We will again use the SBCC Design & Build Contract 2016 as an example. Section 4 of the contract deals with payment. In particular clause 4.7.3 states that the contractor shall make an application to the employer for payment. It is therefore a contractual requirement that the contractor makes a payment application. If the contractor doesn’t make a payment application, the employer's obligation to pay is not triggered.
Under the contract, the contractor must make a payment application on either the completion of each stage of work or periodically, depending on which type of interim payment applies. A payment application must state:
- the sum the contractor considers due to them at the due date; and
- the basis on which the sum has been calculated.
The contract sets out how to calculate the sums due under interim payments. There are different approaches depending on whether periodical or stage payments are used.
However standard forms can be amended or you could be dealing with a bespoke form of contract and it is also often possible to see a contract which places the onus on the Employer or Contract Administrator to carry out monthly valuations without the need for the Contractor to submit an application for payment.
If your contract is silent on any payment terms the Scheme will apply, and the Scheme anticipates payment applications and uses them in calculating certain dates. Under the Scheme payment applications are referred to as "the making of a claim by the payee". This is defined as the payee giving a written notice to the payer which specifies the sum the payee considers due, the work which that sum relates to and the basis that the sum is calculated on.
Should you require assistance with any aspect of a construction contract, we have a large and experienced construction team who would be happy to discuss this with you.
