Payment Notices and the Construction Act

Episode #16

In this episode of the Subcontractors Blueprint podcast, Jacob Austin discusses payments under the Construction Act, with a focus on payment notices. He explains that the Construction Act enforces rules on all construction contracts, regardless of whether they are formal or informal agreements. Jacob highlights the importance of regular and prompt payments throughout the supply chain and emphasizes the need for clear mechanisms for determining payment amounts. He also delves into the requirements for payment notices, pay less notices, and the basis on which sums are calculated. Jacob provides insights on how subcontractors can navigate these processes and ensure fair outcomes. Overall, this episode provides valuable information for subcontractors looking to improve their understanding of payment procedures under the Construction Act.

KEY TAKEAWAYS:

  • The Construction Act, also known as the Housing Grants Construction and Regeneration Act, enforces rules on all construction contracts, even if they are not formal contracts.

  • Payment notices must be issued within five days of the due date for payment, even if no amount is due. If the payer intends to pay a different amount, a pay less notice must be issued, stating the basis for calculating the payment.

  • Contractors must provide a detailed breakdown of how they are valuing the work being paid for, including individual amounts and any adjustments made.

  • Pay-when-paid clauses are generally ineffective under the Construction Act, unless a third party involved in the payment becomes insolvent.

  • If a payment notice is not issued, the original application for payment becomes the default notice. Contractors have the option to issue a pay less notice, but if they fail to do so, the payee has the right to suspend work until full payment is made.

BEST MOMENTS:
"The Construction Act effectively enforces these rules by statute on all construction contracts."

"The contractor doesn't have to do anything in the eyes of the law, as long as they pay you the amount that you've applied for." 

"If you don't receive a pay less notice, you would just get paid your application, and then the same right to suspend would apply if you didn't get the money." 

"The contractor has got to have some genuine belief that that is a fair valuation and that is what they'll pay you based on the information that they've got at the time."

"Your contract, even if it is in support of their contract, is a standalone agreement." 

HOST BIO
Meet Jacob Austin, a Chartered Quantity Surveyor with a rich background at industry giants Balfour Beatty, Kier, and Vistry Group. With extensive involvement in education, health, and residential projects spanning various scales, from £1000s to £100M, Jacob brings a unique perspective. Having collaborated with numerous small businesses, he's now committed to sharing his expertise to drive their success. Join Jacob on his podcast, where he blends his profound insights and personable approach to offer guidance, industry secrets, and inspirational stories.

LinkedIn - www.linkedin.com/in/jacob-austin/
Instagram - www.instagram.com/qs.zone/
www.linktr.ee/qs.zone

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