What constitutes a valid Pay Less Notice?

Four things: the right sender, timing, content and service. A Pay Less Notice is the notice a payer uses to pay less than the sum otherwise due, and it must come from the payer or a specified person the contract names to give notices for the payer, such as the contract administrator or quantity surveyor. It must arrive no later than the prescribed period before the Final Date For Payment, the last day the money can lawfully arrive; where the contract is silent, the Scheme for Construction Contracts makes that 7 days. It must state the sum the payer thinks is due as at the day of service and show the workings deduction by deduction, and be served by the method the contract requires, with proof of delivery kept. Fail any one test and it is no notice at all, so the full Notified Sum, the amount that legally must be paid, falls due. Most fail on timing, or on a bare figure with no calculation behind it.

An employer wants to pay a fit out contractor £30,000 less than the £100,000 Notified Sum. Test the notice against the four points. Sender: from the named contract administrator, passes. Timing: the Final Date For Payment is the 24th and the contract says 7 days, so it must be in by the 17th; sent on the 19th, it fails. Content: it states £70,000 but just labels the deduction defects, £30,000 with no breakdown, fails. Service: the contract requires recorded post but it went by ordinary email, another failure. Any one is fatal, so the notice counts for nothing and the full £100,000 is payable.