Back to Basics #25 - Know the “Final Account” Procedures under the JCT Contract SBC 2016
Each of the Contracts under the JCT suite contain procedures identifying how the "Final Account" is to be dealt with under that particular Contract. It is important to understand the differences and the requirements under the particular Contract you are using.
Previously we considered the “Final Account” process under the JCT D&B 2016 form of Contract and this time we will look at the SBC form of Contract.
The JCT Standard Building Contract 2016 (“SBC”) deals with the "Final Account" procedures in Clauses 4.25 and 4.26.
Clause 4.25.1 requires for the Contractor to submit all documents necessary for adjustment of the Contract Sum, not later than 6 months after the issue of Practical Completion or last Section Completion Certificate.
Should the Contractor not provide the documentation within 6 months, the Architect/Contract Administrator may, at any time thereafter, give the Contractor one month’s notice requiring this documentation. The Architect/Contract Administrator is required to issue to the Contractor, within 3 months after receipt of the Contractor’s documents, a statement showing all adjustments to be made to the Contract sum, traditionally referred to as the Final Account.
If the Contractor fails to supply the documentation following the “one-month notice”, the Final Statement shall be prepared by the Architect/Contract Administrator (or Quantity Surveyor if instructed), based on the information in their possession.
The SBC then, under Clause 4.26.1, requires the Architect/Contract Administrator to issue a Final Certificate not later than 2 months after whichever of the following occurs last:
- The end of the Rectification Period;
- The date of issue of the Certificate of Making Good
- The date on which the Architect/Contract Administrator sends the Contractor copies of the statement under clause 4.25 or 4.25.3.
Clause 4.26.2 requires for the Final Certificate to state:
- The Contract Sum as adjusted in accordance with clause 4.3; and
- The sum of amounts already stated as due in Interim Certificates plus the amount of any advance payment any such sum as is referred to in clause 4.15.4.
The “Due date” for the final payment, under Clause 4.26.3, shall be the date of issue of the Final Certificate. Should the Final Certificate not be issued within the 2 months required under clause 4.26.1, the “Due date” shall then be the last day of that 2 month period.
In summary the mechanisms are similar to those detailed in the JCT D&B 2016 form of Contract.
Ramskill Martin’s Team of Specialist Consultants can help you navigate through this process to ensure that your position is protected.
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