The Scheme for Construction Contracts (Scotland) Amendment Regulations 2011

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Scheme for Construction Contracts (Scotland) Regulations 1998 (“the Regulations”), in part to reflect changes made to the relevant primary legislation, the Housing Grants, Construction and Regeneration Act 1996 (c.53) (“the 1996 Act”), by the Local Democracy, Economic Development and Construction Act 2009 (c.20) (“the 2009 Act”)

Where the parties to a construction contract fail to make provision in their contract for one or more of the various terms relating to “adjudication” (a dispute resolution procedure which the 1996 Act introduced as regards disputes under construction contracts) the provisions of Part I of the Schedule to the Regulations (“the Scheme”) have effect (as implied terms of the parties’ contract).

Regulation 3 updates and amends Part I of the Scheme. Regulation 3(3), in particular, introduces provision to the effect that clerical or typographical errors of the adjudicator’s decision may be corrected, colloquially referred to as the ‘slip rule’. Regulation 3(4) amends paragraph 25 of the Scheme to provide that the adjudicator may apportion liability for payment of the fees and expenses unless the contract contains an effective provision for that purpose.

Regulation 4 amends Part II of the Scheme. Part II of the Scheme concerns “payments” and implies into the contract provisions relating to payments to the effect that express terms are absent or deficient.

Section 110A of the 1996 Act as amended provides that a construction contract must contain a provision to the effect that a “payment notice” (setting out, in relation to every payment, the sum considered due) must be given by the person whom the parties have agreed – the payer, the payee or certain other persons. Where the parties have failed to make express provision in the contract as to who is to give such notices, regulation 4(2) substitutes a new paragraph 9 of Part II of the Scheme to the effect that this is the payer’s responsibility.

Section 111 of the 1996 Act as amended introduces a requirement to pay the sum set out in such “payment notices” (whether given pursuant to express terms in the parties’ contract or by virtue of new paragraph 9 of Part II of the Scheme). It also makes provision for the sum in such a notice to be challenged or revised by the giving of a type of counter-notice – a notice of intention to pay less than the notified sum. Regulation 4(3) substitutes a new paragraph 10 of Part II of the Scheme and thereby makes provision for the timing of such a counter notice where the parties have failed to agree on this.

A Business and Regulatory Impact Assessment of the effect which these Regulations are likely to have on business costs has been carried out and is available on the Scottish Procurement and Commercial Directorate’s website at www.scotland.gov.uk/procurement.