Party A certifies an amount for payment to Party B for works completed.
Party A then pays more than the certified amount for an unknown reason.
Neither party notices the over payment for a period of time. When the overpayment is commented on by Party A to Party B they do not request it to be returned. Party B does however net down its next invoice to reflect the over payment. Party A ignores the adjustment when paying against this corrected invoice and pays the higher pre-adjusted invoice amount thereby maintaining the overpayment.
Question: Does anything within NEC3 govern interest payable on the overpaid amount noting that this is a sum overpaid against the certified amount rather than a correction to the value of works completed which is already handled in Clause 5?
The provisions in the NEC contract for the assessment and payment of interest relate to;
late payment due to a fault of the Project Manager,
payment of a ‘corrected’ amount.
Where an amount is not paid by the date it is due then interest would accrue by virtue of the Late Payment of Commercial Debts (Interest) Act 1998, as supplemented by various Orders and Regulations.
Where the contract provides a ‘substantial remedy’ (as defined) then this ‘contractual remedy’ would fulfill the intentions of the Act.
Interest accrues in relation to a ‘qualifying debt’, although an overpayment would not be classed as a debt.
I am not aware if there are any statutory or common law remedies which apply to the recovery of an ‘overpayment’, although it is clear that Party B tried to ‘pay it back’ by virtue of their amended application, so have taken steps to remedy the situation anyway.