For the first time since 2008, the Canadian Construction Documents Committee (CCDC) published a modified CCDC 2 (2020) Stipulated Price Contract.
The new CCDC 2 updates the standard form contract to catch up with recent prompt payment and adjudication changes in Ontario (and soon other provinces). It also introduces a number of other changes to both reflect more recent trends in contracting and to otherwise streamline the contract.
This article provides a brief summary of some of these changes, with references to the corresponding paragraphs of the CCDC 2. Fortunately, most of the familiar section numbers of the CCDC suite of contracts have been preserved.
In this article, terms defined in the CCDC 2 are used.
Payment Terms and the Release of Holdback
While the payment process has not changed fundamentally, it has been refined in response to recent prompt payment legislation in Ontario and anticipated to soon become law in several other provinces. Updated payment terms under the revised CCDC 2 include the following:
- The concept of “Payment Legislation” is introduced, meaning “legislation in effect at the Place of the Work which governs payment under construction contracts”; i.e. prompt payment laws. [Definitions]
- The Contractor must now submit all applications for any payment (including progress payments, final payments, and holdback) to not just the Consultant but to both the Owner and the Consultant simultaneously. [GC 5.2.1]
- The Contractor’s application for payment must comply with the requirements of applicable Payment Legislation, which would mean it must be a “proper invoice” under such Payment Legislation. [GC 5.2.6; GC 5.5.4]
- The Contractor must now provide evidence of compliance with workers’ compensation legislation with all applications for payments, including progress payments, and holdbacks, not only with applications for final payment and on request. [GC 5.2.7; GC 10.4.1]
- After the first payment, the Contractor must now provide, with all of its subsequent applications for payment, a CCDC 9A Statutory Declaration as to the distribution of the amounts previously received, instead of only upon Substantial Performance of the Work. [GC 5.2.7]
- To conform with Payment Legislation, it is now the Owner (rather than the Consultant) who must notify the Contractor of a rejection of any part of the application for payment by issuing a written notice of non-payment to the Contractor with the reasons for the revisions or rejection of an application for payment in compliance with Payment Legislation. [GC 22.214.171.124]
- The Owner must now pay the Contractor on the 28th day after receipt of the application for payment and, in any event, in compliance with applicable Payment Legislation. The final payment must, however, still be paid within five (5) calendar days after the issuance of a final certificate for payment. [GC 126.96.36.199; GC 5.5.4]
- The Owner must now pay the statutory holdback to the Contractor no later than 10 working days following the expiration of the lien period, subject to the requirements of any Payment Legislation. In many provinces, including Ontario, construction and payment legislation requires payment of statutory holdback on the day after the expiration of the lien period. [GC 5.4.3]
- Note that there is now no provision in the CCDC 2 that allows parties to provide for a non-statutory holdback, i.e. if it is not required or prescribed by applicable lien legislation, such as in Québec. This will need to be expressly stated in supplementary conditions to the CCDC 2. [See Article A-5.1]
- A few of the provisions of GC 5 have been streamlined and consolidated.