We are shortly going out to tender using the NEC4 Term Service Contract (TSC) for facilities management. We note clause Y2.2 states, ‘The date on which final payment becomes due is…if the Service Manager makes an assessment after the end of an accounting period, fourteen weeks after the end of the accounting period’. Is ‘fourteen weeks’ weeks correct as clause Y2.2 in NEC3 TSC states, ‘The final date for payment is fourteen days’?
Option Y(UK)2 is for contracts which are required to comply with the payment provisions of the UK Housing Grants, Construction and Regeneration Act. The Act defines two different terms that have to be used when it comes to payment, namely the ‘due date for payment’ and the ‘final date for payment’. The payer’s obligation to pay is by the ‘final’ date, not the ‘due’ date. As with most other standard contracts that comply with this legislation, in NEC the ‘final’ date is linked to the ‘due’ date.
The first paragraph of clause Y2.2 defines when the due date for payments are. The first sentence deals with ‘normal’ payments and the due date is 7 days after the assessment date. The remainder of the first paragraph then deals with the due date for a final payment (as per clause 53). That is why there are longer periods in certain circumstances. The 14 week periods are correct and are meant to give the service manager more time to calculate these specific payments. To complete the picture, the final date for payment is set out in the second paragraph of Y2.2.
In reality the times for payment, that is until the final date for payment, are the same as those set out in clauses 50 and 51 for ‘normal’ payments and clause 53 for final payments. They are just set out in the language of the Act to make sure the contract complies with it..