Guide to UK Statutes Affecting Construction Projects

There are two critical aspects relating to terms implied by statutes:

1) Consistency: statutorily implied terms can be implied which are inconsistent with an express term of the contract - any conflict is resolved as a matter of judicial interpretation;

2) Mandatory: some statutorily implied terms are mandatory and cannot be contracted out from – some are imposed on all relevant contracts, some implied piecemeal and some only when the parties have not made appropriate alternative provision.

The legislation affecting the construction industry covers topics such as:

Property (buying the land to develop) Planning (getting permission to develop) Contracts (with sellers of land or landowners, suppliers and subcontractors, employees) Carrying out the works (regulations and standards on building or products, codes, insurance,

subject-specific legislation1) Employees (health, safety and welfare, regulations on handling and use of equipment).

Some of the main statutes are summarised below:

Building Acts & Regulations

The Building Act 1984 and subsequent Building Regulations (now 2000) control the construction and design of buildings. The means of control is a combination of local authority inspectors and ‘approved inspectors’. The Building Regulations require that building work should meet the requirements of Schedule 1 as may be generally necessary to secure reasonable standards of health & safety for persons in and about buildings or matters connected with buildings. These regulations cannot be contracted out of. Regulation 7 requires anyone taking on work in connection with the provision of a new dwelling to (i) use adequate and proper materials, & (ii) carry out works in a workmanlike manner.

Construction Contracts

Housing Grants Construction and Regeneration Act 1996 (as amended) This implies terms into construction contracts if they do not meet the minimum requirements. The implied terms include (i) a right to adjudicate; (ii) rights to: payment by instalments, notices of payment and pay less, suspend for non-payment; (iii) other administrative provisions relating to payment. The Act also makes ‘pay when paid’ and ‘pay when certified’ clauses unenforceable except on insolvency

Residential Properties (Homes)

Defective Premises Act 1972 This implies terms into contracts for persons who take on work for/in connection with the provision of a new2 dwelling. The implied terms include: (i) that the work will be done in a good and workmanlike manner; (ii) that she will supply good and proper materials; and (iii) that the house will be reasonably fit for human habitation when built or completed

Interest on Late Payments

Late Payment of Commercial Debts (Interest) Act 1998 This implies terms into contracts between businesses if they have not provided an alternative substantial remedy. It allows late payers to be charged interest at 8% above base rate on qualifying debts, as well as being liable for a fixed sum as compensation.

Party Walls Party Wall etc Act 1996 This Act sets out a procedure for serving notices if certain works are being undertaken on or near a party wall.

Health and Safety

Construction Design and Management Regulations 2015 These regulations impose obligations on specific categories of people involved in a construction project with the aim of reducing the incidence of fatal and non-fatal injuries in the construction industry. Five categories of people have responsibilities: clients, designers, contractors, workers and principal contractors. The regulations also set out defined roles and duties for a principal designer and principal contractor. Competence and co-operation are critical to compliance.

Health and Safety at Work Act 1974 This Act consolidated earlier Acts dealing with the health, safety and welfare of employees. It applies to employees and the self-employed. It creates criminal liability for employers and employees, although the HSE policy on enforcing the Act emphasises prevention over prosecution. It also creates civil liability for breach of statutory duty and also by setting a reasonable standard against which the duty of care in negligence can be measured.

Goods and Services

The Consumer Protection Act 1987 The Product Liability Directive 85/374/EEC was implemented under the CPA 1987 and provided strict liability for death, personal injury and damage to private property from defective products. Building products are covered by the Act (s1(2)) although there are exemptions where products are to be incorporated into a building, structure or works.

Supply of Goods and Services Act 1982 (as amended) This Act applies to supply of services &/or materials in the course of business3 for money or exchange/barter; excludes contracts of employment. It implies terms into these contracts unless the contract includes alternative provisions. Terms implied include: (i) goods of satisfactory quality/reasonably fit for purpose (ii) services supplied with reasonable skill and care, and (iii) within a reasonable time; (iv) recipient will pay a reasonable charge. Sale of Goods Act 1979 (as amended) This Act applies to contracts for sale of goods for money (materials only). It prevents your contract excluding terms on title4. It implies terms into these contracts unless the contract includes alternative provisions. Terms implied include: (i) seller has title to goods; (ii) goods of satisfactory quality5, reasonably fit for purpose6 and corresponding with description or sample and free from defects.7

Author

Sarah Fox, a speaker and trainer on construction contracts and law. This is an abbreviated summary of relevant Acts. For more information, go to Designing Buildings Wiki.

Footnotes

1 E.g. the Party Wall Act 1996, Highways Act 1980.

2 See Jenson v Faux [2011] EWCA Civ 423 where the Court of Appeal confirmed the Act does not apply to the rectification of an

existing dwelling, however extensive. 3 S12 defines a contract for the supply of a service as “a contract under which a person…agrees to carry out a service…whether

or not goods are also (i) transferred or to be transferred, or (ii) bailed or to be bailed by way of hire....whatever is the nature of the consideration for which the service is to be carried out.”

4 Exclusion of s12 on title is void. Exclusion of ss13-15 is not possible in contracts with consumers; it is only possible in business

contracts if it is reasonable. 5 Under S14(2A) satisfactory quality is determined by reference to fitness for all usual purposes, aesthetics, freedom from minor

defects, safety and durability: S14(2B). See the Sale and Supply of Goods Act 1994. 6 Implied if reasonable to rely on seller’s skill and judgment. See BSS Group Plc v Makers (UK) Ltd (t/a Allied Services) [2011]

EWCA Civ 809 for a review of the fitness for purpose requirement. 7 S15 only applies to contracts between businesses. Note breach of these implied terms is a breach of a condition and provides a

right to reject the goods (not merely damages).