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Amendments to the Housing Grants, Construction and Regeneration Act 1996 - Ten Essential Points! [December 2011]

Following the introduction of the new construction legislation on 1st October 2011, Chris Holden examines the changes and highlights ten essential points that you should be aware of.

Payment
 
1.     Payment due dates can no longer be made contingent upon the performance of obligations under another contract (including a decision by any person as to whether such obligations have been performed). For example, the issue of a certificate of making good defects under a main contract.
 
2.     Payment due dates can no longer be made contingent upon the giving of a notice by the payer to the payee as to the sum due.
 
3.     Contracts must provide for the giving of a notice (payment notice), not later than 5 days after the payment due date, by the payer (or person specified by the payer) or by the payee, specifying the sum believed to be due at the payment due date (the notified sum), even if the sum is zero, showing the basis upon which the sum is calculated.
 
4.      If the contract provides that the payer is to give the payment notice and the payer fails to give a valid notice within the time specified (i.e. 5 days after the payment due date), the payee may give a payment notice to the payer, specifying the sum believed to be due at the payment due date (the notified sum). Subject to the giving by the payer of a valid pay less notice, the sum stated as due in the payee’s notice will be the sum payable by the final date for payment. The final date for payment will be deferred by a period equal to the period between the date upon which the payer ought to have given its payment notice and the date upon which the payee gave its payment notice.
 
5.      If the contract provides that a payment notice (e.g. by way of an application for payment) is to be given by the payee before the date on which the payer is due to give its payment notice, the payee’s notice (i.e. its application), subject to compliance with the requirements referred to at item 3 above, will constitute a payment notice and, subject to the giving by the payer of a valid pay less notice, the sum stated as due in the payee’s notice will be the sum payable by the final date for payment.
 
6.      In the circumstances described at item 5 above, the payee is not at liberty to issue any further payment notice in respect of that payment.
 
7.      The payer must pay the notified sum unless he gives a pay less notice, within the period specified in the contract before the final date for payment, specifying the sum he considers due on the date the pay less notice is due and the basis upon which that sum is calculated.
 
8.       In the absence of a pay less notice, the notified sum (whether correct or not) must be paid by the final date for payment.
 
Adjudication
 
9.      Contracts must contain provisions to the effect that the Adjudicator is at liberty to correct his decision so as to remove clerical or typographical error arising by accident or omission.
 
10.    Contracts must contain provisions to the effect that the Adjudicator is at liberty to allocate his fees and expenses between the parties.
 
JCT has amended their contracts to reflect the new legislation and have issued a new JCT 2011 suite of contracts.
 
ICE has published amendments for use with NEC 3 contracts which are subject to the Housing Grants, Construction and Regeneration Act 1996.  The changes in the payment provisions are made by amendments to Y(UK)2, and by additional conditions in the short contracts.
BEWARE!
Contracts entered into after 1 October 2011 which do not comply with the Act will be overridden by the new provisions. 
If you would like further advice or assistance relating to the provisions of the new legislation please do not hesitate to contact us:  email info@kerrigans.net or telephone 0151 647 8862.  
 
The information provided in this article is not a comprehensive analysis of the law and must not be treated as a substitute for legal or professional advice.  To the extent permitted by law, Kerrigans will not accept or otherwise be held liable for any loss or damage incurred in relying upon the contents of this article. Should you require any legal or professional advice about any of the topics covered in this article we recommend that you contact Kerrigans.

07/12

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