The prohibition against "pay if paid" and "pay
when paid" provisions in construction contracts is widely
known. Equally well known to contractors is the hardship this often
causes where a principal, dissatisfied with a subcontractor's
workmanship, withholds payment despite the works being practically
complete, perhaps for 120 days or longer.
Often, the contractor knows that, under the Construction
Contracts Act 2004, the principal has to make all progress
payments, and the final payment, within 50 days of being invoiced.
The contractor also knows that, to get paid quickly, they need to
apply for adjudication of any payment dispute within 28 days after
it arises.
But the contractor does not insist on being paid within 50 days
and does not seek adjudication when it is not paid on time, because
it depends on good relations with its principal and a good
reputation with other principals, to keep winning the work.
