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 ability for a contractor to terminate where the employer has become insolvent. However, this is not necessarily the case with all bespoke or short form appointments of consultants. It is crucial to include a clause of this nature in an appointment, because at common law, insolvency on its own is
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
0330 161 1234