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RIBA; PPC2000; IChemE and ICC - Are You Up-To-Date?

Scotland
01.10.2011
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In October 2011 RIBA, PPC 2000 and IChemE updated their standard form contracts for the amended Construction Act. The new ICC (which replaces ICE) contract, published in September 2011, was also further amended to address a number of issues with its original terms.

RIBA

RIBA has published amendments (free to download) to their 2010 suite of contracts. The main points to note are:

The new Act allows the payee, rather than the payer, to issue the payment notice thereby allowing the payee to fix the amount due. For the most part however amendments to standard form contracts for the building and engineering works themselves have in the main been what is called “payer led” i.e. where the payer dictates what is due. RIBA has adopted a “payee led” approach as its amendments provide that it is the Architect i.e. the payee who issues the payment notice. It is possible that many payers will wish to amend this.
This approach means that whatever is in the Architect’s payment notice is the sum due for payment by the final date for payment.
If the payer disagrees with the sums in the Architect’s payment notice, then it must serve a pay less notice (no later than 5 days before the final date for payment). Unlike withholding notices, pay less notices can deal with issues of value as well as any set-off or crossclaim. The pay less notice must therefore set out the sum considered due at the date of service of the notice together with the basis for calculation. RIBA has sensibly retained the requirement to set out the grounds for what is being withheld.
The new Act provides that on the insolvency of the payee a sum due for payment does not require to be paid where (a) the contract provides that on insolvency no further sums require to be paid and (b) the insolvency occurs after the period for issuing a pay less notice has expired. The implication from this is that if the insolvency occurred before the expiry of the period for issuing a pay less notice, UNLESS that had been issued, the sum remains due and payable. It is not at all certain that this will be the effect of such a provision of the new Act because the law of insolvency cannot be altered by this legislation. The RIBA amendments expressly state that on insolvency no payment requires to be made but say nothing about the requirement for the insolvency to occur after the period for issuing a pay less notice has expired. It would be advisable if the insolvency occurs before the period for issuing a pay less notice has expired, that a pay less notice is issued covering the non payment because of insolvency.


PPC 2000 and IChemE

The amendments for both PPC 2000 and IChemE are free to download. Both are payer led i.e. it is the payer who is to issue the payment notice. One point to note about the PPC 2000 amendments is that the amendments provide that the final date for payment shall be “the later of twenty (20) Working Days from the due date for payment and fifteen (15) Working Days from the date of receipt by the Client of any required VAT invoice from the Constructor in the same sum as the payment notice”mustreissue any required VAT invoice to reflect the sum stated in such notice. Pay Less Notices require to be served no later than 2 days before the final date for payment. Where a Pay Less Notice is served, the payee (i.e. the Constructor) “”. This will have the effect of bumping out the final date for payment.



ICC - Take 2

We have previously highlighted problems with the new ICC conditions. ICC subsequently published amendments which addressed some, but not all, of these problems:

The new conditions did not recognise that withholding notices have been replaced by pay less notices under the new Act. This problem has now been corrected - pay less notices must set out the sum due as at the date of the issue of the notice with an explanation for the sum stated as due, (clause 60(10)).
The new conditions failed to appreciate that where the contract allows for applications for payment by the contractor, (which the ICC contract does), there is no place for a payee default notice UNLESS the contractor doesn’t issue its application for payment. Revisals have been made to address this issue.
Clause 60(9)(b) has been amended to state that where the Employer’s Representative fails to issue a payment notice, the contractor’s statement “shall be the payment notice”. Leaving aside some potentially confusing terminology, this revisal recognises that the contractor’s monthly statement (i.e. its application for payment) automatically becomes the payee default notice in the absence of a valid payment notice.
The second part of clause 60(9)(b) talks about the contractor serving a payee default notice where the contractor has not previously submitted its monthly statement. Under this contract, the due date is linked to receipt of the contractor’s monthly statement. As such this scenario envisaged by the second part of clause 60 (9) (b) will arguably never arise.
The timescale between the payment notice and the final date for payment remains very tight – 3 days - leaving a very short window for the issue of any pay less notice.

This article was first published in Building in October 2011.

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