A fresh start
The Construction Act has completely overhauled building contract law, says Anna-Liisa Walden
We are starting to see the effects of amendments to Part II of the Housing Grants, Construction and Regeneration Act 1996 (known as the Construction Act), which took effect on 1 October 2011 (a month later for Scotland).
If a landlord enters a building contract, this will be covered by the new rules. Even new orders under existing framework agreements are likely to be covered, as new orders you now place form new contracts. Professional appointments with architects, quantity surveyors, and so on will be governed by the new provisions.
- A new payment regime introduces new requirements for payment notices: withholding notices have been replaced with ‘pay less notices’. If you, as a paying party, miss issuing a payment notice, and do not issue any ‘pay less notice’, you will have to pay the amount requested (for example, the sum stated in the invoice, application for payment and so on).
- Informal and wholly or partly oral contracts can now be referred to adjudication. This means more disputes will go to adjudication and more emphasis on landlords’ employees’ witness evidence and records.
- Pay-when-certified clauses that link payment to other contracts are not enforceable.
- It introduces greater rights to suspend performance of the works until payment is received, (and the suspending party can claim reasonable costs for the time when works were suspended).
There may still be appointments or contracts governed by the old provisions and some subject to the new provisions (depending on when the document was entered into or executed).
Anna-Liisa Walden is a senior associate solicitor at Clarke Willmott