The New Construction Act

The New Construction Act
2011
LOCAL DEMOCRACY, ECONOMIC DEVELOPMENT AND CONSTRUCTION ACT 2009 THE NEW CONSTRUCTION ACT A GUIDE TO THE CHANGES
FC Construction

2011
Today: Reviewthechanges Consider what they mean for Mansell anditsbusiness
AmyMorley Partner FreethCartwrightLLP

2011
Somecontext...
Housing Grants, Construction and Regeneration1996(theOldAct). Amended by Local Democracy, Economic Development and Construction Act 2009 (the NewAct). NewSchemeforConstructionContracts. No opting out for qualifying construction contracts.

2011
When:
Appliestoallcontractsenteredintoafterthe effectivedate. 01October2011(EnglandandWales) 01November2011(Scotland)
Contracts that are entered into before the effectivedatewillcontinuetooperateunder theOldAct.

2011
Summaryofchanges: Adjudication: Oralcontracts; Costs; SlipRule. PaymentNotices: Section 111 Withholding Notices are replaced; PaywhenCertifiedunenforceable; NewPaymentNoticeregime; Introduction of Notified Sum for payment.

2011
Section110APaymentNotice Payment Notice required in respect of any payment. Contract must nominate who will serve the Notice:
Payer; SpecifiedPerson; Payee.
Noticemustbeservedwithin5daysofthedue date.

2011
Section110APaymentNotice Mustsetoutthesumdue. Must set out the basis on which it is calculated. Whatdoescalculatedmean. Notice required even if the amount is 0. The amount identified in the Notice becomestheNotifiedSum tobepaid.

2011
NopaymentNoticeserved? The New Act provides for a party receiving paymenttoserveaDefault Notice. WhataretherequirementsofaPayeeNotice indefault? Mustidentifythesumdue. Setoutthebasisonwhichitiscalculated. Incentivetoserveearlyduetopostponement ofthefinaldateforpayment.

2011
PayeeNoticeindefault Ifthepayeeisrequiredtoserveanapplication thenaseparatePayeeNoticeindefaultisnot required. Silentbutdeadly... The amount identified as due in the application becomes the Notified Sum for payment. Unless: APayLessNoticeisserved

2011
PayLessNotice NotifiedSummustbepaidcomewhatmay. UnlessaPayLessNoticeserved. Noticemustsetoutthesumdueandthebasis onwhichitiscalculated. Thisbecomesthenotifiedsumtobepaid. AbatementandSetoffbothcovered. ItisnotaWithholdingNotice. Nogroundsforwithholdingtobeprovided?

2011

2011

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2011
Suspension[Section112] Anyorallcontractualobligations Reasonable cost and expenses incurred as a consequence ExtensionofTimetocoverremobilisation

2011
Paywhencertified No longer possible to link performance and the issue of certificates on one contract to paymentunderanother. RetentionandSubcontractors.

2011
Insolvency Theoneexceptiontopaywhenpaid The right to withhold payment only if the contractexpresslystatesthisright. Still required to comply with Notice provisions. So must serve a Pay Less Notice if the insolvency is after the Due Date but before thelastdaytoserveaPayLessNotice.

2011
Adjudication Contractsnolongerinwriting. Section107oftheOldActnolongerapplies. All the case law on what was and wasnt a contract evidenced in writing no longer applies. Moreadjudication? Increased challenges and uncertainty in dealing with oral/part oral contracts in adjudication.

2011
Adjudication The Agreement to refer disputes to adjudicationmustbeinwriting. IfnotthentheSchemewillapply. Adjudication Agreement must include a slip rule. IfnoslipruleisincludedthentheSchemewill apply.

2011
AdjudicationCosts TheOldActsilentoncosts. NewActsaystheAdjudicatormustbeableto decidewhowillpayhisfees. Only exception is if an agreement is made in writingafter thegivingofaNoticeofIntention toRefertoAdjudication. Parties still able to allocate who should pay partycosts e.g.consultantorlawyertime. So called Tolent clauses only enforceable if they refer generically to Referring Party or RespondingParty.

2011
NoticeProvisionsandcalculatingtimeperiods Expresscontractualprovisionsonservice:
How? Where? When?
Expect any tribunal will uphold express provisionsinthecontract. Ifthecontractissilent:

TheOldActapplies

2011
Reminder of the Old Act provisions on Service Method:

Byanyeffectivemeans Timerunsfromreceipt Considerhowyouevidencereceipt Recordeddeliveryandfax Email
Outofofficereplies Deliveryfailures

2011
Calculatingtimeperiods TheOldActprovisions: When a period of days is specified then time begins to run immediately after the point in action e.g. if Notice of Suspension is to be
given(7daysisrequired)theniftheNoticewasreceivedon Monday the 7 days starts on Tuesday and suspension can takeplaceonthefollowingTuesday.
BanksHolidaysarenotcounted.

2011
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 the PaymentNotice. JCT Design & Build Subcontract 2011 version with bespoke amendments to provide for Subcontractor service of the PaymentNotice. JCT Standard Building Subcontract 2011 version with bespoke amendments to provide for Subcontractor service of the PaymentNotice. Track changed copy of the Old and New legislation to identify thechangesmade.

2011
Thankyouforyourtime

The New Construction Act - A Guide To The Changes

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