To Suspend, or Not to Suspend: The Risks of Suspending Works 

In the fast-paced world of construction, cash flow is king. But what happens when your client stops paying? Or they’re causing endless delays? For many contractors and subcontractors, the idea of suspending work seems like the obvious way to protect yourself. But pulling the pin too soon can backfire badly.

Here’s why you need to tread carefully — and how to do it right.

Suspension: A Powerful Right — But Only If You Have One

Under the Construction Contracts Act 2002 (CCA), you do have the right to suspend work if you issue a valid payment claim and it remains unpaid past the due date and no payment schedule is provided in time. But there’s a catch:

• You must serve a valid payment claim under the CCA.

• You must follow the strict process for suspension — including giving the correct notice.

If your claim or notice is invalid, suspending work could be treated as a breach of contract.

Suspension in Your Contract: Read the Fine Print

Many construction contracts — like NZS 3910:2023 — contain specific provisions for suspension. These may differ to the rights under the CCA. When entering into a contract, it is useful to include a contractual right to suspend in certain circumstances.

If your contract includes suspension provisions, these will need to be followed to the letter.  Things to check include:

• Under what circumstances can you suspend?
• How much notice must you give?
• What form must the notice be in, if any?
• Do you have to resume work straight away once paid?
• Who pays the costs of demobilisation or remobilisation?

If you don’t follow the process exactly, you risk being the one in breach.

What if I Suspend Wrongfully

If you wrongfully suspend your construction works, it may constitute a breach of contract or even repudiation, depending on the circumstances. 

If the suspension is deemed wrongful, you may be liable for damages resulting from the breach, including costs incurred by the other party to engage another contractor to complete your work.

What if There is No Contractual Right to Suspend?

There may be other mechanisms in your contract that can protect you.  This will depend on the facts as to why you want to suspend, and the specific contractual clauses available to you. 

Practical Tips

• Make sure your payment claims comply with the CCA;
• Include appropriate provisions in your contract;
• Get legal advice early if you’re unsure whether you can suspend — or if you suspect your client might dispute it;
• Serve written suspension notices that clearly meet both the CCA and your contract requirements (if any);
• Communicate. Sometimes the threat of suspension is enough to get the money flowing — but always put it in writing and stick to the process.

Summary

Suspension is an important right for protecting your cash flow — but misuse it and you might end up worse off. Always double-check your contract, follow the CCA to the letter, and get professional advice if you’re not sure.

If you would like further or more specific advice on construction related issues, or any other legal issue, get in touch with Ford Sumner and its division of Tradie Law for help at 04 910 3200 or email helpdesk@tradielaw.co.nz.