The Local Democracy, Economic Development and Construction Act 2009 (the LDEDC) amends a number of key provisions in the Housing Grants, Construction and Regeneration Act 1996 (the HGCRA). It has recently been announced that the LDEDC will come into force on 1 April 2011 or (failing that) 1 October 2011.

The key changes brought in by the LDEDC are:

  • creation of a new payment regime including:
    • opportunity for payee to submit payment notice where the payer fails to do so;
    • replacement of withholding notices with notices of intention to pay less; and
    • prohibition of payments that are conditional on performance of obligations under another contract or a decision by any person as to whether obligations under another contract have been performed (pay when certified). Note: this does not apply where parties enter into a construction agreement for the carrying out of works by a third party. In this case payment under the primary contract would be dependent on the work by the third party being completed.
  • right for contractors to recover reasonable costs and expenses incurred as a result of suspension for non-payment.
  • extension of the HGCRA, and therefore the right to refer a dispute to adjudication, to oral contracts.
  • the slip rule, allowing an adjudicator to correct typographical mistakes in a decision, can be relied upon provided the contract states in writing that this rule applies.
  • prohibition of contract terms requiring the referring party to pay all of the costs of adjudication (also known as tolent clauses) which are agreed prior to the notice of an intention to refer a dispute to adjudication.