36
SPN OCT 2011 Pool&SpaIndustry
www.swimmingpoolnews.co.uk NEW REGIME FOR CONTRACT LAW
How changes to the law on construction contracts this autumn will affect the swimming pool industry
I
t may sound a mouthful but the Local Democracy, Economic Development and Construction Act 2009 which deals with changes to adjudication and payment is an important development for anyone involved in the construction industry.
The new Act is all about a change in the regime for payment, notices of withholding and adjudication under construction contracts. In layman’s terms it means that many of the construction contracts you are dealing with in future will have to reflect the new regime for payment and adjudication.
Your own standard terms and conditions will almost certainly need amending.
WHAT IS THE LOCAL DEMOCRACY, ECONOMIC DEVELOPMENT AND CONSTRUCTION ACT 2009?
The main purpose of the Local Democracy, Economic Development and Construction Act 2009 is to strengthen and improve those parts of the Construction Act 1996 relating to cash flow and adjudication. It will not repeal or replace it. It will come into force on 1 October 2011 in England and Wales, and 1 November 2011 in Scotland.
THE KEY CHANGES IN ADJUDICATION • Construction contracts are no longer required to be ‘in writing’. This may lead to an increase in the number of disputes over contract terms as well as those being referred to adjudication
• Adjudication provisions are still required ‘in writing’ • The introduction of a statutory slip rule to England, Wales and Scotland and • The parties can no longer agree who pays the costs of the Adjudication, before Notice of Adjudication is given
THE KEY CHANGES TO PAYMENT • Elimination of “pay when certified” clauses that link to other contracts (but management contracting is not outlawed)
• New payment notices and the replacement of withholding notices • Improvements to the statutory right to suspend for non-payment • Outlawing a contractual provision whereby a Payment Notice triggers the due date
THE LIKELY OUTCOME OF THE CHANGES
The removal of the ‘in writing’ requirements is likely to lead to more disputes over contract terms being referred to adjudication, particularly ones governed by the Scheme for Construction Contracts. In addition, it is probable that there will be more challenges to the Adjudicator’s appointment as well as more cases going before the Technology and Construction Court.
In terms of changes to payments, under the new rules, subcontractors are less likely to experience delays in payment as this will no longer be dependent on links to obligations under other contracts. By the same token, main contractors are likely to want to extend the payment period under sub- contracts to allow more time for payment.
THE SCHEME FOR CONSTRUCTION CONTRACTS This outlines the default provisions which apply if the parties fail to put the adjudication and payment terms required by the Act into their contracts.
You can find a more detailed description of the changes in a briefing note on the new legislation at
www.wrighthassall.co.uk. In the meantime, if you have any queries concerning the changes – or any other matter – please contact Stuart Thwaites or Philip Harris at Wright Hassall LLP on 01926 886688.
KEY POINTS:
There are only three principal changes to remember: • The requirement for construction contracts to be in writing is removed
• The ‘slip rule’ is changing • Parties now cannot agree who will pay the costs of the adjudication before the Notice of Adjudication is given
Construction contracts are no longer required to be “in writing” under the provisions of the new Act
HOW WILL THIS AFFECT ME?
Your existing terms will need to be amended to reflect the new provisions; in particular, key provisions in your terms relating to payment may become unenforceable. It is important to note that SPATA’s own terms have already been amended.
TRANSITION PERIOD
There will be a transition period whereby contracts entered into before a particular date will be subject to the old Act and those entered into after that date, to the new Act. This means that a main contractor may have some sub-contractors under the old regime and some under the new regime.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92