NSW: Due Date for Payment
A claimant is entitled to be paid a valid progress payment claim by the due date for payment.
The due date for payment is the date on which a payment claim becomes due and payable in accordance with the terms of the contract. However for most, but not all contracts, the Act sets a maximum time period for the due date for payment which overrides any contractual provision which is longer.
Calculating the due date for payment correctly is important because, if there is a payment dispute, certain rights and obligations are calculated from that date:
- When a payment schedule is served within 10 business days of receipt of the payment claim and the scheduled amount not paid, the adjudication application must be made within 20 business days after the due date for payment;
- When a payment schedule is not served within 10 business days of receipt of the payment claim, the adjudication notice, also known as s.17(2) notice, must be served within 20 business days after the due date for payment; and
- Rights to suspend work only arise by the giving of 2 business days notice after the due date for payment passes without payment.
Unless the contract provides for a shorter period, a progress payment:
- by a principal to a head contractor becomes due and payable 15 business days after a payment claim has been made;
- by anyone else to a subcontractor or supplier becomes due and payable 20 business days after a payment claim has been made.
However if the contract applies to a residential property in which the owner resides, or intends to reside, and the contract was NOT made directly with the owner, a progress payment becomes due and payable an accordance with the terms of the contract (i.e. the 15/20 day maximum period does not apply) or, if the contract makes no provision, 10 business days after a payment claim has been made.
The due date for payment (regardless of any contract provision) can't occur prior to service of a payment claim. Any subsequent payment claim served will generate a new due date for payment.
Our flowchart is designed to assist parties work out the applicable due date for payment of their contract.