BUSINESS AND TRAINING 15
Standard-form Subcontracts ( Part 4 )
By
Uwe Putlitz
Uwe Putlitz takes us through the ins and outs of standardform subcontracts to broaden our understanding of the topic . We conclude this series in this issue .
Issues of payment and disputes could be part of the process . In this final part of our series on subcontracts , we go in-depth on these topics .
Payment a . Payment criteria should be recorded in the contract data of all SfS – defining the interval and / or the due dates for payment applicable until the final payment is made . Some SfSs provide a payment certificate proforma , others list ‘ items ’ to be included in a payment certificate ; b . The various SfC refers to the payment of subcontractors by the PCr within a defined period subject to satisfactory performance and the submission of a substantiated claim by the due date i . t . o . the SfS ; c . The PCr must timeously co-ordinate the payment claims from all subcontractors and submit these with his regular claim to the CA / PA for payment by the employer by the date stipulated in the SfC ; d . The PCr must make payment to all subcontractors ( and suppliers ) within the period stipulated in the SfC , failure to do so is a breach of the SfS ; e . The Subcontractor is entitled to interest ( at the rate recorded in the SfC-CD or SfS-CD ) on the outstanding balance from the due date for payment until the actual date of payment .
If JBCC SfC is used : a . The CA / PA must issue a ‘ recovery statement ’ to the PCr with every payment certificate showing set-off transactions between the parties ; b . The PA must issue a ‘ payment notification ’ to each subcontractor with every payment certificate to record the amount included for the subcontractor in the current payment certificate due to the PCr ; c . The PCr must with every ‘ payment advice ’ issue a ‘ subcontract recovery statement ’ to each subcontractor showing set-off transactions between the parties ; [ JBCC terminology ].
Note : Subcontractors - JBCC terminology :
1 . The amount in a ‘ payment notification ’ and a ‘ payment advice ’ may differ , shown in the ‘ subcontract recovery statement ’ “ with reasons ”;
2 . A ‘ payment advice ’ is a ‘ liquid document ’ in law enabling the subcontractor to apply to the court for ‘ summary judgment ’ if no payment is received after following the procedures in the SfS ;
3 . The PCr may delay payment to subcontractors by up to 30 days to resolve non-payment by the employer to the PCr . ( Author ’ s comment : Unfair to the subcontractor – beware !).
Suspension and termination a . The Subcontractor may suspend the subcontractworks if the employer and / or the PCr has failed to comply with specified contractual obligations ( proof of insurance , provision of securities or appointment of Agents etc ) on expiry of such notice ; b . The subcontractor may suspend the subcontract-works after notice , where the PCr has failed to make payment by the due date ; c . The subcontractor may terminate the subcontract-works where suspension has failed to resolve a notified issue by following the procedures ( SfS ) in the relevant clauses ; ( suspension is not a prerequisite to give notice of termination of the subcontract ); d . The PCr may terminate the appointment where the subcontractor has failed to perform , – or e . The parties may agree to terminate the appointment where execution of the subcontract-works has become impossible .
Note : A party in breach of contract cannot terminate the contract .
Dispute resolution a . Where the parties have not resolved a disagreement , the aggrieved party may give notice of dispute to be resolved by following the procedures in the SfC / SfS .
Uwe Putlitz is a registered professional Architect and Construction Project Manager , a Fellow of the Royal Institute of Chartered Surveyors ( RICS ) and is a visiting lecturer at the School of Construction Economics and Management at the University of the Witwatersrand . Having recently retired as the Chief Executive Officer of the Joint Building Contracts Committee ( JBCC ) he specialises in the avoidance of construction disputes by way of lectures , technical articles dealing with aspects of contract administration for various industry publications arising from the use of Standardform Contracts including the Federation Internationale des Ingenieurs-Conseils ( FIDIC ), the General Conditions of Contract ( GCC ), the JBCC or the New Engineering Contract ( NEC ) to find an acceptable settlement without resorting to legal processes , where possible .
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November 2024 Volume 30 I Number 9 www . plumbingafrica . co . za