Contra-charges & defending claims

Is your client threatening to deduct contra-charges from your account, or have they done so already? Have you received a pay less notice that claims that you owe money to your client, not the other way around?

We are experienced in assisting parties to construction contracts in defending claims and contra-charges. This includes claims for liquidated damages, delay (LAD’s) or other liquidated damages, claims passed on from other sub-contractors and consultants, and claims for defective work.

Who has to prove their position?

Generally speaking, it is the party making an assertion that has the burden of proving that their assertion is correct. A party claiming contra-charges therefore usually has the ‘burden of proof’.

In civil proceedings, the standard of proof is on the balance of probabilities. In other words, the claiming party must present evidence to demonstrate that the occurrence of the events or circumstances claimed were more likely than not.

Just as a contractor or sub-contractor would have to prove an entitlement to variations, extension of time or loss and expense on the balance of probabilities, an employer or contractor would be held to the same standard in proving their claims in front of an adjudicator or judge.

What needs to be proved in order for a contra-charge to be valid?

A party claiming a contra-charge will generally need to prove on the balance of probabilities that the other party was in breach of an obligation and that the breach in question caused it a loss. Often the claiming party will have an obligation to mitigate its losses, by taking steps to keep them to a reasonable sum.

Whilst it is the claiming party’s burden to prove their claim, evidence that contradicts that of the claiming party can be vital in defending contra-charges. Careful record-keeping can therefore be as crucial to defending claims for contra-charges as it is to claiming positive entitlements.

Cross-contract set-off

Construction contracts sometimes contain cross-contract set-off clauses, meaning that monies owed on one job can be set-off against those owed on other jobs. Such clauses can cause big problems for parties which are engaged on multiple projects by another party. Other problematic clauses can provide that estimates of damages by the party having work carried out will be binding on the other party, making it easier for them to substantiate claims.

Pay less notices and conditions precedent

Construction contracts sometimes require that specific notices are given before contra-charges can be deducted – the JCT for example requires certain notices before liquidated damages (LAD’s) can be deducted and pay-less notices may be required to be given.

Claims for contra-charges by the party having work carried out will however rarely be subject to ‘conditions precedent’ that are as onerous as those imposed on parties carrying out work (such as the requirement to give notices of extension of time or loss and expense within a certain time or rights are lost).

How we can help

When defending claims it can be even more important to take advice as early as possible in the process. Taking advice and action early is likely to pay dividends in the long run. We can assist you at any stage, whether contra-charges have been threatened or actually deducted, and whether or not adjudication or other proceedings have been commenced against you.

If deductions are being threatened or are being made from your account, you disagree with a payment notice or pay-less notice or proceedings have been commenced you we can provide you with rapid advice. Our team of experts are experienced in having to get to grips with complex issues quickly and we can therefore be in a position to defend you immediately. We can often act on the same day of instruction.

Free initial enquiry

We offer a one hour free initial consultation to new clients. Please contact us by phone, email or using our contact form for a free initial consultation to discuss how we can help you deal with contra-charges and defending claims.