{"id":108166,"date":"2022-03-23T16:07:50","date_gmt":"2022-03-23T16:07:50","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=108166"},"modified":"2022-03-23T16:07:50","modified_gmt":"2022-03-23T16:07:50","slug":"arbicon-non-payment-protection-construction-subcontractors","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/arbicon-non-payment-protection-construction-subcontractors\/108166\/","title":{"rendered":"Non-payment protection: Top tips for construction subcontractors"},"content":{"rendered":"

What steps can construction subcontractors take to protect themselves against non-payment? Find advice from Arbicon<\/a> here<\/h2>\n

If a non-payment issue arises, assuming there is no insolvency<\/a> involved and the work is commercial, there is plenty that can be done quickly to ensure payment is recovered. To make the other party pay, the facts need to be assessed and the appropriate attack deployed using construction law and the contract. The contract, therefore, needs to be effective at dealing with the non-payers. The contract is the toolbox any contractor should have properly stocked before commencing any work, with steps taken to reduce the risk of non-payment arising. The main points in stocking the contract toolbox are:<\/p>\n

1. Procurement \u2013 Get the right contract in Place<\/h3>\n

If terms are imposed in a document or subcontract order issued after works have commenced, it counts for nothing, unless then signed by the subcontractor. This is known as \u201cthe battle of the forms\u201d and is very common in construction contract procurement.<\/p>\n

TIP: The last set of terms on file before the start take precedence.<\/strong><\/p>\n

If there is a prestart meeting or subcontract order before the start, be sure to counter any inaccuracies or clauses you do not accept in writing before the start of work and do not sign the contract. If you sign a formal contract, everything that has gone before it is wiped out and the new deal, perhaps with unacceptable terms, will apply and take retrospective effect.<\/p>\n

TIP: If you are faced with \u201csign or you will not be paid\u201d, any clause or imposition to this effect is void and illegal \u2013 ignore it.<\/strong><\/p>\n

2. Payment terms the construction act<\/h3>\n

Payment Terms The Construction Act, which governs the right to payment, demands that payment terms provide an \u201cadequate mechanism\u201d. Construction subcontractors should be aware of common payment terms that are illegal\/void and those that are not illegal\/void.<\/p>\n

An easy way of setting out payment terms in a quote for a project is to say the Scheme1 applies and you alter any of its terms as you wish. The Scheme is in effect a Statutory set of contract terms that are imported in when payment terms are missing or inadequate. The Scheme sets a 17 day payment period and only 10 days to serve a Pay Less Notice.<\/p>\n

Other terms that ought to be included in writing for clarity are \u2018no discount applies nor retention\u2019 and \u2018rights to suspend or terminate the works on a 7 day notice for non-payment after the Final date for Payment\u2019.<\/p>\n

TIP: Be clear on payment term adequacy, due dates and periods. Use the Scheme.<\/strong><\/p>\n

3. Other essential terms to protect rights<\/h3>\n

It is particularly important at the start to ensure that Price, Time and Scope are correct as these are often areas of potential quarrel. You should consider if the price is to be fixed or on quantities, whether you will be bound by a deadline to complete, and whether to introduce or exclude EOT, loss\/expense, Liquidated Damages, with time at large or not. Be clear on what you will deliver, what qualifications have been made, has the work been designed and specified, what provisional sums are there and how all of these are dealt with.<\/p>\n

TIP: Always pay for an Arbicon contract evaluation before you submit a tender or sign the contract.<\/strong><\/p>\n

Other important terms to consider include:<\/p>\n