The ongoing scandal of retention abuse in construction contracts
Retention monies continue to be wrongfully held back for far longer than is lawful. Twelve years ago a decision in the English courts reminded us of this abuse in a case where retention had not been released four and a half years after practical completion of a contract. A few months ago the judge in another English court case considered a dispute where retention was still being withheld seven and a half years after completion. Worryingly the court considered whether release of retention was statute barred after so long a period.
Contractors and subcontractors in construction would be well advised to protect themselves, as far as they can, from the damaging and unlawful practice of hanging on to retentions for too long. The ideal is to arrange contracts with no provision for retention but this will usually meet with resistance from the other party. If zero retention cannot be agreed we can advise on measures to limit or eliminate the danger of abuse.
A J Pidding C.Arb FCIArb