Whenever a dispute arises under a construction contract, it is essential for the aggrieved party to stop to consider its options. It may sound obvious, but a party may seriously jeopardise or limit its options by not following this advice.
Most importantly, a party may miss the opportunity to obtain a swift decision on a disputed claim under the Construction Contracts Act 2004 ("the Act").
There are limited circumstances in which a claim may be made under the Act but if the dispute falls within the meaning of a "payment claim", a decision must be given within 28 days of the claim being lodged.
The catch is that there is a strict 28 day time limit from the date on which the payment dispute arose in which to lodge the application.
If the application is not made within that time, the claim becomes time-barred and the disputing party will then be obliged to consider other options which may be less attractive.
A party with a disputed claim for payment under a construction contract therefore needs to be fully aware of its legal options and should obtain immediate legal advice if it thinks that there may be an issue with payment. Failure to do so creates the risk that access to the remedies available under the Act will be denied.
If a dispute does not fall within the terms of the Act, or a party has missed the 28 day deadline, it will need to be familiar with any other dispute resolution options under the contract, which will typically require the dispute to be referred to arbitration or determined by the appropriate court.
At this stage, it is critical to follow correctly the specific process prescribed in the contract. Failure to do so may give the other party an opportunity to delay the entire process by asserting that the relevant Tribunal has no jurisdiction because the necessary contractual dispute resolution steps have not been taken.
The importance of understanding these contractual terms should not be underestimated and, if in any doubt, parties should obtain legal advice on their options.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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