Non-Payment of “Payment Certificates” and Available Remedies
Contractors and sub-contractors in the construction industry in South Africa are constantly facing situations where they are underpaid or receive late payments from clients or project managers resulting in adverse cash flow. If a contractor has legal grounds, they can take legal action against the client/project manager for fair compensation. This also applies to non-payment of payment certificates, and today, we will discuss your legal options in such an event.
Payment Certificates and Their Vital Role
In general, the average contractor does not have the necessary financial resources to complete a construction contract and thus they generally require deposits and/or interim payment for the work completed during the life of the contract. Therefore, most construction contracts provide a solution for this problem in the form of interim payment certificates. As a result, the contract provisions in this respect are necessary to provide the contractor with the necessary cash flow to complete the work within the agreed-upon timeframe. With a payment certificate, the client’s representative records an approximate, yet reasonable, assessment of the total of work done and material supplied up to a specifically given date. Such a certificate will entitle the contractor to payment of that specific amount within a specific number of days.
What Happens When the Payment Fails?
When such a payment is not made, the contractor is entitled to enforce the provisions of the contract by instituting action against the client/project manager, based solely on the strength of the certificate. Such a claim would be based on the liquidated amount as specified in the interim payment certificate and the legal process of provisional sentence summons which is expeditious can be followed. Therefore, if you find yourself in such a predicament do not delay contacting our Construction and Contractual Law experts as you do not want to be faced with an inability to execute the works and therefore attract penalties and or possible cancellation and termination of the contract.
Allardyce & Partners Attorneys can represent your case on a “no win, no fee” contingency, tied to our terms and conditions, to ensure that your business does not face legal fees that could cripple your business if you lose your case. Please contact us directly on 011 234 2125 or email us at enquiries@allardyce.co.za today to find out how we can help you.
