Payment amendments come into force

Construction Act amendments (Part 8 of the Local Democracy, Economic Development and Construction Act 2009) affecting both payment and adjudication came into force in England and Wales on 1 October and will come into force on 1 November in Scotland, with Northern Ireland expected to follow next April.

“The new legislation changes the payment notification system, allowing the contract to provide which party starts the process; if the payer does not issue a payment notice when it should, the payee can do so.  Withholding notices are replaced by ‘pay less’ notices, but it is now specifically provided that where a contract allows, a ‘pay less’ notice does not have to be issued in the event that the payee is insolvent.

All conditional payment provisions are now outlawed (that is, ‘pay when certified’ as well as ‘pay when paid’), except for first tier PFI contracts. It has also now been clarified that suspension for late/non payment can be of some or all contractual obligations and the payee now has the right to its reasonable expenses associated with the suspension.

“Wholly and partly oral contracts now come under the aegis of the legislation. With regards to adjudication decisions, a specific ‘slip rule’ has been included,” said Marion Rich, BCSA Director of Legal and Contractual Affairs.

“Also, there are controversial new provisions relating to party costs in adjudication designed to outlaw Bridgeway v Tolent clauses, whereby the contract provides that one party pays all the party costs, irrespective of outcome.”