What is the Due Date for Payment Applications    under JCT  2016 Main Contracts?

We have taken numerous enquiries from Main Contractors operating across Essex and London concerning the mechanics of interim payment clauses under JCT Contracts.  It is necessary to understand what falls due under the JCT Main  Contracts and when.

If you do not follow the wording of the contract when submitting your application, then nothing may fall due.

This has consequences for suspension, termination, Payment Notices, Payless Notices and the right to seek payment pursuant to adjudication.

We set out below a brief summary of the requirements under the most commonly used JCT Contracts where interim payments are periodic, as opposed to staged payments:

• JCT Design and Build 2016
• JCT Intermediate Contract 2016
• JCT Minor Works Contract 2016
• JCT Standard Form of Building Contract

The JCT Contracts fully comply with the requirements of the Housing Grants, Construction and Regeneration Act 1996 (“the Construction Act”).

Beware Bespoke Amendments. The dates for payment may be changed by bespoke amendments.

JCT Design and Build 2016

Interim Valuation Date

This is usually one month after the Date of Possession of the Site and the same day each month thereafter (or nearest business day).  Look at Contract Particulars for clause 4.7.2 of the JCT Design & Build Contract 2016.

Due Date

This is 7 days after the Interim Valuation Date (clauses 4.7.2 JCT DB 2016).

Final Date for Payment

This is 14 days after the Date Date (clause 4.9.12 JCT DB 2016).

Payment Notice from Employer

This is 5 days after the Due Date (clause 4.7.5 JCT DB 2016).

Payless Notice Date from Employer

No later than 5 days before the Final Date for Payment (Clause 4.9.5 JCT DB 2016).

What triggers the payment cycle?

The Contractor must make an application for payment (clause 4.7.3 JCT DB 2016) prior to the Interim Valuation Date stating the net sum considered due as of the due date, and why.

The Contractor’s application under clause 4.7.3 is in effect a Default Payment Notice as defined in the Construction Act.

If the payment application is late (i.e. after the Interim Valuation Date), the Due Date for Payment is postponed until 7 days from the date the Employer receives the application.  

The application must include other supporting documentation as is stated to be required as per the Employer’s Requirements (clause 4.7.4 JCT DB 2016).

 If the application (Default Payment Notice) is invalid, then nothing falls due for payment.

It should be noted that the standard JCT DB 2016 wording typically means that the first due date and final date for payment is in the table below:

JCT Intermediate Contract 2016

Interim Valuation Date

This is usually one month after the Date of Possession of the Site and the same day each month thereafter (or nearest business day).   Look at Contract Particulars for clause 4.8.1 of the JCT IC 2016.

Due Date

This is 7 days after the Interim Valuation Date (clauses 4.8.2 JCT IC 2016).

Final Date for Payment

This is 14 days after the Date Date (clause 4.12.1 JCT IC 2016).

Payment Certificate from Architect / Contract Administrator  

This is 5 days after the Due Date (clause 4.8.2 JCT IC 2016).

Note that the Quantity Surveyor can make a valuation whenever the Architect / QS considered them necessary (clause 4.8.3 JCT IC 2016).

But note this QS Valuation is not the payment certificate under clause 4.8.2.

Payless Notice Date from Employer

No later than 5 days before the Final Date for Payment (Clause 4.12. JCT IC 20165).

What triggers the payment cycle?

Architect’s Certificate

The Architect/ Contract Administrator must issue a certificate pursuant to clause 4.8.2 JCT IC 2016.

If the Certificate is late then it is invalid as it must be issued in accordance with the required number of days. If the certificate is late and therefore invalid, it is as if it had not been issued.

Contractor’s Application / Default Payment Application

The Contractor has an option but is not required to issue a payment application to the Quantity Surveyor (not the Architect or Contract Administrator), prior to the Interim Valuation Date (clause 4.11.1 JCT IC 2016).

It makes sense for the Contractor to issue an application. It has the effect of setting out what the Contractor considers to be due and therefore assists the Architect to make a proper valuation of the Works).

More importantly, the Contractor’s application has the effect of being treated as a Default Payment Notice should a valid certificate not be issued (clause 4.11.2.1. JCT IC 2016). This means the payment cycle has been triggered for the interim payment; payment is not as certified by the Architect but as notified in the Default Payment Notice issued by the Contractor.

Had the Contractor not issued its application to the QS as above then, in circumstances where no certificate has been issued, nothing falls due for payment.

To trigger the payment, cycle the Contractor can, after the date the Certificate should have been issued, serve on the QS a Default Payment Notice setting out what the Contractor considers having been due on the due date and why (clause 4.11.2.1. JCT IC 2016). The Final Date for Payment is 14 days after the Contractor serves its Default Payment Notice.

It should be noted that the standard JCT IC 2016 wording typically means that the first due date and final date for payment is in the table below:

*postponed if the Contractor has not prior to the Interim Valuation Date issued an application for payment and the Architect has not issued a certificate of payment until 14 days after the Contractor issues a Default Payment Notice.

JCT Minor Works Contract 2016

Interim Valuation Date

This is usually one month after the Works Commencement Date and the same day each month thereafter (or nearest business day). 

Under the Minor Works Contact the Works Commencement Date can be stipulated in the Contract Particulars (2.2). If not so specified, then extraneous evidence will be needed to demonstrate on what date the works commenced.

Due Date

This is 7 days after the Interim Valuation Date (clause 4.3 of the JCT MW 2016).

