Practical Law

The genuine article? Does a valid payment notice need to set out the sum the payer genuinely considers due?

The requirement that a valid payment notice must set out “the sum the payer considers due” is often at the centre of payment disputes. The recent decision in Downs Road Development LLP v Laxmanbhai Construction (UK) Ltd, provides a necessary clarification around what this actually means, confirming that a valid payment notice must set out the sum the payer genuinely considers due.

In addition, the court refused to enforce the adjudicator’s decision, because the failure to consider a cross claim was a breach of the rules of natural justice and the decision could not be severed. Continue reading →

“I’m going to make him an offer he can’t refuse”, was Vito Corleone’s favourite negotiating tactic. While his methods are a far cry from how things are done in the construction industry, commercial pressure can be used to force a party to accept an unfavourable deal. When does such behaviour cross the line and become illegitimate pressure or duress? Is it where a party, possibly a monopoly, tells the other it will never deal with it again unless it gives up all its claims? That is the situation that the Supreme Court looked at recently but it is worth looking at how this works in a construction context. Continue reading →

As has been well-known in the industry for some time and is also now being picked up by the mainstream media, UK construction is currently under considerable pressure due to global shortages of key materials. The combination of a worldwide surge in demand for essential materials, as existing projects are revived and new projects are greenlit following the uncertainty of the pandemic, compounded with many other factors such as Brexit, congested transport routes, rises in shipping costs, labour shortages (particularly in the haulage sector) and even climate change have meant that UK builders are especially exposed. Key materials, including bagged cement, Scandinavian timber, steel and aluminium have all been affected and there does not appear to be any chance of relief, at least in the short-term.

Consequently, it is important that employers and contractors agree how to mitigate the risk to their projects of increased costs and delays as developments compete for a finite number of resources. Traditionally, employers would usually expect to pass the risk of obtaining materials onto the contractor and, more often than not in our experience, contractors would generally be willing to accept this position. However, we are increasingly seeing contractors becoming more reluctant to contract on this basis due to the uncertainties in the market. Continue reading →

Since the COVID-19 pandemic began, a key question for practitioners has been whether COVID-19 constitutes a force majeure event and so entitles parties to relief under contracts that include force majeure provisions. Much has been written on how little case law there is on this topic and how English law does not recognise force majeure as a standalone concept.

What is not asked so often, but most certainly should be, is what factors the party deciding whether an event constitutes force majeure should have regard to when making that decision. As the recent case of Dwyer (UK Franchising) Ltd v Fredbar Ltd illustrates, here there is no lack of case law. When exercising discretion under a contract, English law has clear principles in place. Failure to exercise these can lead to repudiatory breach.

This blog takes a closer look at this case focusing on the force majeure elements. Continue reading →