Late Payment and Non-Payment by the Employer in Public Sector Construction Contract in accordance to the Public Procurement and Supplies Administration Act, B.E. 2560 (2017)

Abstract

Construction contracts between public sector and private person in accordance with the Public Procurement and Supplies Administration Act, B.E. 2560 (2017) can either be in the domain of private contract or administrative contracts (Public Sector Construction Contract). These contracts are made using the standard construction contract form issued by Notification of the Policy Committee under Public Procurement and Supplies Administration in the Royal Thai Government Gazette. The standard form however does not prescribe details about when payment must be made by the employer or the consequences of non-payment or late payment. This ambiguity leads to issues regarding interpretation of the contract later on. Although construction contract terms provide no such details,  late payment or non-payment by the employer, under administrative contract domain, can trigger default by the employer which allows the contractor to claim interest and other compensations under the Civil and Commercial Code. However, administrative contracts strictly prohibit contractors from work suspension or contract termination so as to sustain continuity of public services; meanwhile, contractors have rights to suspend or terminate the contract under private contracts. Given that uncertainty creates problems in contract interpretation and management, clear and precise contract terms with regards to payments or the specific law governing payments will benefit both the employer and the contractor through clarity of their rights and duties and likely efficient contract management. This principle is not in conflict with the basic principle of administrative law to deliver public services while it creates less burden to the private contractor.