Yellow card

Philip Harris noted the report proposed dropping the “payer’s notice” but had not agreed any mechanism to ensure that payers put their cards on the table and state the amount to be paid.

In the consultation it was suggested the payee should be entitled to make an application for payment and that in the absence of notice from the payer of the amount to be paid, that application should become the sum due.

This proposal has been rejected by advisers who are concerned that clients do not understand the need to follow the procedure and should not have to pay an application simply because they have not operated the contract correctly, especially if the application is fraudulent.

In the TeCSA consultation I suggested that before the payee could rely on its application as being the amount due, he would first have to give a notice to the payer saying that the payer had not operated the contract properly, claiming the amount he thought due and giving a short space of time in which the payer could then get his house in order (a sort of payee’s notice).

As to the problem with fraud, the notice procedure ensures that it is only when the payer has ignored the warning that this can occur. Furthermore, in the industry it has been common practice in the past for certificates to have effect “save for fraud” – the proviso could be attached to the effect of the payee’s notice.

A further consultation process is due in March. To meet competing interests of payers and payees it seems to me that the act should allow for a payee’s notice like a yellow card.

Tim Willis, partner, the Wilkes Partnership