3.05.2018

Clarification of retentions requirements for construction contracts

The retentions regime comes into force on 31 March 2017

A bill has been introduced to Parliament to make clear that the new retentions regime for construction contracts only applies to contracts which have been entered into, or renewed, on or after 31 March 2017.  Once the regime comes into force, parties may agree that it applies to earlier contracts.  The Regulatory Systems (Commercial Matters) Amendment Bill had its first reading on 18 October 2016.

The retentions regime comes into force on 31 March 2017.  Principals and head contractors will be required to hold retention money on trust as cash or liquid assets that are readily converted into cash.  The money does not need to be kept in a separate trust account, and can be commingled with other moneys.  Retentions may only be used to remedy defects in the contract works, cannot be used for working capital, and must be paid no later than the date upon which the contractor’s obligations have been completed.  The mechanics of the regime will be clarified in regulations, which have yet to be released.

For more information, or to discuss any aspect of construction law, please contact:

Nick Gilliesnick.gillies@heskethhenry.co.nz or +64 9 375 8767

Christina Bryant –     christina.bryant@heskethhenry.co.nz or +64 9 375 8789

Helen Macfarlanehelen.macfarlane@heskethhenry.co.nz or +64 9 375 8711

Sarah Holdernesssarah.holderness@heskethhenry.co.nz or +64 9 375 8778

Disclaimer:  The information contained here is of a general nature and should be used as a guide only.  It is not a substitute for obtaining legal advice.  Any reference to law and legislation is to New Zealand law and legislation.

Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Kerry_100x100 1
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

Related Articles / Insights & Opinion

Getting the Deal Through: Construction 2019
Partners Nick Gillies, Helen Macfarlane and Christina Bryant are the contributing authors of the New Zealand Chapter of the 2019 edition of “Getting the Deal Through Construction”. Getting...
19.09.2018 Posted in Construction Law
UAE COMPANIES LAW UPDATE
New Zealand businesses looking to establish a foothold in the UAE have many options
10.09.2018 Posted in Trade and Commodities
When You Can’t Have it Your Way
Antares Restaurant Group Limited (which owns and operates Burger King in New Zealand) has received a whopper of a sanction – a ban on the company supporting visa applications until July next year.
4.09.2018 Posted in Employment Law
Getting the Deal Through: Shipping 2019
The Marine team at Hesketh Henry have again contributed to Getting the Deal Through: Shipping 2019.
30.08.2018 Posted in Maritime Law
A Guide to Concurrent Delay
Hesketh Henry was pleased to host the New Zealand Institute of Quantity Surveyors on 14 August 2018, where one of our construction partners, Nick Gillies, presented on concurrent delay.  The same pre...
22.08.2018 Posted in Construction Law
Update – New Zealand’s New Biofouling Standards
New Zealand has introduced a new standard requiring all vessels to have a “clean hull” on arrival in the country after 15  May 2018.[1]  The objective is to minimise the introduction of ...
21.08.2018 Posted in Maritime Law
No Longer Stumped: The Health and Safety at Work Act 2015 Sentencing Guidelines
The High Court at Auckland has released its first and much-awaited decision under the Health and Safety at Work Act 2015 (HSWA).
21.08.2018 Posted in Health & Safety Law
Send us an enquiry
For expert legal advice, please complete the form below or call us on (09) 375 8700.
  • This field is for validation purposes and should be left unchanged.