Civil Engineering Reference
In-Depth Information
Chapter 8
Payment
8.1 Contractual payment
8.1.1 Introduction
One of the main obligations owed by the employer under a building contract is to
make payment to the contractor for the work carried out by them. he building con-
tract will ordinarily contain express provisions relating to payment and the parties
are, subject to the provisions of the 1996 Act (as amended), free to agree between
them the sum that is to be paid for the works, whether instalment payments are to be
made, when payments are to be made, and the mechanism or procedure to facilitate
payment.
The commonly used standard forms of building contract contain detailed provi-
sions in respect of payment, see, for example, clause 4 of the SBC and core clause 5 of
the NEC3 (as supplemented by Option Y(UK)2).
8.1.2 When are payments due?
Traditional Scots law position
In any building contract one of the contractor's prime concerns is the timing of pay-
ments for work carried out. Traditionally under Scots law contractors have no implied
righttopaymentuntiltheyhavecompletedalltheworktheyhavecontractedtocarry
out, see
Muldoon
v.
Pringle
(1882) and
Readdie
v.
Mailler
(1841). It is a general prin-
ciple of Scots law that, in the absence of any provisions in a contract providing for
interim or instalment payments, there is no obligation to make payment until the
entire contract has been fulfilled. Whether or not this applies to building contracts
was considered in the case of
Charles Gray & Son Ltd
v.
Stern
(1953). In this case, the
contractor demanded payments to account while building a house, maintaining that
it was normal building trade practice to pay contractors for nine-tenths of the work
completed. The contract did not expressly provide for interim payments to be made.
The court held that the contract was a lump sum contract and that, as the contractors
had failed to carry out a material part of the works, they could not sue for payment
under the contract.
MacRoberts on Scottish Construction Contracts
,hirdEdition.MacRoberts.
© 2015 John Wiley & Sons, Ltd. Published 2015 by John Wiley & Sons, Ltd.
