Navigating the Legal Minefield of Construction

Published on 7^th July 2025

Before You Supply or Sign: Key Agreement Clauses That Could Hurt Your Cashflow

In construction, it’s not always the job itself that creates risk — it’s the agreement behind the transaction. Whether you’re supplying materials, hiring out equipment, or offering trade accounts to contractors, the fine print in your terms and credit agreements can make or break your cash flow.

At Top Service Ltd, we work with thousands of UK merchants, suppliers and plant hire firms — and we see the same challenges repeat: vague payment terms, unclear responsibilities, and risky clauses that end up costing businesses thousands.

Here’s what to watch out for in your customer agreements, and how you can protect your income before you’re chasing overdue payments.

Why Clarity in Agreements Matters

Your terms of sale or hire agreement are more than admin — they’re your first layer of credit control.

• Poorly written terms (or relying on verbal promises) can lead to:

• Disputes over delivery dates or hire durations

• Extended or unpaid credit periods

• Confusion about responsibility for damage, loss, or delays

• Legal grey areas when it comes to recovering debt

Let’s break down the essentials that every supplier, merchant, and plant hire business should review in their contracts or T&Cs.

1. Credit Terms — Define the Rules Early

Clear credit terms = faster, more successful collections.

Your agreement should state:

• Exact payment terms (e.g. 30 days from invoice)
• Consequences for late payment (interest, suspension of credit)
• Whether any discounts or penalties apply
• Your right to withdraw credit or enforce legal recovery if terms are breached

 Top Service Insight: Many customers don’t enforce the terms they have — make sure they’re not only written, but also issued, signed, and followed.

2. Delivery & Hire Dates — Avoid Disputes Later

Unclear timelines can lead to payment delays or hiring disputes.

Your agreement should clearly state:

• When delivery is considered complete

• When hire starts and ends (especially for daily/weekly charges)

• What happens in case of delays, theft, or damage

• Requirements for off-hire notice or confirmation

 If your customer says “we didn’t use it” or “we didn’t receive it,” your only defence is a signed agreement and process proof.

3. Retentions & Delayed Payment Risks

While formal retention clauses are more common in subcontracting, suppliers and merchants often face similar delays when payment is linked to project milestones or main contractor processes.

If your client says:

“We’ll pay when we’re paid”

… This is a warning sign.

Note: “Pay when paid” clauses are unenforceable under the Construction Act 1996 — you have a right to payment regardless.

 4. Dispute Clauses — Set the Ground Rules

If something goes wrong — like goods in dispute or a plant allegedly returned damaged — how do you resolve it?

Include:

• Timeframes for raising a dispute (e.g. 7 days after delivery)

• Clear return or off-hire processes

• Preferred resolution process (written notice, mediation, legal action)

 Disputes should be the exception, not the reason invoices go unpaid.

 5. Risk Clauses That Could Hurt You

Many suppliers use outdated templates that don’t reflect the realities of construction supply. Be on the lookout for clauses that:

🛡️ How Top Service Ltd Supports Suppliers & Merchants

As construction credit specialists, we help your business:

✔️ Check the creditworthiness of new customers before offering terms

✔️ Get early alerts on customers entering financial difficulty

✔️ Collect overdue accounts without burning bridges

Our team of credit management experts understand the nuances of supplying to contractors — and how to protect your cashflow from day one.

“Minimise debt, maximise cash” isn’t just our tagline — it’s our mission.