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Most construction contracts simply require the subcontractor to carry out construction operations or provide labour for such work and they may also involve the provision ofmaterials.

Occasionally, however, a contract may require the subcontractor, for example, a developer,to locate and acquire a site for the development, funds for the land purchase being provided by the contractor. If the commitment to purchase land and arrange for construction work arises from a single contract, strictly, all payments made under that contract are subject to a deduction (materials excepted). This is because FA04/S60(1) says that ‘any payment which is made under a construction contract� is caught, though FA04/s61(1) goes on to exclude materials.

Where a payment made includes an element reimbursing the subcontractor for the purchase ofland on behalf of the contractor, that part of the payment may, be treated as ‘materials� and is not therefore subject to deduction.