New Construction Act: October

How does it affect you?

Part 8 of the Local Democracy, Economic Development and Construction Act 2009 (LDEDC Act 2009) came into force on 1st October 2011 and implements amendments to the Housing Grants Construction and Regeneration Act 1996

All construction contracts entered into after 1st October 2011 will be governed by the amended Act [“the new Construction Act”].

The key changes in the new Construction Act include the following:-

  • The new Construction Act will apply to all construction contracts, not just those in writing or evidenced in writing.
  • Any agreement between the parties regarding the allocation of parties’ costs of adjudication are ineffective unless any such agreement is made following the notice of intention to refer the dispute to adjudication and any such agreement must be in writing.
  • Pay when certified is abolished
  • Amended payments provisions; A payment notice is required to be given, either by the payer or the payee. If the payer is required to issue the notice and fails to do so within the required timescales then the payee will be able to serve a “default” payment notice. If the payee should have submitted payment notice (application for payment) and fails to do so, then there is no second chance.
  • Pay Less Notices replace the Withholding Notice. The payer is required to pay the amount stated in the payment notice unless a Pay Less Notice is issued within the required timescales. The Pay Less Notice must give details of the sum proposed to be withheld and the basis on which that sum was calculated, otherwise the Pay Less Notice will be non-compliant.

You therefore need to ensure any new contracts you enter into contain compliant provisions otherwise the amended Scheme for Construction Contracts will apply.

If you would like any advice in connection with the above, please contact either Sean or Bridget