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13.—(1) Subject to paragraph (2), the agreement must contain a term which has the effect of requiring the relevant body to make payments to the contractor under the agreement promptly and in accordance with both the terms of the agreement and any other terms based on which the payment is made and any other conditions relating to the payment contained in directions given by the Secretary of State under section 17 (Secretary of State’s directions: exercise of functions) or 28E(3A) of the Act(1).
(2) The obligation referred to in paragraph (1) is subject to any right the relevant body may have to set off against any amount payable to the contractor under the agreement any amount—
(a)that is owed by the contractor to the relevant body under the agreement; or
(b)that the relevant body may withhold from the contractor in accordance with the terms of the agreement or any other applicable provisions contained in directions given by the Secretary of State under section 17 or 28E(3A).
Section 17 was amended by the 2001 Act, section 67(1) and Schedule 5, paragraph 5(1) and (3) and the 2002 Act, section 1(3) and Schedule 1, paragraph 7 and section 28E(3A) was inserted by section 177(8) of the 2003 Act.
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