1. In this Part a “construction contract” means an agreement with a person for any of the following—
(a) the carrying out of construction operations;
(b) arranging for the carrying out of construction operations by others, whether under sub-contract to him or
otherwise;
(c) providing his own labour, or the labour of others, for the carrying out of construction operations.
2. References in this Part to a construction contract include an agreement—
(a) to do architectural, design, or surveying work, or
(b) to provide advice on building, engineering, interior or exterior decoration or on the laying-out of landscape,
in relation to construction operations.
3. References in this Part to a construction contract do not include a contract of employment (within the meaning of
the [1996 c. 18.] Employment Rights Act 1996).
4. No such order shall be made unless a draft of it has been laid before and approved by a resolution of each
House of Parliament.
1. This Part does not apply—
(a) to a construction contract with a residential occupier (see below), or
(b) to any other description of construction contract excluded from the operation of this Part by order of the
Secretary of State.
2. A construction contract with a residential occupier means a construction contract which principally relates to operations on a dwelling which one of the parties to the contract occupies, or intends to occupy, as his residence. In this subsection “dwelling” means a dwelling-house or a flat; and for this purpose—
3. The Secretary of State may by order amend subsection (2).
4. No order under this section shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.
1. The provisions of this Part apply only where the construction contract is in writing, and any other agreement between the parties as to any matter is effective for the purposes of this Part only if in writing.
The expressions“agreement”, “agree” and “agreed” shall be construed accordingly.
2. There is an agreement in writing—
(a) if the agreement is made in writing (whether or not it is signed by the parties),
(b) if the agreement is made by exchange of communications in writing, or
(c) if the agreement is evidenced in writing.
3. Where parties agree otherwise than in writing by reference to terms which are in writing, they make an
agreement in writing.
4. An agreement is evidenced in writing if an agreement made otherwise than in writing is recorded by one of the parties, or by a third party, with the authority of the parties to the agreement.
5. An exchange of written submissions in adjudication proceedings, or in arbitral or legal proceedings in which the existence of an agreement otherwise than in writing is alleged by one party against another party and not denied by the other party in his response constitutes as between those parties an agreement in writing to the
effect alleged.
6. References in this Part to anything being written or in writing include its being recorded by any means.
1. A party to a construction contract has the right to refer a dispute arising under the contract for adjudication
under a procedure complying with this section.
For this purpose “dispute” includes any difference.
2. The contract shall—
(a) enable a party to give notice at any time of his intention to refer a dispute to adjudication;
(b) provide a timetable with the object of securing the appointment of the adjudicator and referral of the dispute to him within 7 days of such notice;
(c) require the adjudicator to reach a decision within 28 days of referral or such longer period as is agreed by the parties after the dispute has been referred;
(d) allow the adjudicator to extend the period of 28 days by up to 14 days, with the consent of the party by whom the dispute was referred;
(e) impose a duty on the adjudicator to act impartially; and
(f) enable the adjudicator to take the initiative in ascertaining the facts and the law.
3. The contract shall provide that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement.
The parties may agree to accept the decision of the adjudicator as finally determining the dispute.
4. The contract shall also provide that the adjudicator is not liable for anything done or omitted in the discharge or purported discharge of his functions as adjudicator unless the act or omission is in bad faith, and that any employee or agent of the adjudicator is similarly protected from liability.
5. If the contract does not comply with the requirements of subsections (1) to (4), the adjudication provisions of the Scheme for Construction Contracts apply.
6. For England and Wales, the Scheme may apply the provisions of the [1996 c. 23.] Arbitration Act 1996 with such adaptations and modifications as appear to the Minister making the scheme to be appropriate.
For Scotland, the Scheme may include provision conferring powers on courts in relation to adjudication and
provision relating to the enforcement of the adjudicator’s decision.
1. A party to a construction contract is entitled to payment by instalments, stage payments or other periodic
payments for any work under the contract unless—
(a) it is specified in the contract that the duration of the work is to be less than 45 days, or
(b) it is agreed between the parties that the duration of the work is estimated to be less than 45 days.
2. The parties are free to agree the amounts of the payments and the intervals at which, or circumstances in
which, they become due.
3. In the absence of such agreement, the relevant provisions of the Scheme for Construction Contracts apply.
4. References in the following sections to a payment under the contract include a payment by virtue of this section.
1. Every construction contract shall—
(a) provide an adequate mechanism for determining what payments become due under the contract, and when,
and
(b) provide for a final date for payment in relation to any sum which becomes due.
The parties are free to agree how long the period is to be between the date on which a sum becomes due and the final date for payment.
2. Every construction contract shall provide for the giving of notice by a party not later than five days after the
date on which a payment becomes due from him under the contract, or would have become due if—
(a) the other party had carried out his obligations under the contract, and
(b) no set-off or abatement was permitted by reference to any sum claimed to be due under one or more other
contracts, specifying the amount (if any) of the payment made or proposed to be made, and the basis on
which that amount was calculated.
3. If or to the extent that a contract does not contain such provision as is mentioned in subsection (1) or (2), the
relevant provisions of the Scheme for Construction Contracts apply.
