Is the final date valid in construction contracts?

In Deerns UK Limited v VDC LHR11 Limited [2026], the Technology and Construction Court (TCC) delivered an important reminder about payment provisions in construction contracts.

To comply with the Housing Grants, Construction and Regeneration Act 1996 (HGCRA), a construction contract must provide for a fixed period between the due date and the final date for payment. The decision also goes a step further than previous authority and is one that employers and paying parties, in particular, should note.

Factual background

VDC LHR11 Limited (VDC) appointed Deerns UK Limited (Deerns) under a consultancy agreement to provide engineering consultancy services. A dispute arose when Deerns submitted applications for payment seven and eight, in response to each of which VDC served a pay less notice. Deerns argued that both notices were out of time and consequently sought payment for the full £910,501.71 plus VAT.

Clause 7.2 of the agreement provided that the final date for payment would be 30 days after the 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”.

However, the due dates were fixed by reference to a schedule of valuation dates. The result was that the final date could move depending on when Deerns submitted its application, while the due date stayed fixed. The gap between the two could therefore exceed 30 days and vary from one payment cycle to the next.

The law

Section 110(1) of the HGCRA requires every construction contract to provide:

• An adequate mechanism for determining what payments become due and when
• A final date for payment in relation to any sum that becomes due.

The Act leaves the parties free to agree the length of the period between the due date and the final date. Following Rochford Construction Ltd v Kilhan Construction Ltd [2020] and Lidl Great Britain Ltd v Closed Circuit Cooling Ltd [2023], however, that is the only freedom they have. The final date must be a fixed period after the due date, determined solely by reference to the due date and not by reference to some other event.

Where a contract does not comply, section 110(3) provides that the relevant provisions of the Scheme for Construction Contracts (England and Wales) Regulations 1998 (the Scheme) apply. Paragraph 8 of Part 2 of the Scheme fixes the final date for payment at 17 days after the due date.

VDC’s case was that its pay less notices were in time, having been served at least five days before the contractual final date of 30 days after the due date. Deerns’ case was that the contract failed to provide a compliant final date, meaning the Scheme’s 17-day period applied and the notices were late.

The decision

Deerns brought a Part 8 claim in the TCC. Eyre J handed down judgment on 23 June 2026.

Eyre J began with the objective meaning of the contractual language. Properly read, the contract fixed the valuation dates and due dates but allowed the final date to move if Deerns’ application was late. The final date therefore depended on the date of the application, not solely on the due date. As a result, the contract failed to provide a final date for payment as required by section 110(1).

VDC sought to distinguish Lidl Great Britain Ltd v Closed Circuit Cooling Ltd [2023] on the basis that the triggering event in that case, the contractor’s invoice, occurred after the due date, whereas a late application in this case could occur before it. The judge rejected that distinction. It matters not whether the event that moves the final date occurs before or after the due date.

VDC also argued that, applying Bennett (Construction) Ltd v CIMC MBS Ltd [2019], the Scheme should be applied in the way that departs least from the parties’ bargain by treating the final date as a fixed 30-day period.

The judge acknowledged that this had “considerable attraction” and that the 17-day period arguably gave Deerns “something of a windfall”, but held that this approach was not open to him. Where no compliant final date is provided, paragraph 8 of the Scheme applies and the court has no power to redraft the agreement or impose a different solution.

In the alternative, VDC argued that the parties had operated the contract as though the due date and final date moved together, meaning Deerns was estopped by convention from contending otherwise. It was common ground that an estoppel cannot exclude the operation of a statute; VDC’s point was that the parties had, in practice, operated the contract compliantly.

The judge rejected the argument and declined to adjourn it for pleadings and further evidence. The alleged common understanding was “advanced in vague and unparticularised terms”. The contemporaneous documents showed, at most, a degree of informality in the parties’ dealings rather than a shared assumption that amounted to a restructuring of the contract.

VDC’s pay less notices were therefore out of time and Deerns obtained judgment for the sums claimed, totalling £910,501.71 plus VAT. VDC’s application for a stay of execution, based on Deerns’ financial position and VDC’s own substantial cross-claims, was also refused.

Lessons from Deerns v VDC

The overarching message is clear: the final date in a construction contract must be a fixed, unconditional period after the due date. The due date can move but the interval between the due date and the final date cannot.

Had the parties wanted to protect VDC against late applications, the drafting solution was straightforward: make the due date, rather than the final date, run from the date of the application. The interval would then have remained fixed while preserving the commercial protection VDC was after.

The case is also a further warning that commercial common sense will not rescue a non-compliant payment provision. The courts will scrutinise these provisions closely and will not uphold a varying interval between the due date and the final date, however sensible the underlying commercial aim.

Paying parties should review their standard terms and bespoke amendments now, particularly any provision that extends the final date by reference to late applications or invoices, whether the triggering event falls before or after the due date.

Payees should check whether their contracts contain such a provision. If they do, the shorter 17-day period under the Scheme may apply and pay less notices served in reliance on the contractual timetable may be out of time.