Protecting Contractors Through Prompt Payment Act, 2011 Levac, Dave — Bill 211 (39th Parliament, 2nd Session)

Bill 211, 39-2

Ontario — Bills

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Bill 211, Protecting Contractors Through Prompt Payment Act, 2011

Levac, Dave

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[39] Bill 211 Original (PDF)

Bill 211 2011

An Act to

protect contractors by requiring prompt payment of construction contracts

Her Majesty, by and with the advice and

consent of the Legislative Assembly of the Province of Ontario, enacts as

follows:

Definitions

1. In this Act,

"construction contract" means a written or

oral agreement between an owner and a contractor, between a contractor and a

subcontractor or between two or more subcontractors, under which one or more

parties agree to carry out construction work or to supply related goods and

services to another party; ("contrat de construction")

"contractor" means a person contracting

with or employed directly by the owner or an agent of the owner to carry out construction

work or to supply related goods and services; ("entrepreneur")

"payment application" means an invoice,

bill or other request for periodic payment, final payment or release of

retainage in accordance with the terms of the applicable construction contract;

("demande de paiement")

"progress payment" means,

(

a) a final payment for

construction work carried out or for related goods and services supplied under

a construction contract,

(

b) a periodic payment for

construction work carried out or for related goods and services supplied under

a construction contract, and

(

c) a payment that is based on an

event or date; ("paiement échelonné")

"regulation" means a regulation made

under this Act; ("règlement")

"retainage" means a percentage of a

contract price retained by a party to a construction contract for the purpose

of protecting against defect or to guarantee a certain standard of workmanship,

but does not include a holdback under the Construction

Lien Act ; ("retenue de garantie")

"subcontractor" means a person carrying

out construction work or supplying related goods and services pursuant to a construction

contract entered into between an owner and a contractor, but who is not himself

or herself a party to the contract. ("sous-traitant")

Application

(1) Subject

to subsection (2), this Act applies to a construction contract under which

construction work is to be carried out or related goods and services supplied

in the Province of Ontario.

Exceptions

(2) This

Act does not apply to a construction contract,

(

a) to the

extent that a party to the contract undertakes to carry out construction work

or to supply related goods and services as a condition of a loan agreement;

(

b) to the

extent that a party to the contract undertakes to lend or repay money, to

guarantee payment of money owing or repayment of money lent or to provide an

indemnity for construction work carried out or related goods and services

supplied under the contract; or

(

c) that

is prescribed by regulation.

Application to

Crown

(3) This

Act applies to the Crown and to all Crown agencies.

Non-application

of payment on payment provision

3. A

provision in a construction contract that makes payment of the contract

conditional on payment or completion of another contract by a third party is of

no force and effect.

Progress

payment

(1) A

person carrying out construction work or supplying related goods and services

under a construction contract shall receive a progress payment on the date

specified in the contract or, if no date is specified, at the end of every

month during which construction work is carried out or related goods and

services are supplied under the contract.

Amount of

payment

(2) A

progress payment shall be made in the amount specified in the contract or, if

no amount is specified, in an amount based on the value of the construction work

carried out or the related goods and services supplied at the time the payment

is due relative to the total value of the contract.

Interest on

overdue payments

5. Interest

is payable on any unpaid amount of a progress payment at the rate of 18 per cent

per year.

Payment

application

(1) Subject

to subsection (3), payment of an amount due under a construction contract shall

be made within five days after a payment application requesting the payment is approved.

Approval of payment application

(2) A payment application

is considered to be approved 10 days after it is received by the owner, an

agent of the owner or the architect or engineer of record.

Withholding payment

(3) An amount due under a

construction contract shall be paid in accordance with subsection (1) unless

the party owing the amount provides a written statement to the contractor or

subcontractor who submitted the payment application describing how the

construction work or the related goods and services for which payment is being

sought were not carried out or supplied in accordance with the contract.

Same

(4) If a party withholds

payment under subsection (3), the party may only do so in respect of the

portion of the contract to which the written statement provided applies.

Suspension of construction work

7. If a party to a

construction contract submits a payment application and does not receive

payment within 20 days after submitting the application, the party may give

notice to the other parties to the contract of its intention to suspend construction

work or the supply of related goods and services until payment is received.

Retainage

8. Any retainage in

excess of the holdback requirement for construction liens under the Construction Lien Act shall not exceed,

(a) 5 per cent of the total price of

a construction contract; and

(

b) upon completion of 50 per cent of

a construction contract, 2.5 per cent of the total price of a construction

contract.

Act prevails

9. If any provision

of a construction contract or any provision in any other Act conflicts with the

provisions of this Act, this Act prevails to the extent of the conflict.

Regulations

10. The Lieutenant

Governor in Council may make regulations,

(

a) defining "construction work" for

the purposes of this Act;

(

b) defining "related goods and

services" for the purposes of this Act;

(

c) defining any term for the

purposes of this Act;

(

d) prescribing construction contracts

to which this Act does not apply.

Commencement

11. This Act comes into

force on the day it receives Royal Assent.

Short title

12. The

short title of this

Act is the Protecting Contractors Through Prompt Payment

Act, 2011 .

EXPLANATORY

NOTE

The Bill requires a person carrying out

construction work or supplying related goods and services under a construction

contract to receive a progress payment on the date specified in the contract

or, if no date is specified, at the end of every month during which

construction work is carried out or related goods and services are supplied

under the contract. Progress payments shall be made in the amount specified in

the contract or, if no amount is specified, in an amount based on the value of

the construction work carried out or the related goods and services supplied to

date relative to the total value of the contract. Interest is payable on any

unpaid amount of a progress payment at the rate of 18 per cent per year.

The Bill also requires payment of an

amount due under a construction contract to be made within five days after a

payment application is approved. A payment application is considered to be

approved 10 days after it is received by the owner, an agent of the owner or

the engineer or architect of record. The person responsible for paying the

contractor or subcontractor who submitted the payment application may withhold

payment for a portion of the contract if he or she submits a written statement

describing how construction work was not carried out or related goods and

services were not supplied in accordance with the contract.

Date Bill stage Activity Committee

June 1, 2011

First Reading

Carried

Debates and Progress

First Reading

June 1, 2011

Committee

Second Reading

Committee

Third Reading

Royal Assent

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Document details

Collection	Ontario — Bills
Citation	Bill 211, 39-2
Type	bill
Volume / chapter	p39 s2 bill 211 html
Language	en
Format	html
Source	PROVINCIAL
Identifier	e012df9730881a4f4b7a9df5ae1e876a90eef9de

Source file is stored in the law ingest library (html).