Enterprise Bill 2016

On 4 May 2016, the Enterprise Act 2016 (“the Act”) received Royal Assent. The Act will be commenced in stages and has been enacted to help promote the growth of enterprise and small businesses within the UK.

One of the main provisions within the Act is the introduction of an implied term into every contract of insurance obliging insurers to pay insurance claims within a reasonable time. ‘A reasonable time’ will always include time to assess the claim, but reasonable is not defined. Factors such as the type of insurance, size and complexity of the claim and compliance with regulatory guidance will be relevant in the circumstances. If an insured party has suffered loss as a result of the insurer’s breach of the implied term, the insured can claim damages in respect of this over and above the sums due under the contract.  The insurer has a defence if it has reasonable grounds for failing to pay and  parties to a non-consumer insurance contract can choose to contract out of the requirement to pay claims in a reasonable time period. 

The Act also establishes a Small Business Commissioner (“SBC”) whose primary function will be to provide general advice and information to small businesses and consider complaints from small businesses relating to issues with payment.  Small businesses are those with a headcount of less than 50 and meet the small business turnover threshold, which is to be set by secondary legislation.

The type of advice that the SBC will provide will include general impartial advice about the principles of contract law, dispute resolution and complaint handling bodies who may be able to facilitate the resolution of disputes.  The SBC will also administer a complaints scheme that considers and determines “relevant complaints” and make recommendations as to how the issues in question might be remedied, mitigated or prevented in the future. “Relevant complaints” are complaints made by a small business which have an agreement to supply goods to a larger business, relate to an omission or failure to make a payment in connection with the supply of goods or services, or the relationship with the larger business relevant to the supply. Complaints relating to the adequacy of price payable or matters currently the subject of legal or adjudication proceedings will not be considered as they are excluded from the SBC’s remit. A determination made under the scheme will not be legally binding, but the SBC may publish a report of the complaint identifying the larger business respondent.    The SBC will not name the small business complainant unless they consent to being identified.

The Act also introduces provisions that devolve powers to local authorities to extend the Sunday trading hours of shops with a customer serving floor area of over 280 square metres.  Local authorities may do this by publishing a consent notice.  The Act also strengthens the rights of workers who want to opt out of working Sundays.  

Concession Contracts Regulations 2016

The Concession Contracts Regulations 2016 (“the Regulations”) came into force on 18 April this year.  The Regulations set out a regime which regulates the award of concession contracts in the UK, but do not apply to Scotland.

A concession contract is defined as either a works one, whereby a one of the contracting authorities or utilities entrusts execution of works to another party and the consideration is solely the right to exploit the works or the right to exploit the works together with payment, or a services concession contract whereby the provision of management services is entrusted in the same way. In either case the award of the contract must involve the transfer of operating risk to the concessionaire and the part of the risk transferred must involve “exposure to the vagaries of the market” so that any potential estimated loss is more than merely nominal.

The Regulations apply to contracting authorities as defined by the Public Contracts Regulations 2015 (“PCR”) and utilities regulated under the Utilities Contracts Regulations 2016 (“UCR”). Services concession contracts awarded on the basis of an exclusive right are excluded from the Regulations, as well as contracts awarded to an affiliated undertaking, together with various other exclusions copied across from the PCR and UCR.

Contracting authorities are required to publish a notice in the Official Journal of the EU for concession contracts worth £4,104,394 (excluding VAT) or more.  The contracting authority is then able to award the contract following their own procedure provided they comply with the principles of equal treatment, non-discrimination and transparency.  The award criteria must be objective, linked to the subject-matter of the concession contract, must not confer an unrestricted freedom of choice on the concession granter, and may include environmental criteria, social criteria, or criteria related to innovation.

A concession contract cannot be indefinite and if it lasts for more than five years the term cannot be longer than the period that it would reasonably be expected to take to recoup the investments made.  The Regulations largely codify the ECJ case law in relation to the modification of contracts, and include provisions whereby additional works can be provided in circumstances where the requirement was not foreseen by the utility.  The Regulations also confer a right enabling the utility to terminate  the contract where there has been an unlawful substantial modification to the contract, a contract has been awarded to a contractor that should have been excluded or the ECJ rules against the contract award procedure.

The Regulations introduce the same remedies regime as applied in the PCR and UCR, including the requirement of the provision of a debrief document detailing the reasons for the award of the tender.