15 DELAYED PAYMENT AND THE RIGHT TO FINANCING CHARGES
The contracts penalise the Employer for slow payment of sums due by
entitling the Contractor to claim compounded financing charges until
payment is made.
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Clause 14.8 in both Books provides for these charges to be at the annual rate
of 3% above the discount rate of the central bank in the country of the cur-
rency of payment, unless the contract otherwise provides.
Note that the Contractor in entitled to this payment ‘without formal notice or
certification, and without prejudice to any other right or remedy’ (clause 14.8).
This means the Contractor ’ s right to the charges does not depend upon his
giving any notice or receiving any certificate; for example, he is thus able, and
arguably ought, to apply for the charges as part of his interim payment appli-
cation under clause 14.3.
It will be useful to develop this point a little.
By clause 14.3 (e) of the Silver Book and 14.3 (f) of the Yellow, the applica-
tion Statement should include ‘any other additions or deductions which may
have become due under the Contract or otherwise, including those under
Clause 20 [Claims, Disputes and Arbitration]’. Accrued financing charges
under clause 14.8 would appear to fall within this category, and so should be
included in the Statement.
The effect of clause 14.8 is that the Contractor need not give any notice or
receive any certificate in order to be
entitled to apply for payment of the
accrued financing charges under clause 14.3. However, if having applied for
them the Employer does not pay in accordance with clause 14.6, then it would
seem the Contractor has a claim under clause 20.1, and should therefore give
his initial notice within the 28 days or face the time bar.
Thus, although the
contractual entitlement to the financing charges arises
irrespective of any notice or certificate, the Contractor ’ s
right to claim those
charges in the event of the Employer ’ s non-payment will depend upon his
giving his clause 20.1 notice in time. A contractor facing non-payment of
accrued charges for late payment should never confuse these two quite differ-
ent points.
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As we have seen (Section 4.14.2), the Contractor may also suspend the works and
ultimately terminate the contract for non-payment.