Q&A: CPD: Construction Act webinar September 2011

1. If a main contractor enters into its main contract with an Employer, for construction operations in England, dated 1 September 2011… *This question is required.

• ...all its sub-contracts should comply with the "old" law, because the main contract is dated before 1 October 2011.
• ...any sub-contracts dated before 1 October 2011 should comply with the "old" law, and any sub-contracts dated on or after 1 October 2011 should comply with the "new" amended Construction Act 1996.
• ...the situation is not clear; we will need to wait for a test case to see whether the "old" law or the "new" amended Construction Act 1996 applies to the sub-contracts.
• ...because the main contract is dated within a month of 1 October 2011, all sub-contracts should comply with the "new" amended Construction Act 1996.

2. What are the two key payment notices under the Construction Act 1996 (as amended)? *This question is required.

• The payment notice and withholding notice.
• The withholding notice and the pay less notice.
• The payment notice and the pay less notice.
• The application for payment and the pay less notice.

3. Who can serve the employer's formal notice (as the paying party under a construction contract), setting out how much the employer intends to pay? *This question is required.

• The employer or an architect, engineer or project manager "specified" in the contract.
• Only the employer.
• Only an architect, engineer or project manager "specified" in the contract.
• Anyone, as long as the notice is in writing.

4. You are a professional consultant. Your professional appointment (a construction contract) requires your client to notify you how much it intends to pay you each month, based on an agreed schedule of payments in your professional appointment. You haven't received any notice from your client this month, and you want to be paid. You should… *This question is required.

• ...do nothing, because if you don't get a notice from the employer, the amended Construction Act 1996 requires it to pay anyway.
• ...phone the employer to chase for payment, because a phone call can have contractual effect under the amended Construction Act 1996.
• ...wait until next month, because (under the amended Construction Act 1996) your client is prohibited from not paying you two months running.
• ...send a formal notice to your client, to start the formal payment process running under the amended Construction Act 1996, in the absence of your client's notice.

5. A main contractor wants to impose a contra-charge on a sub-contractor on a project carried out in England. The sub-contract is a construction contract dated 1 November 2011 and the sub-contract permits the main contractor to levy the contra-charge. The contra-charge would mean that the next monthly payment from the main contractor to the sub-contractor will be zero. The main contractor: *This question is required.

• Should serve the notices required by the sub-contract. The Construction Act 1996 requires notices in connection with payment to be served, even if the sum referred to in the notices will be zero.
• Should do nothing. The contra charge is an abatement and no notices are needed.
• Should respond to any notice from the sub-contractor requesting payment, otherwise it should do nothing.
• Should serve a withholding notice.

6. If a commercial property developer has a cash flow problem and can't pay its main contractor on time one month, assuming the main contract is dated on or after 1 October 2011 for construction operations in England or Wales, which one of these options gives the best description of the main contractor's right of suspension? The main contractor has a statutory right to: *This question is required.

• Give formal notice, and then suspend the performance of all its obligations under the main contract.
• Give formal notice, and then suspend the performance of any or all of its obligations under the main contract.
• Give formal notice, then suspend the performance of any or all of its obligations under the main contract, and then be entitled to an extension of time for the delay caused by that suspension and payment of a fair amount for the additional costs and expenses of that suspension.
• Give formal notice, then suspend the performance of some or all of its obligations under the main contract, and only start performing its obligations again when the employer has provided a bond or other appropriate payment security.

7. An architect and a structural engineer agree that the architect will pay the engineer £5,000 (plus VAT) to advise the architect on a structural element of the architect's detailed designs for a property developer. They reach this agreement on 5 November 2011. They reach this agreement:

• Scenario one: On the phone.
• Scenario two: On the phone, which they then confirm by exchange of emails.
• Scenario three: On the phone, as an addition to an existing written agreement between them (dated 5  October 2011) for the engineer to design the drainage systems for the same development.
• Scenario four: In an exchange of letters, as an addition to an existing agreement between them (dated 5 October 2011) for the engineer to design the drainage systems for the same development.

Which of these scenarios (at least potentially) describes a construction contract or construction contracts? *This question is required.

• Only scenario four.
• Only scenario two.
• Only scenarios two and four.
• All the scenarios: one, two, three and four.

8. A construction contract dated 1 December 2011, for construction operations in Wales, does not require an adjudicator to reach his decision within 28 days of the referral (or such longer period as is agreed by the parties after the dispute has been referred). Because of this omission: *This question is required.

• All of Part 1 of the Scheme for Construction Contracts (England and Wales) Regulations 1998 applies, as originally brought into force.
• Part of Part 1 of the Scheme for Construction Contracts (England and Wales) Regulations 1998 applies, as originally brought into force.
• All of Part 1 of the Scheme for Construction Contracts (England and Wales) Regulations 1998 applies, as amended by the Scheme for Construction Contract (England and Wales) (Amendment) (Wales) Regulations 2011.
• Part of Part 1 of the Scheme for Construction Contracts (England and Wales) Regulations 1998 applies, as amended by the Scheme for Construction Contract (England and Wales) (Amendment) (Wales) Regulations 2011.

9. An adjudicator has issued his decision, relating to a construction contract entered into after 1 October 2011, for construction operations in England. The relevant amended Scheme for Construction Contracts applied to the adjudication. The party ordered to make payment under the decision spots a simple arithmetic error in the decision, meaning it would have to pay more. Which of these statements best summarises the paying party's rights: *This question is required.

• It may ask the adjudicator to correct the error under the so-called slip rule within five days of the adjudicator's decision.
• It may ask the adjudicator to correct the error under the so-called slip rule within seven days of the adjudicator's decision.
• While the adjudicator may correct his decision, it's up to him to do so, and neither party may ask him to make that change.
• No changes are possible; an adjudicator's decision may be enforced by the courts even if it is wrong.

10. The amendments to the Construction Act 1996 include a ban on so-called Tolent clauses. Given this statutory ban: *This question is required.

• The parties can no longer give the adjudicator power to allocate his fees and expenses, or their legal costs, in any circumstances, whatever they say in their construction contract and whatever they agree in writing after the adjudication has started.
• The parties can give the adjudicator the power to allocate their legal costs between them, but he cannot allocate his fees and expenses, whatever they say in their construction contract and whatever they agree in writing after the adjudication has started.
• The parties can give the adjudicator power to allocate his fees and expenses between them in his decision, by agreeing (in writing) that he may do so.
• If a referring party asks the adjudicator to allocate his fees and expenses between the parties in the referral notice, it no longer matters what the construction contract says, that request means that he may do so.