Hi
The payment mechanism in a bespoke sub-contract specifies that if the contractor fails to issue a payment notice, a default payment notice is to be issued by the payee sub-contractor.
This is fine but the terms also specify that, in these circumstances, the final date for payment gets pushed out 3 times as long (even if the default payment notice is issued on the day after the latest day for the contractor to issue his payment notice).
This seems inherently unfair as all the contractor has to do is fail to issue a payment notice in which case the final date for payment gets pushed out by (minimum) over a month.
Also seems to me that this provision may fall foul of section 110B(3) of the Construction act, thereby potentially making it an inadequate payment mechanism.
Any thoughts?
You are correct in that this provision is not compliant with the requirement of s110B(3) of the ‘construction Act’ in that the postponement of the final date for payment should be the number of days from the date the payer is required to give a payment notice to the date when a (compliant) ‘default’ payment notice is given by the payee.
Thanks for your reply.
I wonder if the corollary is that the entire payment mechanism fails (as non compliant with the construction Act) or if the likely outcome is just that the final date for payment alters to the number of days calculated in accordance with s110B(3) of the Act?
The non-compliance is in relation to the number of days that the final date for payment is delayed by, rather than in relation to a key procedural matter addressed by the ‘Scheme’. I would suggest that the provision of s110B(3) would override the ‘equivalent’ subcontract provision, with all other matters remaining (providing they are compliant).
That’s very helpful; thank you