4 November 2011 by

Changes to the Construction Act

Part II of the Housing Grants, Construction and Regeneration Act 1996 (‘the 1996 Act’) has been a key piece of legislation affecting the construction industry in England, Wales and Scotland since it came into force on 1 May 1998. It applies to any agreement that is a construction contract as defined in sections 104 – 107 of the 1996 Act.

On 1 October 2011 the Local Democracy, Economic Development and Construction Act 2009 (‘the 2009 Act’) came into force. The 2009 Act substantially amends the statutory payment, suspension and adjudication provisions that apply to construction contracts.

The new rules apply to construction contracts entered into on or after 1 October 2011.

In summary, the 2009 Act has introduced some significant amendments of which construction professionals, and those advising them, should be aware. The most notable are: -.

1. Construction Contracts no longer need to be in writing to be subject to the statutory regime.

2. The 2009 Act prohibits ‘pay when certified clauses’ (which are tied into other contracts). The 1996 Act required an adequate mechanism for determining payments to be included in a construction contract. The 2009 Act states that this provision will not be satisfied if the mechanism refers to ‘conditional payments’.

3. Payment notices must be issued no later than five days after the payment due date. In that notice the payer should state the sum they believe is due and the basis for that calculation. If the payer fails to issue a notice within the relevant timeframe then the payee can issue a notice instead. The sum stated in the notice may become the sum due and payable (subject to withholding notices and pay less notices).

4. Contractors have enhanced rights to suspend works. If a sum that is due is not paid by the final payment date then a contractor can suspend works. The 2009 Act provides that:

a. a contractor can suspend all or part of the works it is undertaking;
b. a contractor can recover a reasonable amount in relation to its costs and expenses caused by the suspension
c. a contractor will be entitled to an extension of time in respect of the delay caused by the suspension of works

5. Both parties to a construction contract can refer a dispute to an adjudicator to be determined. Adjudications are a swift way of resolving disputes and are usually concluded within 28 days. The 2009 Act makes some subtle changes to the rules relating to adjudication, for example:

a. a term in a construction contract which requires one party to pay the costs of the adjudication, regardless of the final outcome, is prohibited unless the agreement relating to that is made in writing after an adjudication notice has been served.
b. a new slip rule has been introduced to enable an adjudicator to amend their decisions to correct any clerical or typographical errors.

Please call or email Tom Lawrence for further information or questions on any aspect of Construction law on 020 7288 4769

24 October 2011 by

Nationality, Domicile and Wills

The recent case of Morris v Davies and others [2011] EWHC 1773 (Ch) is an example of the difficult, and potentially litigious, issues that can be encountered when writing a Will. With large scale migration into the UK over the last 60 years and an increasing number of Brits emigrating, working and owning property abroad, the legal notion of domicile is becoming increasingly important.

28 October 2011 by

School’s Out… or is it?

The availability of scholarships and bursaries is becoming increasingly important in family budgeting. The Upper Tribunal Tax and Chancery Chamber recently considered the public benefit in relation to the charitable status of private fee-paying schools.

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