Are milestone payments a sufficient mechanism for payment in construction contracts?

摘要

Bennett contracted to Verbus the design, supply and installation of 78 prefabricated modular bedroom units for a new hotel in London. The units were to be made in China and then shipped to Southampton. The contract price was just over £2 million. The contractual terms incorporated the standard form JCT contract. However, the standard JCT provisions for interim payments were deleted in their entirety and replaced by five bespoke "Milestone" provisions: Milestone 1: 20% deposit payable on execution of contract; Milestone 2: 30% on sign-off of prototype room in China; Milestone 3: 30% on sign-off of all snagging items in China; Milestone 4:10% on sign-off of units in Southampton; Milestone 5:10% on completion of installation and any snagging.