Tue 20 Apr 2021

When should a Payment Notice be issued and what happens if one is not issued?

A payment notice sets out the notified sum and the basis upon which that sum is calculated.

This has to be issued no later than 5 days after the due date.  It is essential that a payment notice is issued even if the notified sum is zero.  The contract should state the due date or method for calculating the due date.

If no payment notice is given, the payment application is treated as a default notice and must be paid by the final date for payment, subject to any pay less notice which is given.

Where the contract doesn’t require payment applications and not payment notice is issued, the party receiving payment may serve a default notice. This can be given at any time after the payment notice was due. The default notice must be given to trigger the paying party's obligation to pay.

The default notice must specify the sum the payee considers due at the due date and the basis for their calculation. Service of the default notice defers the final date for payment for the same number of days as between the due date for the payment notice and service of the default notice. Accordingly a default notice should be served as soon as possible.

In next week's blog we will discuss why pay less notices are so important. 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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