Interim payments in construction contracts

The following Construction practice note provides comprehensive and up to date legal information covering:

  • Interim payments in construction contracts
  • What is an interim payment?
  • Types of interim payment
  • What is included in an interim payment?
  • What is the mechanism for making interim payments?
  • JCT Standard Building Contract
  • JCT Design and Build Contract
  • NEC
  • Notices
  • Payment notice
  • More...

Interim payments in construction contracts

This Practice Note provides an overview of what interim payments are, how the right to be paid (usually by monthly or stage/milestone payments) arises and the contractual mechanisms for interim payment. It also considers the need to ensure that interim payment mechanisms meet the requirements of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996), and examines how the payment regime is dealt with in standard forms such as the JCT and NEC contracts.

See also Practice Notes: Payment in construction contracts under the HGCRA 1996 and Summary of payment provisions in the HGCRA 1996. For a list of key cases considering the payment provisions of the HGCRA 1996, see Practice Note: HGCRA 1996 payment provisions—key cases.

In relation to the JCT and NEC contracts, see also Practice Notes: JCT contracts—price and payment and NEC contracts—price and payment.

What is an interim payment?

Construction projects can be worth millions of pounds, and the programme periods can stretch over months and years. Very few contractors would be able to complete such an undertaking if they had to wait until the works were completed before receiving any payment.

As a general rule, where a construction contract is for the completion of a specific item, it is normally accepted that only complete performance will discharge the contractor's obligations. However, since it would be unjust to insist that

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