Following the introduction of The Housing Grants, Construction and Regeneration Act 1996 (The Construction Act), later updated by the Local Democracy, Economic Development and Construction Act 2009 (The New Construction Act), all construction contracts must incorporate "an adequate payment mechanism". This means a "Payment Due Date", a "Payment Period" and a "Final Date For Payment" must be identifiable. If any of these cannot be identified the statutory "Scheme" applies.
Under the New Construction Act, which applies to contracts formed after 1st October 2011, there are now strict rules in respect of Payment Notices imposed on the Parties. The Paying Party must serve a Payment Notice within 5 days after the "Payment Due Date" and they also have the right to issue a "Payless Notice" before the "Final Date For Payment".
If the Contract stipulates that the Payee must submit a payment claim or application for payment, provided the application shows the total amount due and the basis for calculating that sum, the application will become the sum due, if the Payer does not issue any Payment Notices within the strict time periods.
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