In this practice area
Claims for sums due under a contract, including unpaid invoices, loan repayments, guarantees and construction payment claims, and the defences and set-offs debtors commonly raise.
What a contractual debt claim is
A contractual debt claim is a claim for a sum the contract says is payable. It differs from a claim for damages for breach. A debt claim asks the court to order payment of an agreed amount that has fallen due, such as an invoice under a supply agreement, a loan repayment, a fee under a services agreement or an amount owed by a guarantor. Because the amount is fixed by the contract, the creditor does not need to prove loss or deal with remoteness and mitigation in the way a damages claim does.
The key questions are whether the contract makes the amount payable, whether the conditions for payment have been met, and whether the debtor has any answer to the claim.
The legal framework
The creditor must prove the contract, its terms, the performance or events that made the sum payable, and non-payment. Common defences include that a condition precedent was not satisfied, that the work was defective, that the debt has been paid, that the debtor has an equitable set-off arising from a closely connected claim, or that the contract was induced by misleading or deceptive conduct under the Australian Consumer Law. Terms that impose large sums on default may be challenged as penalties.
Guarantees are construed strictly in favour of the guarantor, and variations to the principal contract made without the guarantor's consent can in some cases release the guarantor. In the building industry, the Building and Construction Industry Security of Payment Act 1999 (NSW) gives contractors and subcontractors a statutory right to progress payments, with a fast adjudication process. An adjudication certificate can be filed as a judgment debt, and the respondent's ability to raise contractual defences in those proceedings is limited.
How these claims typically run
Most contractual debt claims begin with a letter of demand and move to proceedings if unpaid. Where the debt is clear, default or summary judgment may be available. Where the debtor raises defects, set-off or a cross-claim, the matter becomes a contract dispute and is timetabled for evidence and hearing. Construction payment claims under the Security of Payment Act run on short statutory timeframes measured in business days, and missing one of them can decide the outcome.
The general limitation period for claims in contract in NSW is six years from when the cause of action accrues.
How GopherWood Lawyers acts
We start with the contract and the paper trail: invoices, notices, certificates, emails and any acknowledgment of the debt. We identify every party who may be liable, including guarantors, and test the likely defences before proceedings begin so the claim is framed to meet them. For builders, developers and subcontractors, we act on payment claims, adjudication and the enforcement of adjudication certificates, and on the court proceedings that often follow.