Final Date for Payment

This is 14 days after the Dute Date (clause 4.3 of the JCT MW 2016).

Payment Certificate from Architect / Contract Administrator 

This is 5 days after the Due Date (clause 4.3 of the JCT MW 2016)

Payless Notice Date from Employer

No later than 5 days before the Final Date for Payment (4.5.4 of the JCT MW 2016).

What triggers the payment cycle?

Architect’s Certificate

The Architect/ Contract Administrator must issue a certificate pursuant to clause 4.3 of the JCT MW 2016.

If the Certificate is late then it is invalid as it must be issued in accordance with the required number of days. If the certificate is late and therefore invalid, it is as if it had not been issued.

Contractor’s Application / Default Payment Application

The Contractor has an option but is not required to issue a payment application to the Architect or Contract Administrator, prior to the Interim Valuation Date (clause 4.4.1 of the JCT MW 2016

It makes sense for the Contractor to issue an application. It has the effect of setting out what the Contractor considers to be due and therefore assists the Architect to make a proper valuation of the Works.

More importantly, the Contractor’s application has the effect of being treated as a Default Payment Notice should a valid certificate not be issued (Clause 4.4.2.1 of the JCT MW 2016). This means the payment cycle has been triggered for the interim payment; payment is not as certified by the Architect but as notified in the Default Payment Notice issued by the Contractor.

Had the Contractor not issued its application to the Architect/ Contract Administrator, as above then, in circumstances where no certificate has been issued, nothing falls due for payment.

To trigger the payment, cycle the Contractor can, after the date the Certificate should have been issued, serve on the Architect/ Contract Administrator a Default Payment Notice setting out what the Contractor considers having been due on the due date and why (Clause 4.4.2.2 of the JCT MW 2016). The Final Date for Payment is 14 days after the Contractor serves its Default Payment Notice.

*postponed if the Contractor has not prior to the Interim Valuation Date issued an application for payment and the Architect has not issued a certificate of payment until 14 days after the Contractor issues a Default Payment Notice.

JCT Standard Form of Building Contract With Quantities

Interim Valuation Date

This is usually one month after the Date of Possession of the Site and the same day each month thereafter (or nearest business day).  Look at Contract Particulars for clause 4.8 of the JCT Standard Form of Building Contract With Quantities/

Due Date

This is 7 days after the Interim Valuation Date (clause 4.8 of the SBC Q 2016).

Final Date for Payment

This is 14 days after the Date Date (clause 4.11.1 of the SBC Q 2016)

Payment Certificate from Architect / Contract Administrator 

This is 5 days after the Due Date (clause 4.9 of the SBC Q 2016)

Payless Notice Date from Employer

No later than 5 days before the Final Date for Payment (4.11.5   of the SBC Q 2016

What triggers the payment cycle?

Architect’s Certificate

The Architect/ Contract Administrator must issue a certificate pursuant to clause 4.9.1 of the SBC Q 2016.

If the Certificate is late then it is invalid as it must be issued in accordance with the required amount of days. If the certificate is late and therefore invalid, it is as if it had not been issued.

Contractor’s Application / Default Payment Application

The Contractor has an option but is not required to issue a payment application to the Quantity Surveyor (not the Architect or Contract Administrator), prior to the Interim Valuation Date (clause 4.10.1 of the SBC Q 2016).

It makes sense for the Contractor to issue an application. It has the effect of setting out what the Contractor considers to be due and therefore assists the Architect to make a proper valuation of the Works. This means the payment cycle has been triggered for the interim payment; payment is not as certified by the Architect but as notified in the Default Payment Notice issued by the Contractor.

More importantly, the Contractor’s application has the effect of being treated as a Default Payment Notice should a valid certificate not be issued (Clause 4.10.2.1 of the SBC Q 2016).

Had the Contractor not issued its application to the Quantity |Surveyor as above then, in circumstances where no certificate has been issued, nothing falls due for payment.

To trigger the payment, cycle the Contractor can, after the date the Certificate should have been issued, serve on the Quantity Surveyor a Default Payment Notice setting out what the Contractor considers having been due on the due date and why (Clause 4.10.2.2 of the SBC Q 2016). The Final Date for Payment is 14 days after the Contractor serves its Default Payment Notice.

*postponed if the Contractor has not prior to the Interim Valuation Date issued an application for payment and the Architect has not issued a certificate of payment until 14 days after the Contractor issues a Default Payment Notice.

Conclusion on Contractor Payment Applications

• It is sensible for the Contractor to issue applications each month setting out what the Contractor considers is due to it on the due date (i.e. the net valuation) and why.
• The Contractor must ensure it serves notice at the correct time and to the correct party, namely Employer, Quantity Surveyor, Architect (as applicable)
• If the Contractor does not submit a valid application, then then nothing is due.
• If nothing is due to the Contractor then there is no right to interest, no entitlement to suspend and no entitlement to terminate the contract. There is no dispute that can be referred to adjudicatin.
• Many Contractors simply misread the contractual terms for payments. Typically, in our experience the Interim Valuation Date is overlooked.
• It is necessary not only to consider the JCT. Consider bespoke amendments. Consider the Employer’s Requirements because often these supplement the JCT provisions.

To discuss matters further, contact Matthew Dillon on 01277 280 760

Matthew Dillon LLB, Solicitor, MCIArb

MJD Solicitors

7 May 2024

This article is for information purposes, does not constitute legal advice and should not be relied upon. For terms and conditions of this article please read here.