Why Security of Payment Schemes Are Important

One of the most popular areas of payment disputes is that of the building and construction industry. The nature of building projects often results in unexpected costs and final appearances. As such, payment disputes are common and legislation has been developed to streamline the legal process. Security of Payment is a recently introduced initiative intended to provide quick and adequate financial compensation to persons or companies involved in the building industry facing payment disputes.

In the past, payment disputes often required lengthy and expensive litigation or arbitration processes, monopolizing the time and finances of both parties involved. Providing an alternative to this negative route, Security of Payment schemes rapidly determine resolutions through adjudication.

These schemes are the fastest and most effective means of settling these payment disputes and vastly simplify the process of resolution. In order for the Act to be enacted, a claim must be filed, allowing the adjudication process to begin.

Claim of Payment

Before the adjudication process can begin a claim of payment must be filed. Within the Security of Payment schemes, the two parties are referred to as claimants and respondents; the claimant files a claim of payment, while the respondent defends themselves against the claim.

In order for a claim to be considered, it must be filed within a strict allotted time period. The allotted time period should be clearly stated in the contract agreed upon between the claimant and the respondent. However, if this element of the contract was missing, the Security of Payment Act states that the claimant stands to make claims monthly at the end of every month.

Contents of the Claim

Once the claim has been filed, the adjudication process can begin and the timeline established by the scheme is enacted. The contents of the claim will vary depending on the services and goods rendered, as well the agreements laid out within the original contract, which can be either written or verbal with evidence of the arrangement.

Basically, the contents of the claim of payment will follow a general form. The claim should contain a description of the services and goods agreed upon and rendered. Additionally, the claim should accurately and precisely explain the payment dispute and identify the area of applicable jurisdiction.

More requirements and guidelines for writing and filing a claim of payment under The act can be found through legal consultation and direct reference to the Security of Payment schemes in relevant regions.

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