- March 7, 2016
- Posted by: Josiah Hincks Solicitors
- Category: Business Law Updates
Building contracts usually contain detailed payment schedules and provide means by which the amounts of bills can be queried. However, strict time limits almost always apply to such provisions and one High Court case has revealed the serious consequences of failing to meet them.
Company A had subcontracted company B to carry out grounds works in connection with a residential development. The latter submitted an interim bill for almost £250,000 and the former did not serve a notice disputing that amount within the time permitted by the contract. Company B successfully argued before an adjudicator that, in those circumstances, it had a contractual right to be paid in full. After part-payments were taken into account, company B was awarded £216,129.
Company A argued, amongst other things, that the sum claimed by company B was likely to be far greater than its actual entitlement. In ordering enforcement of the award, however, the Court noted that company A had not taken advantage of its contractual opportunity to dispute the bill. It had also failed to establish that payment of the award would cause it serious cash flow difficulties.