Q:How can I comply with the statutory rules for payment and payment notices in construction contracts?

March 1, 2002
Compliance is easy even though failure to comply is still the most common way in which building employers get their fingers burnt. Problems usually arise with employers wanting to contra-charge (set-off) for late or defective work but failing to serve the right notice at the right time. The routine result is a swift adjudication award for the full sum claimed together with costs on top, regardless of whether the set-off was in fact justified.<p></p><p> Of course employers are not daft and they understand the value of communication. The employer often goes to great lengths to explain to the contractor by letters, meetings, inspections, reports etc what the problems are, but still fails to give a valid notice of intention to set off. The problem is not lack of effort but usually lack of a timetable from which to make sense of the notice requirements. The payment rules brought in by the Housing Grants Construction and Regeneration Act 1996 are all about transparency - ensuring that the contractor knows how and when his payments are calculated and notified to him, how and when any intended set off is notified and when he actually gets paid. There is nothing in the rules …

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