Those who are a part of a construction contract may have greater protection than they realise.
A major breakthrough in the construction sector was made in 1996 with the passage of the Housing Grant, Construction and Regeneration Act. Many people in the sector are still unaware of its effects today. In essence, it encourages justice in the payment process and offers adjudication as a quick fix.
A “Construction Contract” is quite broadly defined for the Act’s purposes, and this definition includes agreements with construction experts including architects and quantity surveyors. It is important to note that domestic contracts with the homeowner are not included.
The following are the main lessons to be learnt from the Act:
Calculating Payment Amounts and Dates
- Contracts must state when payment is due as well as the last day for paying any outstanding debts.
- As long as the projected completion date of the job is greater than 45 days, payments may be made in instalments, stage payments, or other recurring payments.
- The amount and frequency of payments are up to the parties decision.
- If they don’t, the following standard payment terms will apply by law. You can request payment 28 days after you begin working and every 28 days thereafter by outlining how much you believe you should be paid and the date of your application is the “due date”. 17 days later is the due date for payment in full.
- The paying side may not connect payment with the actual payment receipt. Imagine a contractual chain where a client, a primary contractor, and a subcontractor are all involved. Because the client hasn’t paid the main contractor for the job, it is not permitted to withhold payment to the subcontractor.
- A payment notification must be provided no later than five days following the payment due date, according to your building contract.
- A payment notification must include both the amount that the party serving it believes is due at the due date and the method used to determine that amount.
- Payment notification is still needed even though there is no money owed on a certain due date.
- The unpaid party may issue a default payment notice if a party to a contract totally ignores to provide a payment notice. The amount that the underpaid party believes is due or was due at the payment date, as well as the method used to compute that amount, must be stated in the default payment notice.
Pay Less Notices
- If the paying party desires to pay less than the notified sum, it must do so by filing a pay less notice. The amount mentioned in the payment notification, or the amount requested if there is no payment notice, is referred to as the notified sum.
- The paying party should file a pay less notice if it wants to pay less than the notified amount.
- The parties may agree on the date that the pay less notice must be sent as long as it is before the deadline for payment. If there is no agreement, it is assumed that notice must be made at least seven days before the payment deadline.
- You may be permitted to stop working on a building project if you give 7 days written notice before the due date for payment for any money that is past due.
It is important to highlight that failing to comply with several terms, notably, those referring to notices and pay less notices may result in the initiation of adjudication proceedings.
The litigation, claims, and conflicts that affect the construction and project industries are well known. SGT Law Firm might be able to help if you are a party to a construction contract and believe you are owed money for work performed. Our connections with the law firms on our panel allow us to pursue appropriate matters on a no win, no fee basis.
Contact us so that we can assist you right away!