Back to Basics #27 - Notices relating to payment under the JCT Contracts
When engaged in a contract under the JCT Suite of Contracts, there are two key notices regarding payment required, these are the Payment Notice/Interim Certificate and Pay Less Notice.
Payment Notice
The Payment Notice is the terminology used by the JCT Design and Build Contract under clause 4.7.5 and this has the same meaning as the Local Democracy, Economic Development and Construction Act (commonly known as ‘The Construction Act’). The Payment Notice must be issued not later than 5 days after the due date for payment.
The Payment Notice is required to state the sum which the Employer (the Payer) considers due and the basis on which the sum due has been calculated.
Interim Certificate
The Interim Certificate, which is the terminology adopted by the JCT Standard Building Contract when referring to a Payment Notice, is required under clause 4.9. The Interim Certificate is to be issued by the Payer not later than 5 days after the due date for payment.
As with the Payment Notice under the JCT Design and Build Contract, the Interim Certificate should state the sum which the Employer considers due and the basis on which the sum has been calculated.
Pay Less Notice
Where the Employer wishes to pay Less than the sums stated as due under an Interim Certificate/Payment Notice, the Employer is required to issue a Pay Less Notice not later than 5 days before the final date for payment.
As detailed in our previous mailing titled "Payment and Pay Less Notices Under the Scheme for Construction Contracts", the same principle applies with regards to Pay Less Notices under the scheme.
Particular note should be made of the case of Downs Road Development LLP v Laxmanbhai Construction (U.K.) Ltd [2021] EWHC 2441 (TCC) which recorded that there has to be a ‘genuine belief’ in the sum included in any Payment Notice/Pay Less Notice. Failure to comply with this requirement could result in the Notice being found to be invalid.
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