Payments in Construction Law

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In construction environment, payments was defined as the value of works, materials or goods comprised in a contract as in Royden (M) Sdn Bhd v Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd[1]. In a simple words, payment can be a consideration in terms of money for works that Contractor had carried out and material delivered to site accordance to the contract. Contractually it can be said that the money must be paid by Employer promptly of fully unless there are specific reasons for delaying or withholding it. While interim payment can be defined as provisional or short-term payments made progressively to a Contractor at weekly, bi-weekly or monthly intervals based on periodical estimated value of work that the Contractor has carried out (Siti Suhana & Rosli, 2010). Interim payment is also known as progress payment or stage payment (Clause 30.2, PAM 2006). The major standard forms of construction contracts used in Malaysia namely the PWD 203A (2007), PAM (1998/2006) and CIDB (2000), contain provisions for payments to be made against Interim Certificates issued periodically by the Architects, Superintending Officer (S.O.) or Client’s Representative or Contract Administrator as the case may be. The provisions give the Contractor the right to be paid upon the issuance of the interim certificate and compel the Employer to pay the Contractor the certified amount (Harban Sigh, 2003). In the event of late payment or non – payment made by Employer, Contractor may have several option either to determine the contract, suspension of work at site or slowing down the work. There is a provision under PAM 2006 Clause 30.7 stated that Contractor has right to suspend the works until payment due is made and a written notice must be delivered by hand or registered post to Employer. While Clause 42.10 of CIDB 2000 allows Contractor to give a notice to Employer about his intention to suspend the works and if the Employer still did not made the payment, Contractor may suspends wholly or partly the works or reduce the rate of execution of works. Contractor also entitled for extension of time and if any loss or damages incurred arising from such suspension of works. In next section 2 cases of Determination by the Contractor will be discussed.


Case: Dataran Rentas Sdn. Bhd. v BMC Construction Sdn. Bhd. (2008)

This case is between appellant (Dataran Rentas Sdn Bhd) against the decision of the High Court at Penang on a winding up petition filed by respondent (BMC Construction Sdn Bhd) against the appellant the High Court had made the following orders:- (i) that the appellant be wound up pursuant to the provisions of the Companies Act 1965;

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