Tue 30 Mar 2021

Payment provisions

If your contract is a construction contract it should contain the provisions required by the Act.  If it does not, whether in whole or part, then the Scheme steps in

The extent of non-compliance will govern the extent that the Scheme applies to your contract.

  • If there are no payment terms in the contract, all Scheme provisions on payment become implied terms of the contract.
  • If there are some compliant terms in the contract, those continue to apply and the missing provisions are filled in by the Scheme, so long as the remaining contractual provisions form a coherent whole with the relevant Scheme provisions.
  •  For example the contract might provide that interim payments are to be made and when but not how to calculate the value of the payments. In that case the Scheme provisions on calculating the value of interim payments will become terms of the contract.
  • Any non-compliant terms in the contract are replaced by the relevant Scheme provisions.
  • If the contract contains an ineffective payment clause then the contract's payment provisions are replaced with the Scheme's payment provisions, unless parties agree other terms of payment.

It is entirely possible to have a 'piecemeal' incorporation of the Scheme provisions in terms of payment  as the Act provides that the Scheme is only required to the extent the contract doesn’t contain the necessary provisions.

Next week we will look at the right to interim payment. If you haven’t read our previous payment blogs they can be found here.

Should you require assistance with any aspect of a construction contract, we have a large and experienced construction team who would be happy to discuss this with you.


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