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Payment Claim Notices, failure to comply

Does failure to issue an payment response means that the payment claim is accepted in full?

Unlike the Housing Grants Construction and Regeneration Act (as amended) in the UK, the failure to issue a payment response may not necessarily mean that the payment claim notice amount that has been made is deemed accepted.

In a recent adjudication, the adjudicator opined that as the Construction Contracts Act is silent on what happens in the event that a party fails to issue a payment response. Under the CCA, the adjudicator has no express authority to award the payment claim amount to sub-contractor.

The effect, the contractor can fail to issue a Payment Response and in such circumstances, the subcontractor can suspend work.  If the matter is then referred to adjudication, the sub-contractor cannot thereafter suspend on foot of lack of payment. The Payment Claim Notice (and the amount of the Claim) will then need to be the subject of a dispute.

Given that the dispute process is likely to take at least another month and a half, conceivably the sub-contractor can be out of funds for some time before getting fair payment.

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