Hybrid construction contract
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| + | [[File:HybridContract.jpg]] | ||
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= Introduction = | = Introduction = | ||
| − | A contract is a promise or set of promises which the law will enforce. A contract is | + | A contract is a promise or set of promises which the law will enforce. A contract is agreed upon between the promisor and the promisee. |
| + | |||
| + | In the procurement of construction, contracts are frequently standard, modified or bespoke. They can also be hybrid. | ||
| − | + | Hybrid contracts are agreements that cover those activities defined under the Housing Grants, Construction and Regeneration Act 1996. This includes construction and non-construction activities. | |
| − | + | Section 105 of the Act defines construction activities (classified as a broad range of operations) covered with certain industry-specific exclusions. Non-construction activities are also defined in the Act, but they are only covered under a hybrid contract. | |
= Hybrid contracts and payment = | = Hybrid contracts and payment = | ||
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This ambiguity around construction and non-construction activities was the cause of court decisions in the past. However, the 2020 ruling stated that the phrase “"only in so far as it relates to construction operations" was not necessary with regard to payment terms for non-construction activities in hybrid contracts. | This ambiguity around construction and non-construction activities was the cause of court decisions in the past. However, the 2020 ruling stated that the phrase “"only in so far as it relates to construction operations" was not necessary with regard to payment terms for non-construction activities in hybrid contracts. | ||
| − | Out -Law News adds, | + | Out-Law News adds, |
“The Court also said that the legislation expressly recognised that hybrid contracts will exist in the construction industry, and if it had intended hybrid contracts to contain a term requiring a distinct break down of sums due in respect of construction operations only, it would have stated this clearly.” | “The Court also said that the legislation expressly recognised that hybrid contracts will exist in the construction industry, and if it had intended hybrid contracts to contain a term requiring a distinct break down of sums due in respect of construction operations only, it would have stated this clearly.” | ||
| Line 33: | Line 37: | ||
* Out-Law News, [https://www.pinsentmasons.com/out-law/news/court-of-appeal-clarifies-hybrid-contracts Court of Appeal clarifies UK Construction Act treatment of hybrid contracts], 9 March 2020. | * Out-Law News, [https://www.pinsentmasons.com/out-law/news/court-of-appeal-clarifies-hybrid-contracts Court of Appeal clarifies UK Construction Act treatment of hybrid contracts], 9 March 2020. | ||
| − | [[Category:DCN_Case_Law]] [[Category:DCN_Legislation]] [[Category:Case_law]] [[Category:Regulations]] [[Category:Contracts_/_payment]] | + | [[Category:DCN_Case_Law]] [[Category:DCN_Legislation]] [[Category:Case_law]] [[Category:Regulations]] [[Category:Contracts_/_payment]] [[Category:Procurement]] |
Revision as of 17:18, 30 September 2020
Contents |
Introduction
A contract is a promise or set of promises which the law will enforce. A contract is agreed upon between the promisor and the promisee.
In the procurement of construction, contracts are frequently standard, modified or bespoke. They can also be hybrid.
Hybrid contracts are agreements that cover those activities defined under the Housing Grants, Construction and Regeneration Act 1996. This includes construction and non-construction activities.
Section 105 of the Act defines construction activities (classified as a broad range of operations) covered with certain industry-specific exclusions. Non-construction activities are also defined in the Act, but they are only covered under a hybrid contract.
Hybrid contracts and payment
According to a 6 March 2020 London court ruling, the Act no longer requires hybrid contracts to identify specific construction and non-construction activities. The case of C Spencer Ltd (CSL) v MW High Tech Projects UK Limited (MW) exposed a lack of clarity regarding payments to the contractor (MW) and the subcontractor (CSL) during a project to construct a waste to energy power plant.
This ambiguity around construction and non-construction activities was the cause of court decisions in the past. However, the 2020 ruling stated that the phrase “"only in so far as it relates to construction operations" was not necessary with regard to payment terms for non-construction activities in hybrid contracts.
Out-Law News adds,
“The Court also said that the legislation expressly recognised that hybrid contracts will exist in the construction industry, and if it had intended hybrid contracts to contain a term requiring a distinct break down of sums due in respect of construction operations only, it would have stated this clearly.”
Related articles on Designing Buildings Wiki
- Act.
- Construction contract.
- Construction contract conditions
- Fair payment practices.
- Housing Grants, Construction and Regeneration Act HGRA.
- Modifying clauses in standard forms of construction contract.
- Scheme for Construction Contracts.
External resources
- England and Wales Court of Appeal (Civil Division) Decisions, C Spencer Ltd v M W High Tech Projects UK Limited [2020 EWCA Civ 331 (06 March 2020)].
- Legislation.gov.uk, Housing Grants, Construction and Regeneration Act 1996.
- Out-Law News, Court of Appeal clarifies UK Construction Act treatment of hybrid contracts, 9 March 2020.
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