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SUSPENDING OPERATIONS FEATURES


Time to press


By Professor Rudi Klein Barrister and SELECT Consultant


I


t is now more than 25 years ago that I was involved in putting together legislation – the Construction Act – to improve payment practices. You may find it surprising that at that time there was no legal right to suspend performance of your work for non or late payment.


32 CABLEtalk APRIL/MAY 2021


Payment due date passes


(Wait 7 days) Issue


notice of suspension (Wait 7 days)


pause?


Our in-house specialist responds to a recent Member inquiry by advising on how to suspend operations if you encounter payment problems on a live project


Without such a right there wasn’t an effective way to enforce entitlement, so I wasn’t too popular when I insisted that the UK Government should introduce a statutory right to suspend works for non or late payment. To my surprise, the politicians relented and the result was Section 112 in the Construction Act, which established the statutory right to suspend one’s work for non or late payment. So how does it work?


Seven days As you’ll see from the diagram on this page, the key provision is that you must issue a seven days’ notice of intention to suspend your contractual obligations. It should be noted that the reference is to suspension of your ‘obligations under the contract’.


This could be wider than just suspension of the ‘works’ – you could, for example, cease carrying out any design work. An example notice of suspension is on these pages.


Let’s talk about timing In everything you do, it’s vital that


Payment due date passes


(Wait 7 days)


Issue


notice of suspension (Wait 7 days)


Payment due date passes


(Wait 7 days)


Issue


notice of suspension (Wait 7 days)


you carefully read your contract to check your payment timings. You should be able to identify the


due payment dates and the final date for payment. The due payment date marks the beginning of a process that leads to your payment entitlement being determined by the final date for payment (which could be 30, 40, 50 plus days from the due date). During that process, your paying party may have issued a payment notice, within five days of the payment due date, and also a pay less notice, which can be issued up to a day before the final date for payment. The amount due to you would be stated in the initial notice unless revised by a pay less notice. If the payer hasn’t issued the initial


notice, and should have done so, your application could become the due sum, subject to any pay less notice.


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