BUILDERS: JUST WHAT DO INTERIM PAYMENT CERTIFICATES PROVE?
Construction contracts commonly provide for "progress payments", based on "interim payment certificates" issued by an agent of the employer (often an architect, engineer or other professional) as the work proceeds.
Subject always to the terms of each individual contract, a certificate contains a valuation of work done (and materials supplied) to date, and a certification of the amount accordingly payable by "the employer" (the client in a building contract) to the contractor.
Note however that an interim certificate does not conclusively entitle the builder to payment. As illustrated in a recent High Court case, although the certificate itself gives rise to a claim and effectively proves the valuation of the work, it isn't "proof of the sufficiency of the work".
In other words, it certifies the value of the work done; it doesn't prove that the contractor has complied with all the terms of the contract. Consequently, as happened in this case, the employer is still free to raise issues of "defective work or any other breach of contract". In practice that can be a subtle distinction, so seek advice before taking any action on any disputed certificate (or, if you are the client, paying out on one).
Recent Articles for March 2010;
Source: www.dotnews.co.za
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