Default Payment Notice under NEC 4 Subcontract

I have been urgently contacted by a subcontractor who is not getting paid and needs to issue a default payment nortice as everything has gone silent from the PM. Can i ask please if anyone has soem suitable wording for such a notice.

I saw one of these 9 years ago and think that they are quite minimal and have to refer to previous applications issued, state sum due, state which contract clause this is being issued under, include basis of application and state that this is a default payment notice of course. I would juts like to check if this is still the case.

Kind regards.

Mark

Under the NEC4 ECS form the Subcontractor is required to submit an application for payment which the Contractor considers when assessing the amount due. I can only assume that the Contractor has not made this assessment and certified payment within the required timescales, which is 2 weeks from the payment assessment date.

At s110B paragraph 4 of the amended ‘Construction Act’, where this situation occurs then the Subcontractor’s payment application would become the ‘default’ payment notice. This amount should be paid by the final date for payment, unless a valid notice of intention to pay less than the notified sum is given. You don’t need to give a further payment notice.

If a payment application has not been submitted the amount due is determined by sub-clause 50.4.

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To add to what @Andrew_W-I has said they should consider seeking referral to the Senior Representatives named in the contract in accordance with clause W2.1. Both @Andrew_W-I and I have assumed that the Act applies and as such Y(UK)2 and W2 should be included in the subcontract.

Hi Andrew that is very useful. Very much appreciated

Neil. Many thanks for your comment. Again. Very much appreciated

Andrew,
I found your post from December last year when searching the internet for clarification to a similar situation that you have explained.

The scenarios you have set out are:
(1) where the subcontractor submits an application but the Contractor fails to issue a certificate; and
(2) where the subcontractor fails to issue an application and the Contractor issues a certificate.

What happens if there is neither an application nor a certificate?

S110B(2) permits the payee (subcontractor) to submit a default payment notice in the event that the payer (Contractor) fails to issue a payment notice (Certificate) by the latest date required to do so. In such circumstances, the Subcontractor could issue a payment notice stating the amount considered due (which would be the notified sum).

The Contractor would have the opportunity to issue a pay less notice and could state the sum considered due was nil (or other amount) determined in accordance with clause 50.4.

However if the Contractor fails to issue a pay less notice, would it not be obliged to pay the notified sum in the Subcontractor’s payment notice (despite what clause 50.4 provides)?

My understanding is that Section 110B of the Act (like s111) has direct application and overrides any contractual provisions that may be conflicting.

I’d be interested in your thoughts on this scenario.
Thanks,
Max

Max

There are many possible scenarios with payment notices, as you have stated, dependent upon what actions are taken, by whom and when.

In your example where an application has not been made and there is no corresponding payment certificate, then if the Subcontractor gives a payment notice under S110B (2) and the Contractor does not give a notice to pay less than the notified sum then the Contractor would be obliged to pay the sum in the Subcontractor’s ‘default’ notice.

There would be no conflict with clause 50.4 as this applies to the amount due at the assessment date, which has already passed.

Andrew,

Thanks for your prompt response, which is appreciated.