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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 10264
Experience:  I have been practising for 30 years.
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We have A contract with A client to do A building job and

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we have A contract with A client to do A building job and they are by passing us and getting our contractors to do work for them and getting prices sent direct off our supplyers so we cant make A profit is this legal

Is the contract in writing? For a fixed price or an hourly rate? For a set job?

Can you please let us have as much detail as possible? Thank you

Customer: replied 1 year ago.
Its in writing and for A fixed price for A set job
There is A architect that is paid by them to over see the job. he takes 5% off each invoice
we agreed that they would pay an invoice at the end of each month but the Architect doesn't sign off a certificate to pay until around the 25th of each month leaving us with A cash flow problem

The original question was about contractors doing work directly but now it seems it’s late payment because of the failure to sign the certificate. What’s the problem exactly?

Customer: replied 1 year ago.
both are problems that are on going if you could just answer the first question that would be good cheers

Thank you. You have a contract to do a job for a price. You are entitled to be paid the contract price for doing the job. If they decide that they are going to get some jobs done elsewhere perhaps cheaper, whether they are using your own contractors or not, then you are still entitled to damages in respect of the loss of profit for the work which they are now having done by other people.

You have a further remedy in respect of the contractors because there was an agreement for them to do this work for you and it is now being done directly by them and hence, you have a claim against them in respect of the profit that you would have made on the work that they did and in respect of your markup.

In essence, your claim against the contractor and the customer is in respect of however much you lose in profit as a result of their actions.

Ignoring the architect for a moment if it was agreed that the customer would pay you at the end of each month and the only reason he is not paying you is because the architect hasn’t signed the certificate, then whether your claim against the customer for late payment would succeed would depend on whether that late payment was contractually dependent on the architect signing.

If it’s not, and they are just habitually late payers, then you can add interest at 8% simple onto the amount you, from the date it became you under the provisions of the Late Payment of Commercial Debts (Interest) Act and a fixed sum of £50 upwards under the provisions of the Late Payment of Commercial Debts Regulations on each invoice if it’s not paid on the date due. The amount of the fixed payment depends on the value of the invoice. Here is an explanatory leaflet:

Can I clarify anything for you?

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Best wishes.


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Customer: replied 1 year ago.
can they contact our window supplier and get our price sent to them ? surely that cant be legal as we cant make any profit

There is nothing to stop them contacting the window supplier if they know who it is and trying to undercut you but, if you were fitting those windows as part of the contract, you are still entitled to the profit. It’s the same concept as corkage in a hotel or restaurant where, you can take your own wine but they charge you money for the privilege of using your own wine instead of their wine because they are not making any profit out of yours.

It would be different if you were not on a fixed price for the job but ultimately, at the end of it, you are entitled to make the same profit that you would have made had they not been going elsewhere.