Parliament last month (July) announced that the new Construction Act will come into force in October. Originally expected to be introduced in April, the Act aims, once again, to improve payment practices and dispute resolution in the construction industry.
Specialist construction lawyers Hawkswell Kilvington say the amendments mean conditional ‘pay when certified’ payments will no longer be permitted because the release of retentions triggered by an event occurring upstream in the contract are prohibited.
Withholding notices are replaced by ‘pay-less’ notices that must give details of the sum proposed to be withheld and the basis on which that sum was calculated.
Rights to suspend work have been widened so if you don’t get paid you can (with seven days’ notice) suspend performance of any or all obligations under the contract and recover reasonable costs and expenses arising out of the suspension.
The new Act is intended to prohibit ‘Tolent clauses’ in contracts that require the referring party (usually a sub-contractor) to pay the responding party’s legal costs of adjudication.
However, it will be possible for contracts to contain a clause requiring sub-contractors to pay the full costs of both parties at adjudication if the ruling goes against them.
For more information about the changes go to the website www.legislation.gov.uk/ukpga/2009/20/notes/division/7/8