Providers need to be alive to the risk of contractors becoming insolvent and how to limit the resulting inevitable disruption.
A recent case¹ has confirmed that a professional appointment for construction will usually be a “construction contract” under the Construction Act².
The appointment in question was to provide design and engineering works for a rail link between Manchester and Leeds. A dispute arose over payment, which went to adjudication. The employer argued that the adjudicator had no jurisdiction to decide the case because their appointment was not a “construction contract”.
The test of whether an appointment is a “construction contract” is whether it relates to “construction operations”. The Court found that preparing designs for potential construction works was a “construction operation”, and, therefore, the designer could refer the dispute to an adjudicator.
When appointing construction professionals, clients should ensure that their appointments:
- include Construction Act-compliant payment provisions; and
- specify adjudication rules, such as the Technology and Construction Solicitors Association (TeCSA) Adjudication Rules.
Standard form professional appointments already cover this.
If you have any further questions about this briefing or have any other procurement concerns, please contact Alistair Smith.
1. Ove Arup & Partners International Ltd v Coleman Bennett International Consultancy Plc (2019).
2. The Housing Grants, Construction and Regeneration Act 1996.
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