Contractor loses £168k dispute due to errors in notice document

Companies disputing invoices from suppliers need to ensure any documents they produce to support their case are legally watertight.

Failure to do so could prove costly, as shown in a recent case involving MI Electrical Solutions Ltd and Elements (Europe) Ltd.

The issue arose after Elements hired MI Electrical to carry out electrical works in a block of apartments.

Elements was unhappy with the progress of the work and issued a pay less notice saying there had been unacceptable delays so it would not pay the full amount agreed in the contract.

The dispute went before an adjudicator who found that the allegations of delay were not a good ground for non-payment.

Elements then claimed it was entitled to set off costs it had incurred rectifying defects in the work. The adjudicator said that whatever the merits of that claim, it could not be used because it had not been included in the pay less notice.

The High Court has upheld that decision. It held that only points included in the pay less notice could be relied on as a defence. Accordingly, the issue had been correctly determined by the adjudicator and the parties were contractually bound by that decision.

This meant Elements had to pay the outstanding cost of £168,452.

Please contact us if you would like more information about the issues raised in this article or any aspect of contract law.