A Pay Less Notice in construction contracts is a formal written notification from the payer to the payee stating an intention to reduce the amount already certified for payment. It is a statutory right in commercial construction contracts allowing the payer to reduce the notified sum that is to be paid. However, be aware it can be challenged in Adjudication.
Implications
- Can reduce a significant certified payment to ZERO impacting cash flow.
- Prevents “Smash and Grab” claims
- Can be challenged quickly using Adjudication to find the “True Value”. So it is not set in stone!
Key Aspects
- In Writing – must be written and served in accordance with the contract
- Time Sensitive – must be served in the correct contract payment mechanism timeframe.
- Basis for calculation – must include the breakdown of the stated figure to be paid
- Clarity – must be clear on form, substance and intent stating the amount to actually be paid even if ZERO
How We Help
- Evaluation of the Pay Less Notice validity – Experts in construction contracts and the Construction Acts
- Dealing with the Pay Less Notice – Issuing or challenging the Notice and valuing the “True Value”
- Negotiating or enforcing a temporary or final resolution to the payment issue using the “True Value”
- Adjudicating the Pay Less Notice to obtain the “True Value” (for or against).
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