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Lack of detailed invoices proves costly for building contractors

By Andrew Steele - 30 Jun 2015

If you're a building contractor who issues simplified invoices, you may need to think again. A recent high court case emphasised the need for contractors to get invoices right the first time if they intend to rely on summary procedures to maximise their cash flow.

In Can Build Limited v Laura Kirkpatrick Family Trust the contractor included a total sum for materials and an hourly rate for labour. The Court held that this was not the detail necessary to comply with the Construction Contracts Act. The Court expected:

  1. Details around how much work had been completed and what it related to.
  2. Labour costs broken down for subcontractors such as for plumbers or carpenters.
  3. Itemised materials costs.

The invoices submitted did not provide enough detail for the property owner to provide any meaningful response to the payment claim.

The result for this contractor was that they face a more protracted legal claim. More detail would have enabled them to get a quick judgment on the unpaid invoices.

The Associate Judge also noted that contractors cannot try to amend invalid payment claims by issuing them again.

Easy enforcement provisions are available for building contractors, but only if the invoices are right.

We often see examples of payment claims falling short because home owners aren't given the proper forms with the invoices. Another common mistake is in not putting in enough detail around how the claimed amount has been calculated.

To check if your payment claims would stand up contact our Construction Law team.

Contact

Andrew Steele

 

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