The New Construction Act - A Guide to the Changes

8/3/2019 The New Construction Act - A Guide to the Changes

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2011

2011

The New Construction Act

LOCAL DEMOCRACY, ECONOMIC DEVELOPMENT

AND CONSTRUCTION ACT 2009

THE NEW CONSTRUCTION ACT

A GUIDE TO THE CHANGES

FC Construction


2/24

2011

2011


Today:

Reviewthechanges Consider what they mean for Mansell

anditsbusiness

AmyMorleyPartner

FreethCartwrightLLP


3/24

2011

2011


Somecontext... Housing Grants, Construction and

Regeneration1996(theOldAct). Amended by Local Democracy, Economic

Developmentand

Construction

Act

2009

(the

NewAct).

NewSchemeforConstructionContracts. No opting out for qualifying constructioncontracts.


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20112011


When:

Appliestoallcontractsenteredintoaftertheeffectivedate. 01October2011(EnglandandWales) 01November2011(Scotland)

Contracts that are entered into before theeffectivedatewillcontinuetooperateundertheOldAct.


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20112011


Summaryofchanges: Adjudication:

Oralcontracts; Costs;

SlipRule. PaymentNotices:

Section 111 Withholding Notices arereplaced;

PaywhenCertifiedunenforceable; NewPaymentNoticeregime; Introduction of Notified Sum for

payment.


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20112011


Section110APaymentNotice Payment Notice required in respect of any

payment.

Contract must nominate who will serve theNotice:

Payer;

SpecifiedPerson; Payee.

Noticemustbeservedwithin5daysoftheduedate.


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20112011


Section110APaymentNotice Mustsetoutthesumdue. Must set out the basis on which it is

calculated.

Whatdoes

calculated

mean.

Notice required even if the amount is0.

The amount identified in the NoticebecomestheNotifiedSum tobepaid.


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20112011


NopaymentNoticeserved? The New Act provides for a party receiving

paymenttoserveaDefault Notice. WhataretherequirementsofaPayeeNotice

indefault? Mustidentifythesumdue. Setoutthebasisonwhichitiscalculated. Incentivetoserveearlyduetopostponement

ofthefinaldateforpayment.


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20112011


PayeeNoticeindefault Ifthepayeeisrequiredtoserveanapplication

thenaseparatePayeeNoticeindefaultisnotrequired.

Silentbutdeadly... The amount identified as due in the

application becomes the Notified Sum forpayment.

Unless:

APayLessNoticeisserved


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20112011


PayLessNotice NotifiedSummustbepaidcomewhatmay. UnlessaPayLessNoticeserved. Noticemustsetoutthesumdueandthebasis

onwhich

it

is

calculated.

Thisbecomesthenotifiedsumtobepaid. AbatementandSetoffbothcovered. ItisnotaWithholdingNotice. Nogroundsforwithholdingtobeprovided?


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20112011


Suspension[Section112] Anyorallcontractualobligations Reasonable cost and expenses incurred as a

consequence

ExtensionofTimetocoverremobilisation


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20112011


Paywhencertified No longer possible to link performance and

the issue of certificates on one contract topaymentunderanother.

RetentionandSubcontractors.


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20112011


Insolvency

Theoneexceptiontopaywhenpaid The right to withhold payment only if the

contractexpresslystatesthisright.

Still required to comply with Noticeprovisions. So must serve a Pay Less Notice if the

insolvency is after the Due Date but beforethelastdaytoserveaPayLessNotice.


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20112011


Adjudication

Contractsnolongerinwriting. Section107oftheOldActnolongerapplies. All the case law on what was and wasnt a

contract evidenced in writing no longerapplies.

Moreadjudication? Increased challenges and uncertainty in

dealing with oral/part oral contracts inadjudication.


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20112011


Adjudication

The Agreement to refer disputes toadjudicationmustbeinwriting.

IfnotthentheSchemewillapply.

Adjudication Agreement must include a sliprule. IfnoslipruleisincludedthentheSchemewill

apply.


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20112011


AdjudicationCosts TheOldActsilentoncosts.

NewAct

says

the

Adjudicator

must

be

able

to

decidewhowillpayhisfees.

Only exception is if an agreement is made inwritingafter thegivingofaNoticeofIntentiontoRefertoAdjudication.

Parties still able to allocate who should paypartycosts e.g.consultantorlawyertime.

So called Tolent clauses only enforceable ifthey refer generically to Referring Party orRespondingParty.


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20112011


NoticeProvisionsandcalculatingtimeperiods

Expresscontractual

provisions

on

service:

How?

Where?When?

Expect any tribunal will uphold expressprovisionsinthecontract.

Ifthecontractissilent:TheOldActapplies


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20112011


Reminder of the Old Act provisions onService

Method:

Byanyeffectivemeans

Timeruns

from

receipt

Considerhowyouevidencereceipt Recordeddeliveryandfax

Email Outofofficereplies Deliveryfailures


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20112011


Calculatingtimeperiods TheOldActprovisions:

When a period of days is specified thentime begins to run immediately after thepoint in action e.g. if Notice of Suspension is to begiven(7daysisrequired)theniftheNoticewasreceivedonMonday the 7 days starts on Tuesday and suspension cantakeplaceonthefollowingTuesday.

BanksHolidaysarenotcounted.


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20112011


Materialsavailable: TheNewConstructionAct FCGuidetotheChanges. LegalSurgerydayinyourBusinessUnit. Mansells Subcontract Conditions (amended to provided for

SubcontractorserviceofthePaymentNotice) Mansell NEC Subcontract amendments with update to provide

for the New Construction Act and Subcontractor service of thePaymentNotice.

JCT Design & Build Subcontract 2011 version with bespokeamendments to provide for Subcontractor service of thePaymentNotice.

JCT Standard Building Subcontract 2011 version with bespokeamendments

to

provide

for

Subcontractor

service

of

the

PaymentNotice.

Track changed copy of the Old and New legislation to identifythechangesmade.


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20112011


Thankyouforyourtime

Documents

The New Construction Act - A Guide to the Changes