As readers of our construction newsletter will be aware, there are substantial changes on the horizon for the way in which construction contracts operate. The Local Democracy, Economic Development and Construction Act 2009 was passed on 12 November 2009. However, the sections relating to construction contracts are not yet in force because the Scheme for Construction Contracts needs to be amended and a consultation process is currently being followed to make those amendments. The Government’s response to the consultation is expected to be published by 18 September 2010.
The major changes will mean:
- adjudication will be available for construction contracts that are not evidenced in writing.
- the party due to be paid monies can serve a Notice stating the money that they are owed and if the paying party does not respond, that amount becomes the sum that is due.
These are the most substantial changes and will have the most serious effects. Adjudication is already a form of rough justice. As it is going to be extended to construction contracts that are not evidenced in writing, it could mean adjudicators’ decisions are even more difficult to predict. Parties should ensure, therefore, that their construction contracts are formally written and agreed.
The option to avoid payment by not serving Notices will no longer be available and if parties do not serve appropriate Notices in the correct timetables then monies may have to be paid that are not due. However, this should stop people from avoiding payment of monies that are due.
We will update you on the full changes as soon as they are available. If you do not already receive our construction newsletter please email jennie.skingsley@birkettlong.co.uk
Peter Allen
peter.allen@birkettlong.co.uk
