The effectiveness of time bar clauses following the high court in decision in Andrews v. Australia and New Zealand Banking Group

Abstract

Purpose – In Australia, compulsory rapid adjudication under the Building and Construction Industry Security of Payment Act 1999 (NSW) (or the equivalent legislation another Australian State or Territory) is a common way that payment claims under commercial construction contracts are decided. Construction contracts often contain penalty clauses. In particular, time bar clauses have been used to impose a penalty upon claimants and are frequently raised by a respondent as a reason for withholding payment. In the recent case of Andrews v. Australia and New Zealand Banking Group [2012] HCA 30 (“the Andrews case”), decided by the high court of Australia, the court has described how Australian courts must deal with penal provisions in contracts. The purpose of this paper is to consider the effectiveness of time bar clauses in the light of the penalty doctrine enunciated in the Andrews case.Design/methodology/approach – A “black‐letter” approach is adopted to analyse and explain the effectiveness of time bar clau...