Saturday, March 30, 2013

Can You Refuse To Pay Contractors Costs?


What are the terms of the contract?


This question can be answered by looking at the express provisions in the contract.

Unless there is an express provision in the contract that states the contractor will only be paid when the client pays “pay when paid”), the client should still pay on time, or the provisions of the late payment legislation will apply.

It has been the norm for construction contracts to contain such provision, which means that even if the contractor completes the job, payment is still subject to the client himself getting paid.

Such pay when paid clause will become void when the Construction Industry & Payment Adjudication Act 2012 (“CIPPA 2012”) comes into force, and a default payment clause will be activated and it may be reasonable to imply payment terms of 30 days or sooner.

If there is no provision for payment terms in the contract, then arguably payment may be due on presentation of the invoice. Should the invoice not be paid promptly, then CIPAA 2012 provides a quick and less expensive method for contractors to recover payment.

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