Once a contractor's or subcontractor's work has been certified and paid, may a later certificate reduce that valuation?
Interim certificates keep businesses running, but they are only payments on account. Whether work certified and paid can be revalued downwards later, and who bears the loss, is settled by the nature of interim payment.
Yes as a rule: interim certificates are payments on account, so an architect or engineer can certify a sum and later reduce it in a subsequent certificate, and the loss of any resulting clawback falls on whoever has already paid down the chain, unless the contract expressly prevents the reduction, as under the ICE Editions for nominated subcontractor sums
Yes as a rule. Interim certificates and payments are payments on account of the final sum due, not conclusive statements of value or quality, so an architect or engineer can certify a sum and later reduce it in a subsequent certificate, in effect clawing back part of what was paid. The loss of any clawback falls on whoever has already paid on the earlier certificate. In Fairclough Building v Rhuddlan Borough Council a nominated subcontractor was paid for defective work, a later certificate reduced its valuation, and because the main contractor had paid before the subcontractor became insolvent the loss fell on the main contractor. The rule yields to express words: under the ICE 6th and 7th Editions, clause 60(8) prevents reduction of sums certified and paid to a nominated subcontractor; JCT 2011, clause 2.3.3, requires the architect to express dissatisfaction within a reasonable time; and the Engineering and Construction Contract, at clause 50.5, lets the project manager correct a wrongly assessed amount. Only specific wording prevents a later reduction.
| Payments on account | Interim certificates are not conclusive as to value or quality |
| Reduction | A certified sum may be reduced in a later certificate |
| The loss | Falls on whoever has already paid on the earlier certificate |
| Fairclough | The main contractor bore the loss where the subcontractor was insolvent |
| Exceptions | ICE 60(8) protects nominated subcontractor sums; JCT 2.3.3; ECC 50.5 |
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