The Housing Grants Construction and Regeneration Act

This article is all about the The Housing Grants, Construction and Regeneration Act which introduced the right to Adjudication to the construction industry.

Stravelles run a course in Adjudication which aims to allow the student to run their own Adjudication as the referring or responding party without paying for legal representation.

We support legal representation in more complex cases but we want to encourage especially smaller companies to feel more confident fighting for their contractual rights.

Introduction

The Housing Grants, Construction and Regeneration Act (also referred to as the Construction Act) is a piece of legislation introduced in 1996.

Intention

The intention of the act was to ensure payments from Clients to main contractors and from main contractors to subcontractors are made fairly and that any issues are resolved efficiently.

Who does the act apply to ?

It applies to all contracts for works defined as ‘construction operations’. This includes construction works as well as contracts with consultants.

Key features of the act

The introduces several new statutory rights including:

• right to adjudication (and lays out in detail the adjudication process that must be followed)
• right to interim or stage payments
• right to notice of any deductions from the total due
• right to suspend performance for non payment
• all pay when paid clauses are not allowed anymore

The Scheme for Construction Contracts 2009

In 2009 The Scheme for Construction Contracts was introduced. Like the later 2011 Amendments to the Act (see below) this scheme is an attempt to close down some loopholes to the act that appeared over the preceding decade.

These included:

• If a contract for construction operations does not fulfil the requirements of the Act then the Scheme for Construction Contracts applies instead.
• If there are no Adjudication clauses in writing then the scheme applies

2011 Amendments to the Construction Act and The Scheme

In October 2011 there were several amendments to The Construction act and to the Scheme to close some further loopholes that had been exposed during the preceding years of adjudication cases.

Some notable changes include:

• Construction contracts not in writing are now covered by the Act
• Clauses that say one side has to pay for the costs are Adjudication are not allowed anymore by the Act
• Adjudicators can correct any errors in their decision document within five days of issuing the decision
• All payment dates must be laid out within the contract
• The Client must issue a payment notice within five days of the payment date even if there is no money due.
• If the Client wants to withhold money the must issue a payless notice explaining why and how they came to their figures.
• Should the Client not issue a payment notice the contractor can issue a payment notice. If the Client does not issue a payless notice then they must pay the amount set out in the payment notice.
• Half of retention held must be released when the works reach practical completion
• A client cannot withhold payment because the work is not certified yet
• Contractor can suspend work for non payment and claim costs for loss and expense and extension of time