In the high-stakes arena of payment disputes, the TCC continues to tighten the leash on compliance. Deerns UK Limited v VDC LHR11 Limited [2026] EWHC 1509 (TCC) serves as a stark warning to employers and their legal teams who attempt to circumvent the mandatory certainty of the ‘Construction Act’. This judgment reinforces the rule established in recent years: the Due Date to the Final Date for Payment must be a fixed period. Any contractual mechanism that allows the final date to fluctuate based on the submission of an invoice or application is a fatal drafting error that invites the application of the Scheme.

Contractual Payment Mechanism

Strategic precision in payment drafting is not merely a preference; it is a shield against the imposition of the Scheme. In this matter, the parties’ attempt to link the final date for payment to the Consultant’s performance created a variable interval that proved terminal for the Defendant’s defense.

The dispute centered on Clause 7.2: “The final date for payment shall be 30 days after the relevant due date save that if the Consultant invoice is issued late, the final date for payment shall be postponed by the same number of days by which the Consultant’s invoice is late.” Crucially, the parties agreed that the term ‘invoice’ actually referred to the ‘payment application’.

Interpretation of Act S.110

Section 110 of the Act is a minimum mandatory standard designed to ensure cash flow certainty. Under S.110(1)(a), there is significant flexibility for an “adequate mechanism” to determine when payments become due and parties are free to peg due dates to the submission of invoices or payee’s notices. Under S. 110(1)(b), there is significantly less autonomy as while parties can agree on the duration of the interval, they cannot agree on an event-based trigger that changes that duration.

Eyre J relied heavily on the precedent set by Rochford Construction Ltd v Kilhan Construction Ltd [2020] EWHC 941 (TCC) [58]: “… while a due date can be fixed by reference to, say, an invoice or a [payee’s] notice, the final date has to be pegged to the due date, and be a set period of time, and not an event or a mechanism. That also makes a degree of sense given that it will be important for the payer to be exactly certain how much time he or she has in which to serve a payless notice, the final date for payment being the date which is critical to that step.”

The Judge also relied on Lidl Great Britain Ltd v Closed Circuit Cooling Ltd [2023] EWHC 2243 (TCC), which included a similar type of ‘postponement’ clause to define the Final Date for Payment: “21 days following (a) the Due Date; or (b) receipt of the Contractor’s valid VAT invoice in the sum due by the Employer …; whichever is the later.”

Eyre J emphasized that Parliament has introduced a blanket prohibition on party autonomy as regards the ascertainment of the final date for payment, save for the length of the period. By allowing fluctuation based on the timing of an invoice, the Court said that would have the effect of driving a coach and horses through the wording and the clear intention of this part of the Act.

When contractual terms offend the Act, the Scheme is applied. Following Bennett (Construction) Ltd v CIMC MBS Ltd [2019] EWCA Civ 1515, the court performed a piecemeal application, replacing only the non-compliant terms. This resulted in the application of Paragraph 8 of the Scheme, which reduced the payment period from the contractual 30 days to the statutory 17 days. Consequently, the Defendant’s Pay Less Notice was served out of time and the sum of £910,501.71 became due immediately.

Critical Takeaways

Drafting the Final Date: The final date for payment must be a fixed duration from the due date. Any provision allowing this period to be postponed for performance-related events is legally void.

The “Invoice” Trap: Never use the submission of an invoice—or a payment application—to trigger the final date for payment. While these events can trigger the due date, the final date must remain a fixed period thereafter.

Legal Workaround: If the parties wish to postpone the final date for payment, it can be achieved via the due date. That is to say, fulfillment of a condition triggers the due date instead of the final date for payment and the end result is no different.

Further Considerations – Exception to the Rule

The Rochford Rule might be defined as the final date for payment has to be pegged to the due date, and be a set period of time or as the judgment stated at [122]“…If it was open to a paying party to include a provision which required the fulfilment of some further condition between the due date for payment and the final date for payment, that would have the effect of driving a coach and horses through the wording and the clear intention of this part of the Act.”

This line of authorities do not consider the effect of S.110B(3) and as such the author suggests it might be an exception to the rule: “110B(3): Where pursuant to subsection (2) the payee gives a notice complying with section 110A(3), the final date for payment of the sum specified in the notice shall for all purposes be regarded as postponed by the same number of days as the number of days after the date referred to in subsection (2) that the notice was given.”

That is to say, the Final Date for Payment is in fact postponed where a payer fails to submit a payment notice and the payee then submits a notice in default thereafter. By way of example, if the final date for a payer’s notice was on ‘Day 15’ and the Final Date for Payment on ‘Day 45’, if the payee submitted a notice in default on ‘Day 40’, the Final Date for Payment would be postponed until ‘Day 70’. Perhaps importantly, the payer’s window to serve any payless notice would also be extended.