You can suspend performance where an enforceable contract term permits it, an applicable statute authorises it, or the proper legal analysis of dependent obligations excuses the particular performance being withheld. An overdue invoice does not automatically give you that right. Follow the required notice procedure before stopping work: an unjustified suspension may itself be a breach and, in serious cases, repudiation.
A business can be owed money and still be contractually obliged to continue supplying services. That is the uncomfortable starting point. The decision is not simply whether the customer has behaved badly; it is whether you have a legal basis to stop doing what you promised.
This article explains the position under Australian contract law, with particular attention to Queensland construction payment legislation. It distinguishes a temporary suspension from termination, examines two High Court decisions and explains the notices and evidence that matter when a payment dispute escalates.
Start with the contractual right to suspend performance
Read the executed agreement, its schedules and any incorporated terms together. A payment clause identifies when money becomes due. It does not necessarily authorise you to suspend performance if the customer misses that date.
Look for the precise trigger. One clause may permit suspension for any overdue amount; another may require an undisputed debt, a substantial breach or failure to comply with a separate default notice. A right given to the principal to direct suspension does not, by itself, give the contractor an equivalent right to stop work.
Contract interpretation is objective and considers text, context and commercial purpose: Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited [2015] HCA 37, [46]–[52]. The practical question is what this agreement authorises, rather than what a supplier would reasonably have liked it to authorise.
Check the limits as carefully as the trigger. Does the right cover all services or only the affected work? Must you continue protecting equipment, confidential information or the site? Does the clause extend completion dates or allow recovery of demobilisation costs? Do not assume permission to suspend performance answers those separate questions.
For building projects, our guide to commercial construction contracts in Queensland explains how payment, time, security and default provisions interact. Those connections often determine the commercial cost of an otherwise lawful suspension.
| Possible basis | What must be established | Main limitation |
| Express suspension clause | The contractual trigger and required procedure are satisfied | Only the scope and consequences actually authorised apply |
| Agreed temporary pause | Both parties validly agree on the pause and its terms | A unilateral proposal does not vary the agreement |
| Dependent obligations | The other party’s performance is a prerequisite to, or concurrent with, the obligation withheld | This does not excuse unrelated obligations |
| Queensland statutory construction right | The applicable payment and notice requirements are met | Coverage exclusions and statutory amounts matter |
| Serious breach or repudiation | A recognised basis for termination is established | A termination right is not automatically a suspension right |
Example one A consultant with a notice clause
Assume a consultancy agreement allows the consultant to suspend performance if an undisputed invoice remains unpaid seven business days after receipt of a written default notice. The notice must identify the invoice and be sent to a specified email address.
The consultant instead tells the project manager by text message that work will stop tomorrow. The debt may be due, but the agreed suspension process has not been followed. On those assumed terms, neither the informal message nor the next-day stoppage satisfies the clause.
The safer course is to serve the required notice, calculate the period from the contractual receipt date and check whether the default remains when the period expires. This is a hypothetical example; seven business days is an assumed contract term, not a general legal rule.
Can you suspend performance because an invoice is unpaid
First establish that the invoice is contractually payable. Consider the agreed due date, milestones, certification, variations, defects and any right of set-off. A demand for payment cannot bring forward a due date that the parties agreed would occur later.
A genuine dispute is relevant, but it is not an automatic answer either way. A clause limited to undisputed amounts operates differently from one permitting suspension when any amount properly due remains unpaid. Equally, describing an invoice as disputed does not make a debt disappear.
If a customer alleges losses from defective work, identify whether those losses can legally be set off against the payment demand. Our guide to set-off and other special defences in Queensland explains the distinction between asserting a cross-claim and having a defence that answers the demand.
Without an applicable clause or statutory right, a single overdue invoice does not automatically permit you to suspend performance. Persistent refusal to pay may support a more serious breach or repudiation argument, but that requires a separate analysis. The number of missed invoices is evidence, not a legal threshold.
Does the common law let you suspend performance
There is no general common law remedy allowing a business to pause all its obligations whenever the other party commits a breach. The relationship between the particular promises matters.
