11. Payment

  1. Roger Knowles FRICS, FCIArb, FQSi, Barrister

Published Online: 14 FEB 2012

DOI: 10.1002/9781118257050.ch11

200 Contractual Problems and their Solutions, Third Edition

200 Contractual Problems and their Solutions, Third Edition

How to Cite

Knowles, R. (2012) Payment, in 200 Contractual Problems and their Solutions, Third Edition, Wiley-Blackwell, Oxford, UK. doi: 10.1002/9781118257050.ch11

Publication History

  1. Published Online: 14 FEB 2012
  2. Published Print: 15 FEB 2012

ISBN Information

Print ISBN: 9780470658314

Online ISBN: 9781118257050



  • payment;
  • contractors, stating a maximum price;
  • ‘guaranteed maximum price’;
  • ‘cash discount’;
  • JCT conditions;
  • 1996 Act, contractors' ‘pay when paid’;
  • contractors' work, certified and paid;
  • payment of interim certificate


This chapter contains sections titled:

  • Where a contract requires the contractor to give a guaranteed maximum price, does he have any grounds for increasing the price above the guaranteed maximum?

  • Where a subcontract provides for 2.5% cash discount, does this mean that the discount can only be deducted if payment is made on time, or may the discount be taken even if payment is made late?

  • Under what circumstances are contractors/subcontractors entitled to be paid for materials stored off site as part of an interim payment or payment on account?

  • Can a contractor force an employer to set aside retention money in a separate bank account?

  • If an employer becomes insolvent, what liability does the contractor have for paying subcontractors who are owed money when no further sums are forthcoming from the employer?

  • Can a contractor/subcontractor legitimately walk off site if payment is not made when due?

  • Where a contractor undertakes work which he considers should be paid for on a daywork basis and submits daywork sheets as required under the terms of the contract to the architect/engineer, if the daywork records are not signed by the architect/engineer, how does this affect the contractor's entitlement to payment?

  • Can an architect/engineer sign a daywork sheet and then refuse to certify the sums involved for payment? Is a quantity surveyor entitled to reduce the hours included on a signed daywork sheet if he considers them unreasonable or excessive?

  • Where a contractor/subcontractor includes an unrealistically low rate in the bills of quantities, can he be held to the rate if the quantities substantially increase?

  • Can a debtor enforce acceptance of a lesser sum in full and final settlement?

  • How can subcontractors avoid ‘pay when paid’ clauses?

  • Once the value of a contractor/subcontractor's work has been certified and paid, can it be devalued in a later certificate?

  • Can a contractor deduct claims for overpayments levied on one contract from monies due on another in respect of a subcontractor's work?

  • When a contractor completes significantly early, may the architect/engineer legitimately delay certification to match the employer's ability to pay from available cashflow?

  • Where an architect/engineer undercertifies, is the contractor/subcontractor entitled to claim interest?

  • Can an architect/engineer refuse to include an amount of money in a certificate in respect of materials stored on site if the contractor or subcontractor cannot prove he has good title to the materials?

  • Can an employer refuse to honour an architect/engineer's certificate on the grounds that he considers the sum certified is incorrect, or is he legally obliged to pay the contractor the sum certified by the architect/engineer?

  • Where a cheque is issued in respect of construction work undertaken, can it be stopped before it is honoured if it subsequently becomes obvious that the work is defective?

  • Where agreement is reached whereby one party to a construction contract agrees to pay the other a sum of money, can the paying party refuse to make the payment on the grounds that he was financially coerced into the agreement? What is meant by economic duress?

  • Are there any circumstances when a standard form of construction contract is applicable, whereby an employer will be obliged to pay in full the amount included in a contractor's application for payment, even though the sum has not been certified and is overvalued?

  • What is a project bank account and how do the advantages compare with the disadvantages?

  • What is the difference between set-off and abatement?

  • Where a contract requires the contractor to provide information for use by the employer, for example heath and safety documents, manuals and built drawings, is the contractor legally entitled to refuse to supply them on the grounds that money is owed by the employer? What other remedies are available as a result of a failure on the part of the employer to make proper payment?

  • Where a party to a construction contract is due to make a payment to the other party, any intention to reduce the sum due under the contract by way of set-off, for example in respect of delay, will require a withholding notice to be served. What information must be included in the withholding notice to ensure that it is valid?

  • Where payment is made late, is there a legal entitlement to claim interest?

  • Where, under a JCT contract, an interim payment is due to be made to the contractor, but the final date for payment has passed without a payment having been made by the employer and no withholding notice has been served, and subsequently the contractor becomes insolvent, can the employer use insolvency as a legitimate reason for not making the payment?

  • Architects, engineers and quantity surveyors are often required to provide services to commercial organisations at risk. In the absence of a specific undertaking to work indefinitely without fee, is a stage reached when a right to payment for services arises?

  • Where money remains unpaid, is the service of a statutory demand and a petition to the court for a winding-up petition an effective method of debt collection?

  • Where a claim is made by a subcontractor against a main contractor for matters such as delays which have been caused by the employer or its agents, can the subcontractor be forced to accept payment based upon a settlement made between the employer and main contractor in respect of these matters?

  • Can a contractor or subcontractor refuse to commence work until satisfactory bank and trade references are provided?