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JCT Contracts 2016 – changes to the payment regime

March 2017 - Issue 91

With the exception of the Major Projects Form, JCT has now issued its 2016 editions of the entire suite of its standard form contracts. Important amendments have been made regarding payment provisions.

Major changes to the payment regime

There are a number of well thought out amendments to the payment mechanism which aim to streamline payment to ensure earlier payments for subcontractors and sub-subcontractors. Under previous editions, it is usual for the sub-contractor and sub-subcontractors to have to wait for their payment application to be included in the contractor’s upstream payment to the client, delaying downstream payment by a month. Now, everything is assessed once per month and paid soon after.

 

Effect of the Changes

 

Other relevant changes associated with payment

 

Conclusion

The idea of these new contracts is to regularise the payments within a contract chain and facilitate payment to all tiers of the chain within 31 days of the IVD. The only potential difficulty being if the standard form contracts include bespoke amendments which affect the contractual arrangement either up or downstream. Care must therefore be taken to ensure that bespoke amendments in the main contract are carried through to any subcontracts and sub-subcontracts to avoid creating an inconsistent payment regime across the supply chain.

The 2016 JCT contracts have definite potential to speed up payment and make the system more transparent. However, keeping on top of the time frames in the JCT contracts is as important as ever, otherwise rights can be lost.

Anna Mulholland

Trainee Solicitor

e amulholland@prettys.co.uk

t 01473 298218

 

 

 

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