Late Payment: What Can We Do When We Don’t Get Paid?

What can we do if we don’t get paid or suffer from late payment? We get this question a lot. In some regions, this is less of a problem because legislation is quite strict on payment terms. However, elsewhere, it is common for the paying party to hang onto money for as long as possible.

Most forms of construction contract will include some sort of remedy for non-or late payment. You will need to check what these are on your projects. However, as an example, let’s have a look at the FIDIC Red Book, 1999 Edition:

FIDIC On Late Payment…

Sub-Clause 14.8 (Delayed Payment) states that:

‘If the Contractor does not receive payment in accordance with Sub-Clause 14.7 [Payment], the Contractor shall be entitled to receive financing charges compounded monthly on the amount unpaid during the period of delay. This period shall be deemed to commence on the date for payment specified in Sub-Clause 14.7 [Payment], irrespective (in the case of its sub-paragraph (b)) of the date on which any Interim Payment Certificate is issued.

Unless otherwise stated in the Particular Conditions, these financing charges shall be calculated at the annual rate of three percentage points above the discount rate of the central bank in the country of the currency of payment, and shall be paid in such currency.

The Contractor shall be entitled to this payment without formal notice or certification, and without prejudice to any other right or remedy.’

Issue a Notice

This provision is quite clear. As soon as you encounter late payment, I would be inclined to… (sign up to receive the full article right away)

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