Late Payment under Construction Contracts

 

The Late Payment of Commercial Debts Regulations 2013 (the “Regulations”) came into force on 16 March 2013. They apply to all commercial contracts, including construction contracts, entered into after this date. The Regulations amend the Late Payment of Commercial Debts (Interest) Act 1998 (the “Act”) by introducing new remedies for late payment.

Remedies for Late Payment For Contracts Entered Into Before 16 March 2013

The Act implies into contracts a statutory rate of interest on late payments of 8% above the Bank of England base rate. The Act also allows payees to recover a fixed sum as compensation for late payment of a debt. The fixed sums are £40 (for debts up to £999.99), £70 (for debts £1,000-£9,999.99) or £100 (for debts over £10,000).

Remedies for Late Payment For Contracts Entered Into After 16 March 2013

The Regulations implement EC Directive 2011/7/EU, which attempts to combat late payments in commercial transactions across the EU by increasing suppliers’ rights.

The Regulations introduce two new rights for payees which exist in addition to the rights already available under the Act:

1. A right for payees to claim the “reasonable costs” incurred in recovering the debt.

2. A right to claim statutory interest after 60 days.

These additional rights only apply to contracts entered into after 16 March 2013.

Ref Source: Hawkswell Kilvington www.hklegal.co.uk