NEC ECS: Not received signed option A subcontract

We have agreed NEC 3 Option A Subcontract terms and conditions via email with a Subcontractor. However we have still not received the Subcontractors signed subcontract.

The Subcontractor has proceeded with design as per the agreed Activity Schedule and have now issued a payment application for the completed works.

It’s my view that without a signed subcontract we cannot pay for the works as we are technically not in contract?

You are both in contract when both Parties start acting as if you are in contract: the problem comes if the written draft contract has been going back & forth between the Parties and it is unclear when both Parties starting acting as if they were in contract and hence which ‘draft’ is actually the contract.

So if you respond and authorise the payment, you would definitely be in contract, but you may well have done actions before this and hence be in contract.

Just to add to Jon’s answer, if the works are deemed to be ‘construction operations’, as defined by s105 of the HGCRA 1996, as amended by the LDEDCA 2009, (together the ‘Construction Act’), then you have a statutory obligation to implement a payment procedure irrespective of whether you have a formal written contract in place.