A construction contract provided for 23 interim payments, up to the contract completion date, but no more. The contract overran and, earlier this year, the court was asked to decide if there was a contractual right to make, and be paid in respect of, a further interim application (or subsequent applications). The court said there was no such right but did the Court of Appeal agree?
It did. The words used in the contract made it clear that the parties were only agreeing a regime of interim payments up to the contractual date for practical completion. It was impossible to deduce from their payment arrangement what would be the dates for valuations, payment notices, Pay Less notices and payments after that date, which were essential matters, and this was a classic case of one party making a bad bargain. The court will not, indeed cannot, use the canons of construction to rescue one party from the consequences of what it has clearly agreed and in this case there was no ambiguity.
Nor could a term providing for extra interim payments be implied. In particular, it was not obvious what the proposed term would say or what would be the critical dates for serving notices. The term was also not necessary to secure business efficacy and it could not be said that the contract would lack commercial or practical coherence without it. And the contract provided an adequate mechanism for quantifying interim payments so that the parties' contract, although unusual, satisfied the requirements of section 110 of the Construction Act.