Changes to construction legislation coming into force on 1 October 2011 (1 November 2011 in Scotland) will incorporate revisions to the fair payment and adjudication provisions required to be included in construction contracts. Unless developers are careful about updating their construction contracts, they may unwittingly find that the provisions they believe to be agreed are replaced with something stricter.
The changes include an overhaul of the payment procedure, with the “withholding notice” process replaced by a new “pay less notice” system. Contractors’ and consultants’ remedies following suspension for non-payment have been widened. The provisions now also apply to contracts which are not in writing.
Unless developers entering into construction contracts specifically address the changes in their bespoke contracts, or use updated standard form contracts, they run the risk that the statutory regime takes precedence. Updated JCT contracts which are compliant with these changes will be published in the next couple of weeks.
Unfortunately the legislation is not particularly well drafted and the proposed changes are difficult to interpret. For those of you concerned about the impact on your construction contracts, our experts Christopher Parrott, Jonathan Stone, and Elinor Crowther have prepared a detailed alert covering the changes to the Act which can be accessed if you follow this link.