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Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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Good morning. I am a director of a subcontract company. Our

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Good morning.
I am a director of a subcontract company.
Our company undertakes a lot of work for a particular Principal Contractor (around 50% of our entire turnover).
We are in dispute with this principal contractor with regards ***** ***** particular scheme that we undertook which they are not happy with. They want to recover a sum of money from us and, whilst we acknowledge that some monies are due from us to them, we are disputing the amount that they are claiming as many of the issues had arisen as a result of them not meeting their own obligations to us (which they accept).
Our main problem is that they keep threatening to withhold sums due to us on other (ongoing) projects that we have for them. None of these schemes are in dispute or have any issues, so do they have the right to cross-hold money from one scheme to another?
We have had a successful 5 year working relationship with this client, notwithstanding the one scheme as denoted above, and I don't want to fall out with them, but we can't keep having the threat of payments from other schemes being withheld every time that we don't agree with their demands.
Our wage bills to service their jobs are well into six figures every month and our monthly applications / invoices (obviously) are somewhat more.
Failure to pay on time or, worse still, failure to pay at all would close our business down due to the cash flow issues caused.
We normally enter into NEC3 or JCT contracts with them - none of which seem to obviously permit withholding money between various jobs. I have looked through the site specific contracts (orders placed with us) and these don't seem to make reference to them being able to do this either.
Could you tell me if the withholding of money between schemes is likely to be legal for them or not please?
Hello my name is ***** ***** I will help you with this.
Do you have a contract with them please?
Customer: replied 2 years ago.

Hi Alex,

We do have a contract with them, but it's hundreds of pages long and I wouldn't be able to scan and email it all to you.

I have checked through the payment and pay-less sections of our order and cannot find any clause to say that they are able to withhold money from one job to pay for another.

Does it have anything about set off or deduction?
Customer: replied 2 years ago.

Please see the attached, which is all that I can find in the contract with regards ***** ***** and deductions. It all seems to be contract specific, which leads me to believe that they can't withhold monies from a separate contract.

If, however, it transpires that this is common practice with other principal contractors - maybe they can???

Custom and practice applies only to employment contracts generally. However in your case there is no mention of set off.
Therefore they can not. This is because it appears that the contract is, as you say per job rather than generally. As such the contract does NOT allow it and therefore they can not
So unless the contract allowed deductions they can not -its a contract and should be included.
Can I clarify anything for you about this today please?
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