Problem: Hi. I need some help with invoices that have not been paid.
I run a small electrical contracting company and early in 2012, I was approached by a main contractor to carry out electrical works for a housing association on a large development. I priced and subsequently won the contract, and have since been undertaking the work, issuing invoices on a monthly basis. So far I have completed approximately £32,000 of work. However, the main contractor only initially paid small amounts and then payments stopped altogether in about September 2012. I have tried calling but just get told that nobody is there to help at moment. I have sent email after email but just get fobbed off.The main contractor owes my company over £15,000. However, I do not have a written order, so I have no contract. I also know that my company is not the only sub-contractor that is being treated like this. Another sub-contractor is owed £16,000 and gets told that because no monies have been received from the housing association, it will not pay. What can I do?
Rajinder, Oadby
Response: Hello Rajinder. First and foremost, even though you have no written order, there will still be a contract between your company and the main contractor. Very few transactions require an agreement to be in writing for the same to be a legally binding contract. The main problem you will have where everything is done verbally is proving your case.
You are fortunate that you entered into the agreement after 1 October 2011, as your contract will be caught by the Housing Grants, Construction and Regeneration Act 1996 (as amended by the Local Democracy, Economic Development and Construction Act 2009 – “The New Construction Act”). I say that you are fortunate because although under the old act (which was enacted in May 1998), anyone entering into a construction contract had certain terms implied including payment, the right of suspension and the right to refer a dispute to adjudication, section 107 stated that the contract must be evidenced in writing. Under The New Construction Act however, you do not have to have a contract that is evidenced in writing, hence you not only have the right to suspend performance of your obligations for non-payment, you also have the right to refer the dispute to statutory adjudication, which will produce a court enforceable decision within 28 days of referral.
In addition, pay-when-paid terms and now invalid under The New Construction Act (section 113). Further, to withhold any monies from a valid payment notice, the payer must issue a timeous payless notice.I suggest you contact a construction law specialist as soon as possible in order for your situation to be evaluated.
© Michael P. Gerard MSc, PGDipLaw, PGDipBar, FCIOB, MCIArb, MAE
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.
Author background
Michael is a Barrister, Chartered Builder, Registered Adjudicator & Accredited Expert in quantum and planning matters. He is Managing Director of Michael Gerard & Co www.michael-gerard.co.uk, a company of chartered building consultants and quantity surveyors who provide a specialised service in the areas of construction law, quantum, programming, business recovery and insolvency support to the construction industry. Michael is also a consultant with Silver Shemmings LLP, a London practice of solicitors specialising in construction.