JCT payment disputes are unfortunately all too common in the construction industry. If not handled properly and with the appropriate levels of care and skill, a JCT payment dispute can have severe consequences, including project delays, cash-flow issues, and damaged commercial relationships.
At Altion Law, our team of expert construction dispute solicitors have extensive experience in JCT payment disputes. We pride ourselves on our distinctly commercial outlook, and we have a well-earned reputation for offering not just legal but also pragmatic, business-focused advice.
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 Contracts?
JCT contracts are standardised contracts used widely by businesses operating in the construction industry. They are published by the Joint Contracts Tribunal (‘JCT’), and they provide a convenient framework within which employers and contractors involved in a specific project can work.
There are a number of different JCT contracts, each tailored to the specific situation it is intended to cover. They include the following:
- Standard Building Contract.
- Intermediate Building Contract
- Minor Works Building Contract.
- Major Project Construction Contract.
- Design and Build Contract.
- Management Building Contract.
- Construction Management Contract.
- Repair and Maintenance Contract.
Why do businesses use JCT Contracts?
Most businesses operating in the construction industry use JCT contracts. The contracts offer various advantages, including the following:
- They are industry-specific and reflect industry norms.
- Many stakeholders are involved in the development of JCT contracts, including contractors, sub-contractors, and specialists.
- They can reduce the costs of a transaction.
- They can save the parties valuable time.
- They allocate risk between the parties in a fair, standardised way that most businesses understand.
- They address the common pitfalls in the construction industry.
What do JCT Contracts say about payment?
The terms of each type of JCT contact vary, but those governing payments are similar across all of them. Payment typically takes place through a series of interim valuations, applications, and payments, culminating in a final payment.
The payment provisions of JCT contracts are a common cause of disputes between those working on a construction project.
Why does a JCT Payment Dispute arise?
Disagreements over payment are the most common cause of disputes between businesses operating in the construction industry. They can arise for a variety of reasons, including the following:
- Disputes over ‘pay less notices’. Under JCT contracts, a party to the agreement can issue a ‘pay less notice’ to the other party indicating their intention to pay less than the sum contained in a payment application. Disputes frequently arise because the receiving party wishes to challenge the pay less notice, or the notice has not been prepared correctly.
- Disputes over late or non-payments. Late or missed payments can cause significant cash flow issues for the receiving party, particularly where they are a small business.
- Disputes over variations. Construction projects regularly evolve, and JCT contracts usually contain terms detailing how variations should be dealt with. The types of variations that might be agreed include variations to the scope of work, design adjustments, time extensions, and changes in the specifications relating to the types of materials to be used. Disputes often arise when variations have not been properly documented or understood.
How can you resolve a JCT Payment Dispute?
JCT contracts usually contain terms that expressly detail how disputes should be addressed, including JCT payment disputes. They typically include a mix of informal and formal dispute resolution methods, such as negotiation, adjudication, and litigation.
Negotiation is the least formal method of dispute resolution and involves the parties discussing their issue and reaching a mutually acceptable solution. Enlisting the help of expert construction dispute lawyers, like ours, can give you the best chance of negotiating a favourable solution quickly.
Many JCT payment disputes are settled by adjudication. Adjudication is a popular choice for dispute resolution among businesses operating in the construction industry because it is quick (an adjudicator must decide an issue within 28 days) and allows the parties to get back to work. The adjudicator’s decision is binding on the parties, but it is intended to be a temporary solution that enables the project to continue while the parties explore a permanent resolution, through other dispute resolution methods, such as arbitration or litigation. However, in practice, the parties to a JCT payment dispute often accept the arbitrator’s decision and move on.
It is essential that you follow the dispute resolution provisions contained in your JCT contract when addressing a JCT payment dispute. If you fail to do so, you may be in breach of your contractual obligations.
If you are facing a JCT payment dispute, timely legal advice is essential. By taking decisive action, you stand the best chance of achieving a swift resolution, keeping the project on track, and preserving important commercial relationships.
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.
