The following Construction guidance note Produced in partnership with CMS provides comprehensive and up to date legal information covering:
most importantly, a consultant needs to keep alert to the client's financial status
the consultant should take heed of ongoing rumours about the client's financial position (either in the press or by word of mouth)
look out for official announcements to shareholders/the stock market (for example, profit warnings)
note any surprising or uncommercial omissions from the project made by the employer
keep aware of the employer's non-payment or late payment of the contractor or any other parties, on this project or on other projects being carried out by the employer
clearly, if the employer suspends work on the scheme without any adequate explanation or without commercial rationale, this may be a sign that the employer is unwilling to finance further work
confirm suspicions by carrying out a Dun & Bradstreet search/report, which should disclose , for example, any unsatisfied court judgments against the client
There are various ways in which a consultant can protect itself in advance against the risk of a client becoming insolvent during the course of a project. Those methods are mostly ones which can be incorporated into the terms of appointment of the consultant, and they include:
The majority of building contracts will incorporate an
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