It is often thought that the signing of a contract or agreement (in other words ‘execution’) is just merely formality. The parties have negotiated the terms, reduced it to writing, and now all they have to do is ‘sign on the dotted line’.
The Construction Contacts (Retention Money) Amendment Bill (Bill) passed its first reading on August 6, 2021. It is currently with the Select Committee with a report due on November 25, 2021. The Bill will strengthen and clarify the retentions regime under the Construction Contracts Act 2002 (Act). However, not all retentions are held by way of money in a trust account. This article looks at another mechanism for retentions – a contractor giving a bond in lieu of retentions and the advantages of doing so.
A recent High Court decision highlights the importance of parties agreeing on a pricing mechanism for construction works from the outset to prevent disputes arising as to the cost of the works. This is particularly relevant now, given the level of residential construction activity occurring.