If payment must occur before a specified delivery becomes due, the supplier may be entitled to withhold that delivery until payment. Where obligations are concurrent, one party’s failure or refusal to perform may affect the other’s obligation to tender performance. That reasoning does not necessarily justify shutting down other services under the same agreement.
Case example one Foran v Wight and dependent obligations
In Foran v Wight [1989] HCA 51; (1989) 168 CLR 385, vendors said shortly before settlement that they could not complete on the essential date because a required right of way had not been registered. The purchasers later terminated and sought their deposit back. The High Court allowed their appeal.
The judgments examine when the other party’s conduct excuses tender of concurrent performance, and the significance of readiness and willingness to perform. Mason CJ discusses those questions at [21]–[25]; the judges’ reasons differ in their treatment of the purchasers’ financial capacity and estoppel.
The lesson is narrow but useful: the law may excuse a particular act of performance because of the other party’s conduct. This was a land-sale termination dispute, not authority for a general right to suspend performance under an ongoing services contract.
A right to terminate does not create a general right to pause
Repudiation and sufficiently serious breach can justify termination. Keeping the contract alive while refusing your own obligations is a different decision. Unless a separate legal basis excuses that refusal, it may expose you to a breach claim.
Our guide to terminating a contract legally in Queensland addresses the grounds for bringing a contract to an end. Before deciding to suspend performance instead, identify which obligations remain due and why you say you may withhold them.
Case example two Koompahtoo and the seriousness of breach
In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] HCA 61; (2007) 233 CLR 115, a development manager seriously failed to meet accounting and reporting obligations under a joint venture. The High Court upheld termination for sufficiently serious breaches.
At [44]–[55], the majority distinguishes renunciation, breach of an essential term and sufficiently serious breach of an intermediate term. Not every breach permits termination.
For a business considering whether to suspend performance, the decision helps assess seriousness and repudiation risk. It does not establish a freestanding suspension remedy. An unpaid invoice must be assessed within the bargain and its consequences, rather than labelled fundamental because payment matters commercially.
When Queensland legislation allows you to suspend performance
Qualifying construction contracts have a statutory route under the Building Industry Fairness (Security of Payment) Act 2017 (Qld). The provisions below were checked against the in-force version dated 28 April 2026.
Check whether the statutory scheme applies
Section 61 governs the application of the progress-payment chapter. In particular, section 61(2)(b) excludes a domestic building contract involving a resident owner to the stated extent. A builder working directly for an owner on the owner’s intended home should not assume that statutory suspension is available. A subcontract is a separate contract requiring its own assessment.
The definitions of construction work and related goods and services, and other exclusions, also matter. A connection with a building project does not settle coverage by itself.
Identify the unpaid statutory amount
Section 78(1)–(5) deals with failure to pay an amount owed following a payment claim. Under subsection (5), the amount owed is the claimed amount if no required payment schedule was given, or the amount proposed in a payment schedule if one was given as required.
That distinction prevents a common mistake: a claimant cannot simply treat every disputed dollar in its invoice as an unpaid statutory amount entitling it to suspend performance.
Under section 78(3), the claimant may give written notice of an intention to suspend. Section 78(4) requires the notice to state that it is made under the Act. There is also a notice route for an unpaid adjudicated amount under section 92(1)–(2).
Observe the statutory waiting and restart periods
Section 98(1) allows suspension once at least two business days have passed since the relevant notice was given under section 78 or 92. This is not a universal two-day rule for every unpaid construction invoice.
Under section 98(2), the right continues until payment of the relevant amount and for another three business days immediately afterwards. Calculate business days under the Act’s schedule 2 definition; do not simply count calendar days.
Section 98(4) protects a claimant exercising the statutory right against specified liability for loss caused by the non-performance during suspension. Section 98(3) separately addresses loss or expense where the respondent removes work or supply from the contract. Neither provision is blanket immunity for unrelated misconduct.
Our construction-specific guide explains when a builder can stop work for non-payment in Queensland. The statutory route and the contractual route should each be checked on their own terms.
