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Housing Grants, Construction and Regeneration Act 1996
This apparently innocuous sounding act has had the most far-reaching effects on the construction industry. Section 1 concerns housing grants and regeneration, as the name suggests. Section 2, however, sets up an adjudication system for all contracts connected with construction. The scope is very wide ranging, from such things as security and communication systems to painting and decorating of any building or structure.
The apparent intention is to provide a quick route to resolution of construction disputes. The problem is that, following notification of referral to adjudication, the adjudicator has to be appointed within 7 days, and give his ruling within 28 days. This is fine if the dispute involves what colour a wall was painted, but is way too short for a complex construction dispute.
The referring party can spend months preparing their position, leaving the other party only a couple of weeks to mount a sensible response. The scope for ambush is obvious.
Any construction contract must include adjudication provisions in accordance with the Act, otherwise the provisions of the 'Scheme for Construction Contracts' will apply. You don't want to do this.
The Act also includes requirements for payment provisions, banning, for example, 'pay when paid' provisions for sub-contractors and setting out timescale provisions.
Major construction projects, where the contracts are drawn up by professionals, will normally take account of these provisions. A 'Construction Contract evidenced in Writing' can, however, be created by an informal agreement to carry out any of a wide range of activities if one party makes a note to that effect in his diary.
Take advice before entering into a construction contract, document what is agreed and how payment is to be made, and ensure a proper adjudication procedure is included.
We are engineers who implement the regulations, not lawyers, and this section covers the areas of legislation with which we are routinely involved. The information in this site is a general overview of the legislation and may well be affected by the particular circumstances of your case.
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