JCT contracts are a suite of contracts developed by the Joint Contracts Tribunal with input from various construction professionals. The template contracts aim to standardise the contractual arrangements between businesses operating in the construction industry and simplify relationships between contractors and subcontractors. Among the most important provisions in these contracts are JCT contract payment terms.

JCT contract payment terms are essential for the effective management of construction projects in the UK. They provide the parties with a structured framework for managing crucial cash flow and allocating risk.

At Altion Law, our construction dispute solicitors specialise in assisting clients in resolving disputes arising out of JCT contract payment terms. We offer commercially focused, pragmatic advice to help you reach a swift conclusion and get back to work as quickly as possible.

 

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

 

What are JCT Payment Terms?

There are a number of JCT contracts tailored to deal with specific relationships within the construction industry. Most JCT contract payment terms seek to give effect to certain key principles, which include the following:

 

  • Right to interim payments.

Interim payments are the lifeblood of construction projects. JCT contract payment terms relating to interim payments ensure a steady cash flow to businesses working on a project, enabling them to cover expenses such as labour costs, materials, and overheads.

 

  • Payment notices.

The payee may need to issue a payment notice detailing the sum they consider due and stating the basis on which they have calculated that sum. If it fails to issue a payment notice, the payee can serve a ‘payee payment notice’ stating how much they consider to be due and the basis of their calculation.

 

  • Pay Less Notices.

If the payer changes its mind about how much to pay the payee, it must issue a ‘pay less notice’. In its pay less notice, the payer must state the sum they now consider to be due and the basis on which it has reached that conclusion. If a payer does not issue a pay less notice by the relevant deadline, it must pay the amount detailed in the payment notice.

 

  • Right to Suspend Works.

If a payee does not receive a payment due to them by the due date, they have the right to suspend work. However, before doing so, the payee must give proper written notice of their intention. If they simply walk off site, they may be in repudiatory breach of contract. Repudiatory breaches of contract are incredibly serious, giving the innocent party the right to terminate the contract and claim any losses they have sustained as a result of the breach.

 

Why do JCT Payment Terms cause Disputes?

Non-payment or late payment are the main causes of disputes between businesses working on a construction project. While JCT contract payment terms seek to impose a clear framework for payment throughout a project, issues frequently occur when the parties disagree on whether payment is due or the amount that should be paid.

Just a few examples of the types of disputes that can arise over JCT contract payment terms include the following:

  • A party misunderstands the JCT contract payment terms and inadvertently breaches them.
  • A party misses a deadline for serving a notice, such as a payment notice or a pay less notice.
  • A party serves a notice that does not contain adequate detail about the basis on which they have calculated the sum they claim is due.
  • A party fails to serve a notice in accordance with the JCT contract payment terms.
  • The parties disagree over whether specific works fall within the original scope of works or constitute a variation.
  • A party walks off site for non-payment without serving the required notice beforehand.
  • One party disagrees with the other exercising their right to suspend works following non-payment of the sums due.
  • A party cannot make payment due to cash flow issues.
  • The parties disagree on the value of the work undertaken.

 

How can Disputes over JCT Contract Payment Terms be resolved?

At Altion Law, our construction disputes solicitors firmly believe that disputes over JCT contract payment terms are best addressed in a constructive manner. Wherever possible, we will seek to save you time and money by achieving your aims through negotiations with the other party. If negotiations are unsuccessful, we may advise you to consider alternative dispute resolution methods, such as mediation or arbitration, before issuing court proceedings.

Many JCT contracts contain dispute resolution provisions that dictate how the parties must address any dispute arising under the agreement. The parties are contractually obliged to adhere to those terms, and failing to do so will place you in breach of contract. Accordingly, prompt legal advice and support are essential as soon as a dispute over JCT payment terms arises.

 

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.