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How does JCT clause 4.13 work?

Clause 4.13 lets the Contractor suspend work if the sum due is unpaid by the final date, after written notice, and recover its reasonable costs.

Updated: . By Jack Butler-Kettle, Construction Claims Consultant.

The answer

Clause 4.13 of SBC/Q 2016 is the contract's version of section 112 of the Housing Grants, Construction and Regeneration Act 1996. The contract right and the statutory right run together. It lets the Contractor suspend any or all of its obligations, in three parts. First, the failure. The sum due has not been paid in full by the final date for payment. The sum due is the notified sum, less anything in a valid Pay Less Notice. Second, the notice. The Contractor gives written notice to the Employer, copied to the Architect/Contract Administrator, of its intention to suspend and the grounds. Only if the failure continues for the period the clause gives after that notice may it suspend, and only until it is paid in full. Third, the consequences. The Contractor is entitled to a reasonable amount for the costs and expenses it reasonably incurs because of the suspension. A suspension under clause 4.13 is also a Relevant Matter under clause 4.22, so the loss and expense route is open for the effect on progress. Any effect on the completion date is dealt with separately, under the extension of time clauses and by a planner. Five things go wrong. The Contractor suspends before the final date has passed. It suspends over a disputed sum, not a notified one. It sends the notice to the Quantity Surveyor instead of the Employer. It stops before the notice period has run. Or it keeps no daily record of the demobilisation, standing time and remobilisation costs the clause is there to pay. On a JCT subcontract, check its own suspension clause and notice period.

Example

Illustrative example. The scenario and figures are invented.

The facts

An Interim Certificate shows a notified sum of £140,000. No Pay Less Notice is given, and £90,000 is paid on the final date for payment, leaving £50,000 unpaid.

What happens

  1. The next day the Contractor gives written notice to the Employer, copied to the Architect/Contract Administrator. It says it intends to suspend all its obligations because £50,000 is unpaid.
  2. The period the clause gives runs without payment, and the Contractor suspends.
  3. Its records show demobilisation of £4,000, standing plant and supervision of £12,000 across the suspension, and remobilisation of £6,000.
  4. It claims £22,000 as costs and expenses reasonably incurred, with the invoices and timesheets attached.
  5. The Employer pays the £50,000 and work starts again.

The suspension in figures

ItemAmount
Notified sum£140,000
Paid on the final date£90,000
Demobilisation£4,000
Standing plant and supervision£12,000
Remobilisation£6,000
Costs and expenses claimed£22,000

The outcome

The £50,000 is paid and the £22,000 is claimed under the clause. Had the Contractor walked off the day the money fell short, with no notice, the clause would not have covered it. The same £22,000 would have been its own cost.

To have the notice of intention to suspend prepared for you to serve, and the suspension costed, see our Late Payment Claim service.

Sources

  1. Housing Grants, Construction and Regeneration Act 1996, s 112 (Right to suspend performance for non-payment). legislation.gov.uk.