Paul Hyett warns architects who are sub-consultants to beware of pay- when-paid clauses. Such clauses are, of course, now ineffective (except where the ultimate client is insolvent) for all appointments which have been entered into on or since 1 May 1998. This is one of the results of the new Construction Act.
If the architect is the lead consultant, this can give him a headache, though. He must pay his sub-consultants even if the client does not pay him in time. The architect can exercise his right to suspend work if payment is not made by the final date for payment, or take the matter to adjudication, although neither of these will make him popular with his client. The architect will still have to pay the sub-consultants, whatever he decides to do about the client's non-payment.
If the architect had a right to interest on late payment this might help - it would provide an incentive to the client to pay, and some extra cash to ease the architect's overdraft if payment is late.
Rowe & Maw