Commentary
Part 8: Construction Contracts
Commentary on sections
Section 145 - Suspension of performance for non-payment
351.Section 112 of the 1996 Act permits a contractor to stop carrying out work under the contract in the event of non-payment by the other party.
352.Subsection (2) of section 145 amends subsection (1) of section 112 to put it beyond doubt that a contractor may stop carrying out some, and not simply all, of the work in such a case.
353.Subsection (3) of section 145 inserts a new subsection (3A) into section 112. The effect of this is to make the “party in default” (the party who has not paid) liable to pay to the contractor stopping work pursuant to section 112 a reasonable amount by way of the costs and expenses he incurs by stopping work (for instance, the payee’s reasonable costs in redeploying staff or removing plant and equipment).
354.Subsection (4) of section 145 amends subsection (4) of section 112. Section 112(4) as originally enacted provided that any period during which the contractor stopped work in pursuance of this right to do so in a non-payment situation was to be disregarded in calculating any time period prescribed in the contract. The amendment extends this to any period in which the contractor stops work “in consequence of the exercise of” this right; with the effect that extra time is allowable – for instance, the time which the payee requires to remobilise staff or return plant and equipment to the relevant site.
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