In October 2011 the scope of the Construction Act (Housing Grants Construction and Regeneration act – 1996) was extended to include contracts not in writing.
The Construction Act provides for adjudication and payment provisions where the parties to a construction contract do not make adequate provision in the contract for these essential cash-flow mechanisms – there are also provisions in the Act allowing the contractor or sub-contractor to suspend work, or part of the work, if they are not paid in accordance with the statutory scheme. If an application for interim payment is made within statutory scheme then unless the payer gives notice within the specified time the full application becomes a due debt and it can be rapidly and safely collected by a number of enforcement methods.
Anyone in the construction industry should ask themselves whether they fully understand the practical effect of the recently amended Act, whether their systems need to be revised to take account of those changes and whether they want to rely on a contractual mechanism of their own design or on the statutory scheme, they should also see whether they have the ability to suspend their own subcontractors in the event they wish to suspend against the party employing them. For more information or to ask a question.