As it is not the most common area of practice in law, construction can for the uninitiated can be like hammering a square peg into a round hole, whilst blindfolded. Pitfalls and traps await the unwary, and early advice from a specialist can save time, money and extended proceedings for all parties.
Understanding the language of construction law
Advice on construction law and documentation needs to be undertaken with a solid grasp of the specific statutory landscape surrounding the construction industry. The industry has not wholly re-written contract law, but both statute and implied terms are akin to elements of a secret language which pervade the contracts, overtaking the usual meaning of a phrase. A provision added to a contract which may at first glance appear simple, acceptable and understandable, is likely to need a second viewing in construction contracts.
Take for example the due date for a payment. That’s the date you have to pay it, when it is due to be paid, the date you would expect your money to arrive by, right? Yes, in usual terms, but not in construction. Due date is the date it is due, but not the date you would make the payment or expect to get your money - that would be the final date for payment. Only after the final date for payment is a missed payment late…unless there has been a pay less notice certifying no payment is to be made, in which case there will not be any money coming at all…subject to certain conditions precedent, a genuine belief in such value, and a valid notice with evidence of the calculation of the nil sum so stated. No wonder disputes around payment keep many construction lawyers consistently employed.
Typical commercial clauses used in other contracts are not safe from being upturned by the Courts enforcing the particular statutes applicable to construction law. As with all law, the Technology and Construction Court judgments evolve over time. In a 2024 case[1] the Court looked at the net contribution clause included in the consultancy appointment that the Architect wanted to rely upon in their defence and ruled they could not rely upon it in relation to Defective Premises Act 1972 claims, as Section 6(3) provides that a term that has the effect of excluding or restricting any liability arising under the DPA shall be void. This would apply to all limitation of liability clauses, contribution clauses, and time bar clauses - which would be of use in defence of a claim, other than one coming under the DPA, and are regularly included in appointments - and would have been expected to cover all of the consultant’s potential liabilities under their appointment.
Practical considerations
Then the practical things – like invoices. The accounts team need an invoice to be able to pay a contractor/sub-contractor; that is the business process to get the payment request approved to send payment to another company. You need to make sure you can get the invoice from the contractor/sub-contractor in time to make that payment before the final date for payment. Easy answer: add in a contract term that says the final date for payment is X days from the date of receipt of the invoice for the sum due, or that submitting a valid invoice is a condition of payment. No, you cannot apply this in construction law; the final date for payment is always linked to the due date and must be certain[2], also it cannot be contingent on a further event[3]. There are some ways to make it work, just not the obvious ones. If accounts do not pay just because there is no invoice (or it has the wrong value now and they “cannot” part pay), the paying party is likely in breach of contract and needs to fix it swiftly (never mind the invoice) or brace themselves for an adjudication that they cannot defend.
Expect the unexpected
Finally, like all disputes there is the risk of unexpected things being unearthed and construction litigation has its own foibles. The specifics surrounding invoices, payment applications, the Building Safety Act, DPA, limitations of liability, and limitation periods overall could lead you down the wrong road with the varied interpretations - not forgetting the interaction with insurance.
The requirement to adjudicate
Where you have a dispute in relation to a construction project there is a construction pre-action protocol. Not everyone is aware of it and not following it could end up costly, wasting valuable time and missing a good settlement opportunity. There is a statutory right for all parties to adjudicate “at any time” of a construction project, and what constitutes “construction” is a lot wider than you would think. Adjudication is not binding but has time restrictions you have to comply with, and does not abide by all the usual rules of litigation.-In fact many disputes are adjudicated and then still end up in litigation.
If in doubt, consult a construction law specialist
Overall, if you’re not regularly dealing with construction law and find yourself needing advice on construction related matters, we are more than happy to assist to whatever extent you require.
Whether it’s a simple piece of advice on drafting, or on the next stage of a matter, or advising on the strategy for adjudication or complex litigation proceedings, our construction team has the experience and commercial knowledge to help.