Last edited 29 Oct 2020

Default in construction contracts

The CCRs 2013 UK Legislation 3134/2013 refers to Default. This default has a different meaning from 'defaulting' here, defined as a breach of contract.

The 'default' in CCRs 3134/2013 is an addition to the invoice which is automatically added without consent from the consumer. Default means the additional charge is continuously in operation, such that the consumer is opted-in to the charge by the trader without consent being received by the trader.

This might be an optional service charge percentage for good on-time work, added by coding the accounting system. The regulation requires express consent to have been received by the trader before the consumer is bound by the contract.

This 'default' in CCR 3134/2013 article 40 is not the same as here - to default, to fail to pay.The following paragraphs refer to 'fail to pay'.

A default is a non-material breach of contract, whereby one party fails to perform a contractual obligation. What specifically constitutes a default will be set out in the contract terms, but generally, it can be defined as an omission or a failure to do what is expected or required.

If one party defaults, the other party may make a claim for damages, but may not consider it is discharged from any further obligations under the contract. This prevents the innocent party from avoiding their overall obligations because of a minor breach of just one part of the contract.

This is different from a serious, material breach of contract (although the distinction is not clear cut) which may allow the innocent party to consider that they are discharged from any further obligations under the contract.

NB This use of the term default differs from its use with regard to a debt, which is when a debt has not been paid by its due date.

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