AZ of construction law: suspension and termination Building.co.uk
S is for suspension
However harsh it seems, there is no common law right that allows you to stop performance of a contract if you have not been paid. You can have a contractual right to suspend work if it is clearly set out in your contract and, in the UK, you do have a statutory right to suspend under the Construction Act. You have to give at least seven days’ notice of your intention to suspend under the Act (but note that this is sometimes extended in the terms of a contract) and your notice needs to set the grounds under which you intend to suspend. Your right to suspend ends when you receive the outstanding payment but you are not liable for the consequences of the suspension. When the changes to the Construction Act take effect on 1 October 2011, you will also be entitled to your costs and expenses of the suspension and any time due to it (such as the additional time taken in remobilising).
While you have an important and powerful right, you have to use this right carefully - make sure that you do not end up being at fault by repudiating the contract. Careful distinction needs to be made between temporarily suspending performance for non-payment and walking away from the contract entirely. In the recent case of Mayhaven Healthcare vs Bothma, a contractor that thought it was properly entitled to suspend for non-payment was held to be in breach of contract when it was established it did not have the right. However, it was not found to have repudiated the contract simply because it mistakenly thought it had a right it did not have. You should not assume that this will always be the outcome, as it will depend on the circumstances each time. If you are not able to suspend you have a statutory right to claim interest on the amount unpaid under the Late Payment of Commercial Debts (Interest) Act. This allows for a statutory rate of interest or, subject to it being a substantial remedy, such other rate as the parties agree.
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