New ruling says late payment may not be grounds for termination

Albertini, Anthony - HiRes

Cash flow is likely to worsen for contractors and subcontractors following a TCC judgment clarifying termination rights relating to late payment

Cash flow has been described as the lifeblood of the construction industry. With profit margins often extremely slender for many contractors and subcontractors, an interruption in cash flow can have serious consequences for their ability to do business and deliver projects to budget and on time. This makes the need for prompt, clearly scheduled payments vital.

However, a recent judgment from the Technology and Construction Court (TCC) has potentially exposed contractors and subcontractors to increased cash flow shortfalls after it clarified the avenues to terminating contracts when employers or contractors fail to pay on time.

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