What is the legal basis for demanding payment after a missed Payment Notice under the Construction Act?
By George Kershaw, Founder, ContraUpdated
The legal basis is the payment framework in the Housing Grants, Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009: section 110A (payment notices), section 111 (the requirement to pay the Notified Sum), and section 108 (the right to adjudicate). Together they make an un-notified, un-reduced Notified Sum a debt due in full and enforceable by adjudication.
Key takeaways
- The legal basis is the Housing Grants, Construction and Regeneration Act 1996 (amended 2009): sections 110A, 111 and 108.
- An un-notified, un-reduced Notified Sum is a debt due in full.
- The Scheme for Construction Contracts overrides non-compliant contract terms.
- Adjudication makes the debt enforceable within 28 days.
The Act and the 2009 amendments
The Housing Grants, Construction and Regeneration Act 1996, amended by the LDEDC Act 2009, sets a mandatory payment framework for construction contracts covering construction operations in the UK. Parties cannot contract out of it; where a contract fails to comply, the Scheme for Construction Contracts imposes compliant terms.
Section 110A - payment notices
The payer must give a Payment Notice within five days of the due date, stating the Notified Sum. If they do not, your Application for Payment stands as the default payment notice and sets the Notified Sum.
Section 111 - the requirement to pay the Notified Sum
The payer must pay the Notified Sum in full by the final date for payment unless they have served a valid Pay Less Notice in time. No valid Pay Less Notice means the full sum is due - this is the statutory basis for your demand.
Section 108 - the right to adjudicate
Either party may refer a dispute to adjudication at any time. The adjudicator decides within 28 days, and the decision binds until finally determined - pay now, argue later. In Macob v Morrison [1999] EWHC 254 (TCC), Dyson J confirmed that “the decisions of adjudicators are binding and are to be complied with until the dispute is finally resolved”.
The Scheme fills the gaps
Where a contract is silent or its payment terms do not comply with the Act, the Scheme for Construction Contracts supplies the due date, notice periods, and final date for payment. You are never left without a mechanism.
Contra is built on these mechanics
The Clock™ runs sections 110A and 111 against the specific contract form on every Application for Payment, and Crystallised Entitlement™ fires the section 108 demand the moment a deadline lapses - assembled from The Record™ and defensible in adjudication.
This guide is general information on UK construction payment law, not legal advice. Payment terms vary by contract; take advice on your specific position.
About the author
George Kershaw · Founder, Contra
George Kershaw is the founder of Contra, which builds Construction Act payment and deadline tracking for UK specialist subcontractors. He writes on subcontractor payment rights, the Housing Grants, Construction and Regeneration Act 1996, and construction adjudication.
Sources
Frequently asked
Which contracts does the Construction Act cover?
Contracts for construction operations in the UK, as defined by the Act. Certain arrangements are excluded, including some contracts with a residential occupier and specified process-plant work.
Does a demand have to be in writing?
A written, dated demand is strongly advisable. It fixes the Notified Sum, the missed notice, and the final date for payment, and forms part of the evidence if the matter goes to adjudication.
What if the contract's payment terms differ from the Act?
Terms that do not comply with the Act are overridden by the Scheme for Construction Contracts, which supplies compliant payment provisions.
Related guides
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