Generally speaking, under most standard form construction contracts the issue of a payment certificate by the employer or the employer’s agent is a condition precedent to the contractor’s entitlement to payment.  However this is not always the case.  In certain bespoke contracts, payment is made to the contractor on a monthly basis without any requirement for a payment certificate to be issued by the employer prior to payment being made. The legal principles which apply to payment certificates are unique and require a sound understanding when assessing the risk of payment.

The payment certificate’s function is to record the factual situation existing at a point in time during the progress of the works and for the certifier to give, in effect, his opinion as to the item / s being certified i.e. the value of the work performed to a certain point in time. Most standard forms contain provisions stating that payment certificates issued prior to the final payment certificate are interim, can be adjusted in subsequent certificates and do not constitute acceptance of the work certified.

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Written by Niel Coertse, Associate at MDA Consulting

Disclaimer: The content of this newsletter does not constitute legal advice. If you have a specific problem please contact MDA on 011 648 9500, at our Durban office on 031 764 0811 or by email on ncoertse@mdaconsulting.co.za