Certificate of Payment Definition

Many standard forms of contract provide a certification system for payments. An architect’s certificate for payment is relied upon by the owner as acknowledgement of a professional opinion as to the progress of the Work, the owner’s lender in releasing funds in accordance with the opinion and the contractor as an assistance in advancing payment under the provisions of the contract with the owner. A clear, concise and consistent standard format provides the architect with a vehicle in which to deliver professional certificates for payment. The parties have agreed that he will be the particular expert to carry out this function.

Two types of certificate need to be differentiated, namely interim and final certificates.

Interim Payment Certificates

Most standard forms of contract state an entitlement on the part of the contractor to interim payment. These payments assist in the contractor`s cashflow, but the actual determination of the contractor`s entitlement is not made until the final certificate. The interim payments are therefore sums paid on-account of whatever the contractor might eventually be entitled to recover from the Employer. Most standard forms make the issue of a certificate a condition precedent to the contractor`s right to payment.

It is a matter of fact whether payment for work carried out is a statement of acceptance or approval. Most contract provisions for interim certification and payment are based on cumulative valuation of work done, and are only for payments on account. They are not binding nor conclusive of acceptance of the work.

Final Certificates

Some standard forms of contract, notably JCT Forms, IChemE Forms and MF/1, include clauses which make conclusive the Final Certificate in relation to the fulfilment of specified obligations under the Contract. The Courts have upheld such clauses and given effect precisely to the terms of the clause, sometimes to the surprise of the construction industry. In all cases it is a matter of construction of the particular contract.