Q&As

How much can a contractor claim from the employer if it suspends the works for non-payment?

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Published on LexisPSL on 05/04/2016

The following Construction Q&A provides comprehensive and up to date legal information covering:

  • How much can a contractor claim from the employer if it suspends the works for non-payment?

How much can a contractor claim from the employer if it suspends the works for non-payment?

In short, there is no formula or rule for determining the amount that a contractor can claim from the employer if it suspends the works. Any amount payable by the employer will depend on the particular circumstances.

Where the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) applies to the contract, section 112 provides that where a sum is due under a construction contract and it has not been paid:

  1. the party to whom the sum is due has the right (without prejudice to any other right or remedy) to suspend performance of any or all of its obligations under the contract to the party by whom payment ought to have been made

  2. the right cannot be exercised without first giving at least seven days' notice of the intention to suspend performance, stating the ground or grounds on which it is intended to suspend performance (the contractor must take care here as suspension may amount to repudiation of the contract if the correct notice is not given)

  3. the right to suspend performance ceases when the party in default makes payment in full

  4. the party in default is liable to pay to the party exercising the right a reasonable amount in respect of costs and expenses reasonably incurred by that

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