Civil Engineering Reference
In-Depth Information
Section 110B (4) provides that where the construction contract requires the payee
(before the date on which the payer notice is to be given) to notify the payer or a
specified person of the sum that the payee considers will become due on the payment
due date and the basis upon which that sum is calculated, then if that notification is
given and the payer or specified person fail to issue a payer notice, that notification
is to be treated as a payee notice in default and no further payee notice in default is
required. In those circumstances the final date for payment will not be postponed.
Section 111
Section 111 provides that the payer must pay the 'notified sum'. The notified sum
is defined in section 111(2) as the amount specified in (i) a payer notice; (ii) a payee
notice; or (iii) a payee notice in default. he payer is obliged to pay the notified sum by
the final date for payment, subject only to the issue of a notice of the payer's intention
to pay less than the notified sum (a 'Pay Less Notice') as provided for in section 111(3)
of the 1996 Act. A Pay Less Notice under section 111(3) must specify:
•
the sum that the payer considers to be due on the date the notice is served; and
•
the basis on which that sum is calculated.
The Pay Less Notice must be given no later than the prescribed period before the final
date for payment and must not be given before the relevant notice which determines
the notified sum. That prescribed period can be agreed between the parties, failing
which, paragraph 10 of the Scheme for Construction Contracts prescribes a period of
seven days.
Section 111(10) provides that a Pay Less Notice is not required where (i) the con-
tractprovidesthat,ifthepayeebecomesinsolvent,thepayerneednotpayanysumdue
in respect of the payment; and (ii) the payee has become insolvent after the prescribed
period. This provision reflects the decision of the House of Lords in
Melville Dundas
Ltd (in receivership)
v.
George Wimpey UK Ltd
(2007), that no notice of intention to
withhold payment will be required to withhold payment following termination of a
contract where the contract expressly provides that no further payment requires to be
made until after a final accounting has been completed.
The SBC provisions
The SBC contains complex provisions for ascertaining the amount of interim pay-
ments. he procedure for ascertaining amounts to be included in Interim Certificates
is to be found in clause 4.9. This stipulates that the amount due as an interim pay-
ment shall be the gross valuation of the work carried out by the Contractor pursuant
to clause 4.16, less (i) the aggregate of the total amount stated as due in Interim Cer-
tificates previously issued; (ii) any amount which may be deducted and retained by
the Employer by way of retention under clauses 4.18-4.20; (iii) the total amount of
any advance payment due to be reimbursed to the Employer in terms of the Contract
