Introduction

The Building and Construction Industry Security of Payment Act 2004 (“Act”) was passed in Parliament on 16th November 2004 and will be effective from 1st April 2005. It is modelled after similar legislation in Australia, UK and New Zealand. The Act:-

1. confers a statutory entitlement to payment on any person who has carried out construction work or supplied goods or services under a written construction contract or supply contract (“contract”), irrespective of whether the contract is expressed to be governed by the laws of Singapore;
2. provides for the due date for progress payments even where the contract does not provide for one;
3. renders unenforceable a “pay when paid” or “back-to-back payment” clause in the contract; and
4. establishes an adjudication framework by which a person may claim payments due under a contract and enforce payment of the adjudicated amount.

Applicability

The Act will apply to any written main contract entered into on or after 1 April 2005 (“œCommencement Date”) and all sub-contracts under these main contracts. However the Building Control Authority recognises that issues may arise with sub-contracts where the main contracts was entered into before the Commencement Date. Hence, such sub-contracts that are entered into during a 6-months grace period from the Commencement Date will be exempted from the Act. However, the Act does not apply to:

1. Any contract relating to construction works for any residential property which does not require approval the Building Control Act (Cap 29). Thus HDB and most small renovation works are not covered by the Act.
2. Any contract where a party carries out construction work as an employee;
3. Any contract relating to construction work carried out outside Singapore; and
4. Such contract or class of contracts as may be prescribed by the Minister.

A contract is considered as in writing if:

1. the contract is made in writing, whether or not it is signed by the parties;
2. the contract is made by an exchange of communications in writing (example by exchange of letters, telefaxes or emails);
3. the contract made otherwise than in writing is recorded by one of the parties or by a person authorised by the parties (example minutes of meetings where the contract was agreed to); or
4. the parties to the contract agree that terms terms which are in writing apply to their contract.

The provisions of this Act cannot be excluded from applying to a contract that the Act is intended for. Such

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