Their set-off clause has taken money for another job
Money earned on this job has been taken for a problem on another job, under a clause we signed.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
If the deductions have arrived at the final account instead, see what to do when contra-charges appear from nowhere.
What's happening?
Your subcontract lets your main contractor set off sums it says you owe on any contract with it. Set-off means taking those sums out of money it owes you. It has used that clause to take money earned on this job for a problem on another. Even so, the deduction still has to be tied to the right parties, contract, payment cycle, notice and evidence.
Left unchallenged, the cash you earned here stays with your main contractor against a charge nobody has proved. Keep two questions apart. The first is whether the deduction was notified in time and backed by evidence, which a schedule can show. The second is how far the clause legally reaches, which is a question for a solicitor.
The solution
List every sum taken for another job. For each one, record the parties, the clause relied on, the notice and its date, the payment cycle, the evidence and the amount. Keep each notice with proof of when it arrived. Then ask in writing for the build-up behind each sum.
Contra-Charge Claim tests each sum on its evidence and pursues the return of what is unsupported. We carry anything genuinely disputed into the account of the job where it arose. How far the clause reaches goes to a solicitor rather than being assumed either way. Contra-Charge Prevention then sets up the routine that catches the next one the week it lands.
Example
Illustrative example. The scenario and figures are invented.
The facts
A subcontractor has three subcontracts with the same main contractor. On the first job, a Pay Less Notice cuts a certified £38,000 to £17,000. It deducts £21,000 said to arise from defects on the third job.
What happens
- The subcontractor lists every cross-contract sum: the parties, the clause relied on, the evidence, any credit or notice, the payment cycle and the amount. It keeps each notice with proof of when it arrived.
- The list shows the notice on the first job went in on time and cites the cross-contract clause. But the £21,000 is a single line with no breakdown.
- On the third job there is no defects notice and no record of any repair cost. £9,000 of measured work there is still unpaid.
- The subcontractor's response treats the item as notified but not evidenced. It does not argue how far the clause reaches, and leaves that question to its solicitor.
- Asked for the basis, the main contractor produces a £13,000 invoice from a repair subcontractor and withdraws the other £8,000.
- The subcontractor disputes the £13,000 inside the third job's own account, where the defects are said to arise. It keeps the original notice, proof of receipt and later letters together.
The first job in figures
| Item | Amount |
|---|---|
| Certified | £38,000 |
| Pay Less Notice | £17,000 |
| Deduction asserted | £21,000 |
| Deduction supported by invoice | £13,000 |
| Deduction withdrawn | £8,000 |
| Paid | £25,000 |
The outcome
The first job's payment arrives at £25,000. The £13,000 is left to be dealt with when the third job's account is agreed, with the papers kept together for that.