Payment in JCT Design and Build

As there is no independent certifier under the JCT Design and Build 2016 conditions, the contractor is required to make applications for interim payments (contractor’s interim applications). This happens either at the completion of stages (Alternative A) or at regular intervals in time (Alternative B).

The payment procedure now follows 4 distinct phases:

1. due date (usually the valuation date);
2. payment notice (a notice stating the sum due on the due date);
3. pay less notice (a notice stating that the payer intends to pay less than the sum in the payment notice);
4. final date for payment (this is the date the payment actually has to be made).

The final date for payment of an interim payment shall be 14 days from its due date. The due date in respect of the alternative methods of valuation are:

• Alternative A (stage payments) the due date for payment shall be the later of the date of completion of the stage or the date of receipt by the employer of the interim application.
• Alternative B (periodic payments) the due date shall be the later of the specified date (for periodic payments) or the date of receipt by the employer of the interim application.

Interim applications can be made before, on or after completion of the relevant stage or the monthly date and shall be accompanied by such further information as may be specified in the employer’s requirements. Following receipt of the contractor’s interim application, the employer must follow the prescribed notice and payment procedure.

Not more than 5 days after the due date the employer must give notice (the payment notice) to the contractor stating the sum due on the due date and the basis upon which that sum has been calculated. If the employer fails to issue a valid payment notice in accordance with the provisions then the contractor's interim application will constitute the payment notice. In the absence of a pay less notice this becomes the sum due on or before the final date for payment.

Should the employer subsequently intend to pay less than the sum stated in the payment notice, the employer is required to issue the contractor with a notice, not less than 5 days before the final date for payment, stating both the sum that the employer considers to be due to the contractor, at the date at which the notice is given, and the basis upon which that sum has been calculated. This notice is termed the pay less notice. If correctly notified this becomes the sum due on or before the final date for payment.

If the employer fails to pay the sum due (or any part of it) under an interim payment by the final date for payment the employer shall, in addition to the sum due, pay the contractor simple interest at the interest rate stated within the contract particulars.