Jurisdiction(s):
United Kingdom

Key definition

Advance payment definition

What does Advance payment mean? An advance payment is a sum paid up front by an employer to a contractor to fund mobilisation, procurement of materials or plant, and other start-up costs, typically before work on site begins. It is a descriptive contractual term rather than a statutory concept; its availability, amount and conditions are defined by the contract (some standard forms include express mechanisms, for example NEC options for advance payments). Key features commonly include: - Conditions precedent (such as an advance payment bond or guarantee, insurances, and a programme). - Single or staged release. - Contractual repayment by deductions from interim payments or...

Advance Payment Bonds in Construction: On-demand Protection—Purpose, Insolvency Risk, JCT Approach, and Key Drafting and Enforcement Points

Published by a LexisNexis Construction expert

Practice notes

An Advance payment bond is a specific type of performance Bond, almost always issued as an ‘on demand’ instrument. See Practice Notes: Performance Bonds—construction projects and On demand performance bonds—construction projects. This Practice Note considers:

the nature of advance payment bonds
why they are used in the construction sector
the key features of the wording used in an advance payment bond

Why are advance payment bonds used?

Under a standard building contract, the usual payment regime is that the contractor receives instalments as each stage of the works is completed, following inspection, measurement and certification by the contract administrator. In essence, sums are paid in arrears for work already performed.

There are occasions when an advance is made to the contractor, for instance to fund mobilisation activities, or to enable orders to be placed for the long-term manufacture and delivery of steel or other materials.

Whenever an advance is paid, the employer faces the risk of loss if, thereafter, it does not obtain the benefit of that prepayment through works delivered under the building contract...

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Web page updated on 21/05/2026

Popular documents

Using the Judicial College Guidelines to assess general damages in personal injury claims

When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...

Tomlin orders in England and Wales: CPR guidance on drafting, confidentiality, approval, variation, enforcement, limitation, CCA issues, court-specific requirements, sample wording and precedents

This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...

Precedent: Deed of Surrender of Lease with Optional Premium, Settlement and Release, Landlord, Mortgagee and Guarantor Consents, Reimbursement and HM Land Registry Provisions (England and Wales)

Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...

Precedent Statutory Declaration: Standard Wording under the Statutory Declarations Act 1835

I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...