Factoring Companies Guidebook
J.C.T Contracts
Definition
The Construction Industry uses a wide range of contract documents including The Joint Contracts Tribunal Standard Form of Building Contracts, known as 'JCT'.
See also: - Ban on Assignment, Contract Labour, Contractual Sales, Installation/Commissioning, Liquidated Damages, 'Pay when Paid' Contracts and Retentions.
Concerns
JCT Contracts are one of the most common forms of construction industry contracts in use and they invariably contain onerous clauses which will likely make a debt unfactorable.
Such clauses may include:-
- Ban on Assignment
- Liquidated Damages
- 'Pay when Paid'
Delivery/provision of services to timescales being the essence of the contract
Inherent right of offset for any reason against any contract
Payments against quantity surveyor's valuations not against invoices
Various deductions, including tax subject to 714 Certificates and retentions.
Identification
Consider the industry in which the Client operates. Enquire as to whether work or services undertaken are of a contractual nature; review the major debtors Terms and Conditions together with any Contracts. Note whether the Terms and Conditions to which the Client is operating are subject to the terms of the overriding contract with the principal contractor, which is probably not accessible.
Review debtor remittance advices for any deductions for such items as Retentions.
