March 22, 2023
Construction Contract Issue – Pay-If-Paid and Pay-When-Paid Clauses
In this post, we shall discuss ‘pay-if-paid’ and ‘pay-when-paid’ clauses in construction contracts: their meaning, differences and implications. Delays in payments are endemic in the construction industry all over the world. A European Commission report on payment behaviour in business-to-business transactions, published in 2018, mentions that construction industry is most affected by delays with 65% of stakeholders having experienced delayed payments. Extensive research all over the world has shown that delayed payments in the construction industry have four major outcomes: cash flow problems, increase in disputes, insolvency and bankruptcy, and/or delays and cost overruns in projects. One reason for delayed payments in the construction industry that particularly affects Subcontractors, is the ‘pay-if-paid’ and ‘pay-when-paid’ clauses included or implied in construction contracts. These broadly imply that the main Contractor will be liable to pay the Subcontractor if and when he is…
August 7, 2019
Evaluating Defects
The ICCP's training partner, Claims Class, publishes case studies based on real situations for readers to study and decide what the correct contractual outcome would be. The author’s opinion of the solution is presented underneath so you can see if you've got it right. Claims Class shared the following with us for our readers: CASE STUDY The project is an international airport terminal constructed for the exclusive use of the country’s flagship airline and also to accommodate the new Airbus A380 airliner. The form of contract is the FIDIC 1999 for Building and Engineering Works Designed by the Employer.The project was designed and procured in a very tight time-scale and this led to several major variations for additional work being instructed during the construction period. The Engineer issued extensions to the Time for Completion due to the variations, but these were significantly less than the Contractor had claimed for. The Employer, facing immovable deadlines from his operations…