The Local Democracy, Economic Development and Construction Act 2009 (“Act”) is set to amend the law relating to construction contracts and part II of the Housing Grants, Construction and Regeneration Act 1996 (“HGCRA”). The Act received Royal Assent on 12 November 2009 but Part 8 (construction contracts) is yet to come into force.
The general consensus was that the Act would reform the law relating to construction contracts, producing a fair and efficient adjudication system. However, this view is less than conclusive. Some industry experts doubt whether, in reality, the changes brought about by the Act will have any practical impact. Others, express concern over the disruption that new payment and adjudication provisions will have on standard form contracts.
As yet, no date has been set for when Part 8 will come into force. One thing is clear though. This cannot happen until the secondary legislation, the Scheme for Construction Contracts (England and Wales) Regulations 1998, has been amended to reflect the changes brought about by the Act. Some industry circles predict that the Act may come into force in 2011.
However, this is far from definitive given that the consultation process for these amendments closed on 18 June 2010. There still remains a great deal of uncertainty as to when (or even if) the Act will come into force. Until then, we must continue to look to the HGCRA in its present form for authority.