1. A party to a construction contract may not withhold payment after the final date for payment of a sum due under
the contract unless he has given an effective notice of intention to withhold payment.
The notice mentioned in section 110(2) may suffice as a notice of intention to withhold payment if it complies with the requirements of this section.
2. To be effective such a notice must specify—
(a) the amount proposed to be withheld and the ground for withholding payment, or
(b) if there is more than one ground, each ground and the amount attributable to it,
and must be given not later than the prescribed period before the final date for payment.
3. The parties are free to agree what that prescribed period is to be.
In the absence of such agreement, the period shall be that provided by the Scheme for Construction Contracts.
4. Where an effective notice of intention to withhold payment is given, but on the matter being referred to
adjudication it is decided that the whole or part of the amount should be paid, the decision shall be construed
as requiring payment not later than—
(a) seven days from the date of the decision, or
(b) the date which apart from the notice would have been the final date for payment,
whichever is the later.
1. Where a sum due under a construction contract is not paid in full by the final date for payment and no effective
notice to withhold payment has been given, the person to whom the sum is due has the right (without prejudice
to any other right or remedy) to suspend performance of his obligations under the contract to the party by
whom payment ought to have been made (“the party in default”).
2. The right may not be exercised without first giving to the party in default at least seven days' notice of intention
to suspend performance, stating the ground or grounds on which it is intended to suspend performance.
3. The right to suspend performance ceases when the party in default makes payment in full of the amount due.
4. Any period during which performance is suspended in pursuance of the right conferred by this section shall be
disregarded in computing for the purposes of any contractual time limit the time taken, by the party exercising
the right or by a third party, to complete any work directly or indirectly affected by the exercise of the right.
Where the contractual time limit is set by reference to a date rather than a period, the date shall be adjusted accordingly.
1. A provision making payment under a construction contract conditional on the payer receiving payment from a
third person is ineffective, unless that third person, or any other person payment by whom is under the contract
(directly or indirectly) a condition of payment by that third person, is insolvent.
2. For the purposes of this section a company becomes insolvent—
(a) on the making of an administration order against it under Part II of the [1986 c. 45.] Insolvency Act 1986,
(b) on the appointment of an administrative receiver or a receiver or manager of its property under Chapter I of
Part III of that Act, or the appointment of a receiver under Chapter II of that Part,
(c) on the passing of a resolution for voluntary winding-up without a declaration of solvency under section 89 of
that Act, or
(d) on the making of a winding-up order under Part IV or V of that Act.
3. For the purposes of this section a partnership becomes insolvent—
(a) on the making of a winding-up order against it under any provision of the Insolvency Act 1986 as applied by
an order under section 420 of that Act, or
(b) when sequestration is awarded on the estate of the partnership under section 12 of the [1985 c. 66.]
Bankruptcy (Scotland) Act 1985 or the partnership grants a trust deed for its creditors.
4. For the purposes of this section an individual becomes insolvent—
(a) on the making of a bankruptcy order against him under Part IX of the [1986 c. 45.] Insolvency Act 1986, or
(b) on the sequestration of his estate under the Bankruptcy (Scotland) Act 1985 or when he grants a trust deed
for his creditors.
5. A company, partnership or individual shall also be treated as insolvent on the occurrence of any event
corresponding to those specified in subsection (2), (3) or (4) under the law of Northern Ireland or of a country
outside the United Kingdom.
6. Where a provision is rendered ineffective by subsection (1), the parties are free to agree other terms for
payment.
In the absence of such agreement, the relevant provisions of the Scheme for Construction Contracts apply.
1. The Minister shall by regulations make a scheme (“the Scheme for Construction Contracts”) containing provision
about the matters referred to in the preceding provisions of this Part.
2. Before making any regulations under this section the Minister shall consult such persons as he thinks fit.
3. In this section “the Minister” means—
(a) for England and Wales, the Secretary of State, and
(b) for Scotland, the Lord Advocate.
4. Where any provisions of the Scheme for Construction Contracts apply by virtue of this Part in default of
contractual provision agreed by the parties, they have effect as implied terms of the contract concerned.
5. Regulations under this section shall not be made unless a draft of them has been approved by resolution of
each House of Parliament.
1. The parties are free to agree on the manner of service of any notice or other document required or authorised
to be served in pursuance of the construction contract or for any of the purposes of this Part.
2. If or to the extent that there is no such agreement the following provisions apply.
3. A notice or other document may be served on a person by any effective means.
4. If a notice or other document is addressed, pre-paid and delivered by post—
(a) to the addressee’s last known principal residence or, if he is or has been carrying on a trade, profession or
business, his last known principal business address, or
(b) where the addressee is a body corporate, to the body’s registered or principal office,
it shall be treated as effectively served.
5. This section does not apply to the service of documents for the purposes of legal proceedings, for which
provision is made by rules of court.
6. References in this Part to a notice or other document include any form of communication in writing and
references to service shall be construed accordingly.
1. For the purposes of this Part periods of time shall be reckoned as follows.
2. Where an act is required to be done within a specified period after or from a specified date, the period begins
immediately after that date.
