Common use of Right to make direct payments Clause in Contracts

Right to make direct payments. 12.15.1 Should the Principal have reasonable grounds to consider that the Contractor has defaulted in making payment to any Subcontractor in respect of any part of the Contract Works for which the Contractor has been paid by the Principal, the Principal may require that, within five Working Days of notification by the Principal to the Contractor, the Contractor: (a) obtains written confirmation from the Subcontractor that the Subcontractor has received all monies due and owing to it from the Contractor under the terms of the agreement between the Contractor and the Subcontractor; or (b) justifies to the Principal that the payment in question is the subject of a bona fide dispute; or (c) makes payment to the Subcontractor to the extent required by the agreement between the Contractor and the Subcontractor. 12.15.2 If the Contractor fails to undertake one of the courses of action outlined in clause 12.15.1 within the time stipulated, the Principal shall have the right to pay that Subcontractor directly and deduct such amount from any monies payable to the Contractor or otherwise recover the amount concerned from the Contractor. 12.15.3 Any payment made by the Principal directly to a Subcontractor under this clause 12.15 shall be deemed to be in full satisfaction of any corresponding liability owed by the Principal to the Contractor. 12.15.4 The parties acknowledge that in the event of the Contractor: (a) becoming bankrupt; or (b) going into liquidation; or (c) having a receiver or statutory manager appointed; or (d) going into voluntary administration, the Principal’s rights under this 12.15 may be subject to, or impacted by, the receiver’s, liquidator’s, statutory manager’s or administrator’s (as applicable) rights and as such the Principal may not be able to exercise some or all of its rights under this 12.15.