The number of cases regarding the amended Construction Act has been increasing lately. We now have our first decision on the provisions intended to clarify when an employer can avoid having to pay a previously certified sum to a contractor who has become insolvent. I think it is fair to say that it goes wider than most commentators thought. These provisions are important, as contractor insolvency is still an all too frequent occurrence. Naturally, employers have no wish to make payments to an insolvent contractor without being able to take into account any cross claims resulting from the insolvency. To do otherwise would doubtless see money flushed away. To recap, section 111(10) of the act provides that as long as the contract is drafted appropriately, an employer is not obliged to pay a certified sum if the contractor becomes insolvent after the last date a valid payless notice could be served. Instead, there will be a final account between the parties taking into account their respective claims.
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