Recoverability of an overpayment in construction projects

Abstract

Construction payment is one of the essential thing in a construction project. The formation of contract between an employer and a contractor will usually include the terms regarding payment. It is important by both parties to respect the contract especially when it involved payment. The opposite of it will cause such disputes regarding payment to arises. Issues such as non-payment or late payment is one of the major disputes that often occured. The payment should be executed by the respective party to avoid such failure in project or causing any financial losses especially to the contractor. Overpayment is regarded as one of the issues that happened within the construction industry. Overpayment is when an individual has overpaid a sum of money more than as it supposed to be. The question is on the recoverability of the overpayment whether such overpayment can be recovered or not. There are cases that allows the recovery of the overpaid sum and some cases do not allow such event. Therefore this research was conducted to identify the cirumstances that allows the recoverability of an overpayment. Local legal cases have been selected prior to this research and have been analysed by using the method of documental analysis. There are eleven cases that have been analysed and for the analysis, several key elements such as the causes of an overpayment, the type of work, the type of contract, the type of relationship, the time of claim and the reasons for its recoverability have been extracted out from the cases. It is found that miscalculation, fraud and misrepresentation are one of the causes of an overpayment although the recovery of it was not always possible as it must be proved before allowing such claims. The type of contract might also influence such decision because most cases analysed are from a subcontract basis and there no any proven standard forms used besides using a simple contract formation. Main contractor or the employer could tend to forget such terms that are important to the project when engaging others to work with them. So, it is important that the contract formed is solid to avoid such matter to happened.