The Construction Act - Housing Grants, Construction and Regeneration Act 1996 (HGCRA)
The provisions under the HGCRA 1996 and modified
by the LDEDCA 2009
Commonly known as the Construction Act, The Housing, Grants, Construction and Regeneration Act 1996 (HGCRA 1996) (“The Act”) was introduced following the publication of the report, “Constructing the Team”, by Sir Michael Latham.
The Act aims to address the perceived issues within the Construction Industry concerning payment and the parties’ abilities to have determination on a dispute. Sir Michael Latham’s findings were based largely on the difficulty firms faced within the industry in getting prompt payment and resolution of disputes on monies owed. This was leading to poor payment time and increasing instances of insolvency. The introduction of the construction adjudication process was aimed at addressing this.
Subsequently, the Act has been modified by the provisions of the Local Democracy, Economic Development and Construction Act 2009 (LDEDCA) that came into force from the 1st October 2011. The main intention of these changes are to increase the scope of what falls under a construction dispute and therefore would be covered by the adjudication process.
What the Construction Act aims to achieve?
The Act and its subsequent amendments are intended to:
- Provide a party to a contract the right to refer a dispute to adjudication for determination of the issue.
The Act requires that:
- where there exists a contract, that contract should provide for the mechanism and provision of Adjudication
- should the contract not incorporate such provisions for adjudication, the Act will imply such terms into the contract through a set of procedures, known as The Scheme
Where a construction contract does not include such provisions, the Act will imply terms into the contract. Provisions for payments under the Act (as modified by the LDEDCA) provide:
- Entitlement to Stage payments (s109)
- Dates for Payment (s110)
- Payment Notices: Contractual Requirements (s110A)
- Payment Notices: Payee’s notice in default of Payer’s notice (s110B)
- Requirement to pay notified Sum (s111)
- Right to suspend performance for non-payment (s112)
- Prohibition of conditional payment provisions (s113)