An important Technology and Construction Court (“TCC”) decision¹ has clarified for the first time that payment or pay less notices served without a genuine belief in the sum stated as due may be invalid and open to challenge.
The minimum requirements covering interim payments in construction contracts are set out in the Housing Grants (Construction and Regeneration) Act 1996 (the “Construction Act”). A payment notice must comply in substance, form and intent with the requirements of the contract to which the application relates (see our previous briefing on this issue here). There is a long history of case law dealing with the requirements for valid payment notices.
Now, for the first time, the TCC has provided guidance on the requirement in s.110A(2)(a) of the Construction Act that a payment notice must state the sum the payer “considers” to be due.