtained to cover a specific situation.Tick the correct answers below and record what you’ve learnt! Evidence of actual learning rather than just ‘participation’ is becominga key requirement of the LBP renewal process.7) a b c8) a b c9) a b cWhy is it useful to have a writtenconstruction contract?a) To set out the rights and obligations betweenthe contractor and the principal (client).b) Because it’s illegal not to.c) To practise your typing and spelling.What type of contract is best for longeror more complex projects?a) A pre-nup.b) Detailed standard forms such asNZSD 3910.c) Any of those available from theRegistered Master Builders site.If you are only responsible for part of the scopeof work to be done, what is important to specify?a) When your preferred morning tea breaks are.b) Who is responsible for checking the interfacebetween your work and the work of previousor subsequent contractors.c) How long it will take you to complete the work.NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation.17