How will developers respond to the ‘Better Payment Outcomes’ Discussion Paper?

Submissions on the ‘Better Payment Outcomes’ discussion paper, released by the QBCC, closed yesterday.

We anticipate that developers and principals will respond by:

  1. amending clause 5 of Australian Standard contracts to allow security to be converted “immediately” following the provision of notice to prevent an injunction;
  2. (a)      a termination for convenience clause exists; and

    (b)      there is no further reference date after termination for convenience,

  3. obtain legal advice on the validity of any preconditions to the right to lodge a payment claim, or to reference dates arising (for example, the provision of a statutory declaration or other documentation required to assess the claim);
  4. requiring a signed deed of release as a precondition to the contractor achieving PC or FC, to prevent contractors and subcontractors from lodging an adjudication application after PC;
  5. ensuring that the superintendent has the right to grant EOTs at the superintendent’s absolute discretion (whilst being under no obligation to do so) so that:

    (a)      an adjudicator or court cannot exercise the discretion in favour of the contractor or subcontractor to              award time-barred EOT claims; and

    (b)      the Principal’s / Developer’s entitlement to liquidated damages is preserved;

  6. excluding the operation of the prevention principle, as an additional safeguard of the Principal’s / Developer’s entitlement to liquidated damages;
  7. ensuring that contracts adequately protect and define the parties’ rights (especially those belonging to third parties, including subsequent purchasers) and liabilities in relation to pure economic loss for latent defects.
  8. amending the contract to ensure there is nothing preventing a Principal from converting security immediately after receiving and unfavourable adjudication decision.  This strategy can, in effect, negate an adverse adjudication decision.

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