Example two A payment schedule changes the answer
Assume an electrical subcontractor makes a valid $50,000 payment claim under a contract covered by the Queensland scheme. The head contractor gives a compliant payment schedule proposing $30,000 and pays that sum by the due date.
The subcontractor cannot rely on section 78 to suspend performance merely because the remaining $20,000 is disputed. On these facts, the scheduled amount has been paid; the difference can be pursued through the applicable adjudication process. If an adjudicated amount later becomes payable and remains unpaid, section 92 may provide a separate route.
Change one fact: the head contractor does not pay the scheduled $30,000. Section 78 may then support a suspension notice, subject to compliance with the legislation. The invoice is identical; the statutory entitlement is different.
Give an effective notice before you suspend performance
A notice should be drafted from the applicable clause or statutory provision. Generic demands for payment frequently omit the information or sequence needed to activate the right.
Identify the contract, the default and the amount properly due. State the provision relied on, what must happen to remedy the default, the deadline and the intended suspension. Use the required service method and recipient. Preserve evidence of when notice was given or received, depending on the governing provision.
Check whether a default notice and a later suspension notice are separate steps. A contractual dispute-resolution clause may also require continued performance or impose another relevant procedure. An invoice reminder is not necessarily either notice.
Before you suspend performance, prepare a chronology showing the payment trigger, due date, notices, service and expiry of any cure period. In litigation, that sequence can be more decisive than months of correspondence expressing frustration.
Where the agreement or an alleged variation was made in conversation, preserve the actual words and surrounding documents. Our guide to pleading contracts and conversations in Queensland explains why identifying the contractual promise matters when a dispute reaches court.
What if you suspend performance without a valid right
An unauthorised stoppage can be a breach without necessarily being repudiation. Repudiation depends on what the conduct objectively communicates about willingness or ability to perform the contract substantially. A short, mistaken interruption and an indefinite refusal to perform a central obligation may have very different consequences.
Calling the stoppage temporary does not decide the issue. Nor does adding “all rights reserved” to an email create an entitlement to suspend performance.
If the conduct amounts to repudiation, the other party may elect to accept it and terminate. A damages claim may follow. The compensatory approach, including remoteness, is discussed in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8, [13]. Replacement costs and delay losses require proof and remain subject to the applicable rules on causation, remoteness, mitigation and any effective contractual limitations; they are not automatically recoverable simply because they appear in a demand letter.
Do not assume wrongful suspension erases every accrued payment entitlement either. Existing debts and any counterclaim must be analysed separately. Our discussion of when to sue for breach of contract considers the commercial decision to litigate, including recoverability and costs.
| Question | Suspension | Termination for breach |
| Does the contract continue | Yes, subject to the applicable terms | Future performance obligations are generally discharged |
| What happens to existing rights | They usually remain, subject to the contract and law | Accrued rights and surviving obligations may remain |
| Is performance expected to restart | Usually, once the stated trigger is satisfied | Ordinarily no |
| What legal basis is needed | A specific entitlement to withhold the affected performance | A contractual termination right or sufficient common law ground |
| What is the danger of an unjustified step | Breach and potentially repudiation | Wrongful termination may itself be repudiation |
Can force majeure or an agreed pause allow you to suspend performance
If an external event disrupts delivery, read the force majeure clause before treating the disruption as permission to stop. The event must fall within its wording, and the relevant causal, notice and mitigation requirements must be satisfied. Relief may cover only the affected obligations and only for the specified period.
Our guide to force majeure clause risks in Australia examines those drafting issues. A clause dealing with a flood or supply interruption should not be assumed to cover the customer’s failure to pay.
The parties can also agree on a temporary pause. Record its legal effect carefully: affected work, payments, revised dates, ongoing protective obligations, costs and the mechanism for restarting. Have the variation validly documented rather than relying on an ambiguous exchange that one party later describes as mere negotiation.
Before deciding to suspend performance
The useful question is precise: which obligation may you withhold, under which provision or principle, from what date and until what event? If those answers are uncertain, stopping work is a commercial gamble with legal consequences.
Obtain advice on the signed agreement and the actual payment history before issuing the notice. Advice given before a stoppage can address the available options; advice sought afterwards may have to address a counterclaim as well.
