Industry
payment but could not insist on the contractor returning to site to complete the works, even when payment was made.
In most circumstances, where standard forms of contract are involved, there will be a requirement to pay interest on the overdue amount. In the absence of such a provision, if payment is late then general late payment legislation may apply and the contractor can, as a right, charge interest at an annual rate of 8% above The Bank of England Lending Rate.
Standard forms of contract are likely to involve payment at rates that are significantly above this; for example, there is a default provision under some NEC contracts of 0.5% per week.
Can Clubs avoid this liability?
The short answer is no! It is possible to vary the timescale as to the date of payment and the date of any Pay Less Notice, and to agree a different percentage of interest. Such agreements have to be extremely carefully worded or a court may consider that the agreement does not meet the required criteria, or the interest rate may be considered grossly unfair. In these cases the default Regulations apply.
The legislation has been drafted specifically to prevent avoidance, so beware.
If, for any reason, the club is unable to
make a payment, as with any other debt, they would be well advised to tell the contractor indicating when funds are likely to be available. This does not change the legal situation, but most contractors will react favourably provided they feel secure that payment will be forthcoming within a reasonable timescale. If funds are being provided by a third party, then they should also be informed of the problems that are being created.
When did the Acts come into force?
The Legislation dates back to 1998, with numerous updates by Acts of Parliament and changes to regulations. The latest
104 PC DECEMBER/JANUARY 2014
perverse if the admirable aim of encouraging the provision of better sports facilities were to result in rendering clubs
“It would be insolvent”
relate to Late Payment Regulations which were amended in March 2013. The general tenor of the legislation has been to strengthen and extend the original acts and regulations
Who needs to be aware of this?
Any organisation issuing orders or entering into contracts should be aware of the liabilities. The legislation generally does not apply to private individuals. Any organisation responsible for
providing funds or grants to pay for such projects should be aware and should ensure that the funds are made available, otherwise they may force the club into breach of contract and render them liable for additional costs as well as resulting in delays in completing works, or worse, forcing clubs to default. Whilst liability, in the first instance, falls directly on the club, they cannot rely on any ‘pay when paid’ clauses as these were rendered unlawful at the end of the last century. Any funding arrangement,
which does not allow clubs to meet their contractual liabilities, is at best sloppy and might even result in clubs seeking remedy from the funder. It would be perverse if the admirable aim of encouraging the provision of better sports facilities were to result in rendering clubs insolvent.
*Standard forms of contract usually require the issuing of a payment certificate by an engineer, architect or contract administrator. Payment should be made against such Certificate and within the time allowed in the Contract. If the Club objects to any certificate they should register their objection in accordance with the Conditions.
LEGAL WARNING
This article is for general guidance only. It does not constitute legal advice and reliance should not be placed on it.
No liability can be accepted by the author for its contents. The interpretation of the law on the matters covered is a matter for the courts.
Any organisation or individual affected by these issues should take their own legal advice, where appropriate.
ACTS AND REGULATIONS AND DATES
The Housing Grants Construction and Regeneration Act and the accompanying Scheme for Construction Contract was brought into force in May of 1998
The Local Democracy, Economic Development and Construction Act 2009 came into force in October 2011
Late payment of Commercial Debts (Interest Act) 1998
The Late Payment of Commercial Debts Regulations 2002 (August 202)
The Late Payment of Commercial Debts Regulations 2013 (March 2013)
The legislation covers England and Wales, with separate though similar legislation covering Northern Ireland and Scotland.
Construction Contracts and Forms (JCT, NEC, ICC, FIDIC and more) are available from the Royal Institute of British Architects at
http://www.ribabookshops.com
Further information -
http://uk.practicallaw.com/3-502-2528#
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152 |
Page 153 |
Page 154 |
Page 155 |
Page 156