Ex gratis payment
Although not a formally recognised method of payment, in certain extreme cases when lack of cash is preventing a contractor from carrying out their obligations under the contract, a special one-off payment may be made with the client's agreement. This is an ex-gratis payment made in advance of the normal payment procedure to ensure certain works are carried on or to recover or prevent a delay or to expedite certain materials. This might be accompanied by an advance payment bond.
If payment is for materials or equipment, it is important that ownership is clearly established to guard against insolvency of the contractor (see off-site goods and materials).
This text in based on an extract from PROJECT MANAGEMENT, by Eric Stokes and Saleem Akram. The original manual was published in 2008. It was developed within the scope of the LdV program, project number: 2009-1-PL1-LEO05-05016 entitled “Common Learning Outcomes for European Managers in Construction”. It is reproduced here in a slightly modified form with the kind permission of the Chartered Institute of Building.
--CIOB
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