FAQs

The following FAQs are addressed below:

  • Challenging the contract sums if there is a delay between the date on final certificate and its receipt
  • Compensation entitlements where faults are found with work after final certificate is issued
  • Contractor's process in failure to issue withholding notice against the final certificate sum
  • The final certificate fails to include any deductions for omissions. What should the employer do?
  • What should the contractor do if the final certificate is issued before final account is agreed?
  • Will clause 1.10.1.1 render the final certificate conclusive?

The contractor has just received the final certificate two months after the date on its face. Is the contractor still able to challenge the contract sum?

In this example, the contract provides that the final certificate is to be conclusive of the adjusted contract sum unless legal proceedings are commenced within 28 days of the date of issue.

Most contracts provide that a final certificate must not merely be signed, but also issued in order to be valid. Further, it is generally the case that the final certificate will need to be issued to all interested parties, not just the employer. This is particularly the case where the certificate purports to have conclusive effect. If the difference between the date on the face of the certificate and the date of issue is only a couple of days, then it is likely for reasons of certainty that the date on the face of the certificate will be taken as the date of issue. If, however, the certificate is withheld for a substantial period of time it is likely that the true date of issue will be considered when determining deadlines. Hence, the 28 day time limit should, in a case such as this, run from the date the certificate is, as a matter of fact, issued to the contractor.

The contract administrator has issued the final certificate but now the employer has discovered that the glass is not the correct colour. Is the employer entitled to compensation?

The answer to this question depends entirely upon the wording of the contract between the employer and the contractor. It is submitted that generally where a contract is silent it should not prevent a claim in breach of contract for defective workmanship. However, each individual contract must be assessed on its own terms and it might be that, correctly interpreted, the final certificate is conclusive as to the works being in accordance with the contract.

The employer has failed to issue a withholding notice against the sum certified in respect of the final interim certificate. What should the contractor do?

In this example, the employer is refusing to pay the full amount certified on the basis that the employer expects the final certificate to substantially reduce the amount owing to the contractor. However, because the employer has failed to serve a withholding notice, the contractor is entitled to, and generally should, seek immediate payment of the amount certified in the last interim certificate by either adjudication or summary judgment in the courts. It is no defence for the employer to allege that the final certificate is likely to alter the sum due.

The contract administrator has issued a final certificate which fails to include any deductions for omissions instructed by the employer during the contract period. What should the employer do?

The employer should initially serve a withholding notice so as to entitle him to retain the contested sum. Consideration should then be given as to whether there is any need to commence adjudication or legal/arbitral proceedings in order to prevent the final certificate becoming conclusive as any matters which it might subsequently wish to contest. Again, the wording of the contract might be somewhat complex and consideration should be given to immediately seeking legal advice.

The contract administrator has issued a final certificate when the contractor was still seeking to persuade the CA to increase the value of the final account. What should the contractor do?

The exact answer to this question depends greatly upon the wording of the contract. The contractor may be able to challenge the final certificate on 1 of 2 bases:

  • the contractor may be able to argue that the final certificate has not been validly issued if the procedural requirements of the contract have not been complied with; and 
  • the contractor may be able to challenge the amount certified in court or arbitral proceedings.

The primary issue that the contractor must bear in mind is that prompt action may be required under the contract to prevent the final certificate acquiring conclusive effect. Each case will depend upon the exact wording of the relevant contract which can often be fairly complicated. As such, the contractor should consider immediately seeking legal advice.

The employer believes that some of the workmanship is not up to standard, but the contract administrator fails to make any deduction. Will clause 1.10.1.1 render the final certificate conclusive?

In this example, works are being carried out under a JCT Standard Form of Building Contract 2005 where the contract documents state that the contractor is to exercise reasonable skill and care in the construction of the works.

Clause 1.10.1.1 will not render the final certificate conclusive becuase it only applies where the contract explicitly states that the standard of goods, materials or workmanship is to be to the approval of the architect/contract administrator. This contract does not state that, requiring instead that the contractor simply use reasonable skill and care.