3. Where the period would include Christmas Day, Good Friday or a day which under the [1971 c. 80.] Banking and
Financial Dealings Act 1971 is a bank holiday in England and Wales or, as the case may be, in Scotland, that day
shall be excluded.
1. This Part applies to a construction contract entered into by or on behalf of the Crown otherwise than by or on
behalf of Her Majesty in her private capacity.
2. This Part applies to a construction contract entered into on behalf of the Duchy of Cornwall notwithstanding any
Crown interest.
3. Where a construction contract is entered into by or on behalf of Her Majesty in right of the Duchy of Lancaster,
Her Majesty shall be represented, for the purposes of any adjudication or other proceedings arising out of the
contract by virtue of this Part, by the Chancellor of the Duchy or such person as he may appoint.
4. Where a construction contract is entered into on behalf of the Duchy of Cornwall, the Duke of Cornwall or the
possessor for the time being of the Duchy shall be represented, for the purposes of any adjudication or other
proceedings arising out of the contract by virtue of this Part, by such person as he may appoint.
Generally
1. These adjudication rules apply to disputes which arise between the customer and the contractor (sometimes
referred to as 'the parties') under the Building Contract for a Home Owner / Occupier ('the building contract').
2. The Customer or the Contractor can apply for adjudication on any dispute which arises under the building
contract from the date the work starts until 6 years after it has finished.
3. An Adjudicator can be appointed either by the Royal Institution of Chartered Surveyors (RICS) or the Royal
Institute of British Architects (RIBA). Each of these bodies is called 'an appointed body'.
4. Ifthe Customer of the Contractor wants to have a dispute decided by an adjudicator, he must complete the
application form and send it with a payment of £94 (£80+VAT) to one of the above appointed bodies. (The
payment covers the appointing body's administration costs).
5. Within 48 hours of receiving the application the appointing body will confirm receipt in writing to both Customer
and Contractor.
6. The appointing body will appoint an Adjudicator within 7 days of giving written confirmation of receipt of the
application.
7. If the Customer and the Contractor have each applied for Adjudication about the same dispute, but one of
them has applied to the RICS and the other has applied to the RIBA, the Adjudicator will be appointed by the
appointing body whose date of confirmation or receipt of the application is earlier.
8. If either the Customer or the Contractor applies for Adjudication but the other person starts Court Proceedings
about the same dispute, the Adjudication can still go ahead pending settlement of the dispute by the Court.
9. Once the Adjudicator is appointed, the role of the appointed body is at an end and all further communications
must be made directly to the Adjudicator.
10. The adjudicator will charge an hourly fee for his services. He will tell the Customer and the Contractor, before
he begins the adjudication process, what his fee will be. The amount of fee will depend on the complexity of
the issues in dispute, but will not exceed £75 per hour up to a maximum of 10 hours. This is regardless of how
many additional hours the adjudicator actually spends on the adjudication.
11. When he makes his decision the adjudicator will state whether the Customer or Contractor is to
be responsible for paying his fees, or whether payment is to be responsible is to be divided between them
in a proportion that the adjudicator decides.
12. The adjudication can also order that the application payment of £94 made by one party should be reimbursed
to him by the other party.
13. If the party responsible for paying any or all of the Adjudicator's fees does not pay them, the Adjudicator can
take the Court proceedings against that party to recover the amount not paid. The adjudicator will not claim
that unpaid amount from the other party.
14. The Customer and the Contractor will be responsible for their own costs in preparing for the Adjudication,
e.g. Costs for professional advice and getting documents together.
15. As soon as possible after his appointment, the Adjudicator will notify the Customer and the Contractor that he
will be carrying out the Adjudication. At this point he may ask them for information about the dispute.
16. The Adjudicator will act fairly between the Customer and the Contractor, and will carry out the adjudication by
reference to the terms of the building contract.
17. If he wishes, the Adjudicator can visit the premises where the work has been carryed out. The visit will be at
any time when the Customer and Contractor are expected to be present. During the visit the Adjudicator can
examine the work and ask questions about the dispute. The Customer and Contractor will co-operate with
the Adjudicator and give any information he needs.
18. If either party chooses not to be present when the Adjudicator visits the premises , the Adjudicator can go
ahead in their abscence.
19. If the dispute is about payment, the Adjudicator can order the Customer to pay the Contractor, with interest,
any amount which he decides is appropriate. The Adjudicator can also order the Contractor to repay the
Customer, with interest, any money he decides is appropriate. The rate of interest will be no more than 5%
above the Bank of England Base Rate current at the date the Adjudicator considers that interest shall apply
and will run for such period as the adjudicator thinks fit.
20. The Adjudicator will give his decision in writing no later than 21 days after being appointed. He will send a
copy of his decision to the Customer and the Contractor.
21. The Adjudicator is not required to give reasons for his decision.
22. The Customer and the Contractor must follow the Adjudicator's decision as part of their obligations under the
building contract, unless and until either party obtains a Court Judgement about the dispute which is different
from the decision of the Adjudicator.