In Ontario, the changes to the Construction Act (formerly the Construction Lien Act) introducing prompt payment and adjudication came into force on October 1, 2019. The prompt payment regime comprises swift payment deadlines, requiring the owner either to pay within 28 calendar days or to dispute within 14 calendar days, describing the reasons for non-payment. In turn, the contractor must either pay its subcontractors within seven calendar days of receipt of payment or send notices of dispute within seven calendar days, as described in a previous Update. Introduced by the Construction Act, adjudication is a quick interim method to resolve disputes on a construction project.
Ontario was the first jurisdiction with a prompt payment and adjudication regime layered on top of an existing construction lien regime.. Ontario has implemented Prompt Payment and Adjudication provisions in the Construction Act to address payment delays and disputes within the construction industry. This is a significant step towards ensuring timely payments and providing a mechanism for quick resolution of payment-related conflicts. Prompt Payment provisions establish specific timelines for payors to make payments for construction work. This helps contractors and subcontractors receive payments within a reasonable timeframe, reducing financial strain and potential disruptions to projects.
Prompt Payment provisions establish specific timelines for payors to make payments for construction work. This helps contractors and subcontractors receive their payments within a reasonable timeframe, reducing financial strain and potential disruptions to projects. Adjudication is a dispute resolution process that allows parties involved in a construction project to quickly resolve payment disputes without going through lengthy court proceedings. It is designed to be a fast and cost-effective alternative for settling disagreements related to payments.
By incorporating these measures into the Construction Act, Ontario aims to streamline payment processes, promote fairness, and protect the financial interests of contractors and subcontractors in the construction industry. It’s crucial for businesses in the construction sector to familiarize themselves with these changes and utilize the adjudication process when necessary to enforce their right to prompt payment. To download a.pdf file on any of the main elements of the Propmt Payment, Adjoudication and the Construction Act.
What is Prompt Payment & Adjudication
Prompt Payment for Owners
Prompt Payment for Contractors
Prompt Payment for Sub-Contractors
Prompt Payment Holdbacks
How Does A Basic Holdback Work
What is a Proper Invoice
Adjudication – The Basics
Disclaimer: This website is intended to provide information to the industry at large and should not be considered legal advice. Contact a lawyer to find out how Prompt Payment and Adjudication apply in your particular circumstances.
Thank you to the Council of Ontario Consruction Associations for much of the content.