Building Law: How the Act Works, Amendments, and More

Running head: BUILDING LAW
BUILDING LAW
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BUILDING LAW1
1) How does the Act work?
The state of New South Wales is regarded as the first jurisdiction of the nation of
Australia to be responsible for the introduction of the legislation named ‘security of payment’.
The nature of this particular legislation is explicitly in relation to the industries. To be specific,
this particular legislation is in relation to the industry of building and construction. The Building
and Construction Industry Security of Payment Act (NSW) of the year 1999 [the Act of NSW],
was approved to on the 5th day of the month of October in the year of 1999. The Act of NSW
initiated on the twenty sixth day of the month of March in the year of 2000. Presently, every
territories and the states of the country of Australia has instigated similar legislations in relation
to the industry of construction and building. Except two jurisdictions of the nation, every other
jurisdictions of the country have adopted the legislation of security of payment on the basis of
the Act of NSW1.
The words ‘security of payment’ may be referred to the fact that the suppliers, the
consultants, the contractors and the sub-contractors in relation to the contractual chain shall be
entitled to receive the payments that may be due from any party who holds a higher position in
the chain, according to the terms of any particular contract. The primary issue in relation to the
‘security of payment’ regarding the construction and the building industry may be said to be the
continuous failure to make sure that the parties in a particular contract are provided with proper
and complete payment in relation to their work or job. These payments must be made to the
required parties within a specified time period, and such timely payments are also among the
failed cases in this regard. Such problems arise in the construction and the building industry,
1 Ashworth, Allan, and Srinath Perera. Contractual procedures in the construction industry. Routledge, 2018.

BUILDING LAW2
even when there is presence of a contractual right in relation to such parties. Such contractual
right ensure that full payment must be paid to the parties2.
The Act of NSW created and established certain new rights of statutory nature in relation
to the parties who claim such rights. These rights include the following. Firstly, a right of interest
in case the payments made are late and not in a timely manner. Secondly, a right in relation to
payments made in a progressive manner. Thirdly, a right to append the work. Fourthly, a right of
lien.
The primary functions of the Act of NSW is in relation to the claims that are made by a
party, who may be in a lower position in the contractual chain regarding the industry of
construction and business. This particular Act provides provisions that helps and assists the
contractual parties in the specified industry. The Act of NSW created a very helpful mechanism
in relation to the process of adjudication. This Act assists in the exercise of the rights as provided
in relation to the parties. The Act of NSW fulfils the role of protecting the rights in relation to
proper payments to parties in the industry of construction and building3.
2) Why was the Act of NSW introduced?
The establishment of the Act of NSW was done for certain exclusive purposes. The
primary purpose of the Act of NSW is to give a counter against the well-reported and thoroughly
studied approach of many individuals or associations in the industry of construction and
buildings. Such approach is in relation to the unfair and unjust devaluation, delay and
2 Bailey, Julian. Construction Law: Volume II. informa law from Routledge, 2016.
3 Hughes, Will, Ronan Champion, and John Murdoch. Construction contracts: law and management. Routledge,
2015.