Hybrid construction contract
Contents |
[edit] Introduction
A contract is a promise or set of promises between two or more parties (the promisor and the promisee) which the law will enforce. In the procurement of construction, contracts are frequently standard, modified or bespoke. They can also be hybrid.
Hybrid contracts are agreements that cover those activities defined under the Housing Grants, Construction and Regeneration Act 1996. This includes construction and non-construction activities.
Section 105 of the Act defines construction activities (classified as a broad range of operations) covered with certain industry-specific exclusions. Non-construction activities are also defined in the Act, but they are only covered under a hybrid contract.
[edit] Hybrid contracts and payment
According to a 6 March 2020 London court ruling, the Act no longer requires hybrid contracts to identify specific construction and non-construction activities. The case of C Spencer Ltd (CSL) v M W High Tech Projects UK Limited (MW) exposed a lack of clarity regarding payments to the contractor (MW) and the subcontractor (CSL) during a project to construct a waste to energy power plant.
This ambiguity around construction and non-construction activities was the cause of court decisions in the past. However, the 2020 ruling stated that the phrase “only in so far as it relates to construction operations" was not necessary with regard to payment terms for non-construction activities in hybrid contracts.
This is clarified further by Simmons+Simmons:
"Hybrid construction contracts are those which include both construction operations covered by the Housing Grants, Construction and Regeneration Act 1996 (the Act) and non-construction operations. The Act has been of great assistance to the construction industry by providing clear and certain provisions in respect of payment applications and the dispute resolution procedure, which has in turn improved cash flow. However, the Act is not as comprehensive as some might have hoped. The use of ‘hybrid contracts’, i.e. those which include both construction operations (as defined by s.104 of the Act) and non-construction operations (not covered by the Act), has resulted in uncertainty.
"The dispute between M W High Tech Projects UK Limited (MW) and C Spencer Ltd (CSL) arose out of this uncertainty. In this case, the court found that payment notices for hybrid construction contracts do not need to separately identify the sums owing for ‘construction operations’, together with the basis of the breakdown, in order to be valid."
[edit] Related articles on Designing Buildings Wiki
- Act.
- Construction contract.
- Construction contract conditions
- Fair payment practices.
- Housing Grants, Construction and Regeneration Act HGRA.
- Modifying clauses in standard forms of construction contract.
- Scheme for Construction Contracts.
[edit] External resources
- England and Wales Court of Appeal (Civil Division) Decisions, C Spencer Ltd v M W High Tech Projects UK Limited [2020 EWCA Civ 331 (06 March 2020)].
- Legislation.gov.uk, Housing Grants, Construction and Regeneration Act 1996.
- Out-Law News, Court of Appeal clarifies UK Construction Act treatment of hybrid contracts, 9 March 2020.
- Simmons + Simmons, Hybrid construction contracts - payment notices.
Featured articles and news
A change to adoptive architecture
Effects of global weather warming on architectural detailing, material choice and human interaction.
How big is the problem and what can we do to mitigate the effects?
Overheating guidance and tools for building designers
A number of cool guides to help with the heat.
The UK's Modern Industrial Strategy: A 10 year plan
Previous consultation criticism, current key elements and general support with some persisting reservations.
Building Safety Regulator reforms
New roles, new staff and a new fast track service pave the way for a single construction regulator.
Architectural Technologist CPDs and Communications
CIAT CPD… and how you can do it!
Cooling centres and cool spaces
Managing extreme heat in cities by directing the public to places for heat stress relief and water sources.
Winter gardens: A brief history and warm variations
Extending the season with glass in different forms and terms.
Restoring Great Yarmouth's Winter Gardens
Transforming one of the least sustainable constructions imaginable.
Construction Skills Mission Board launch sector drive
Newly formed government and industry collaboration set strategy for recruiting an additional 100,000 construction workers a year.
New Architects Code comes into effect in September 2025
ARB Architects Code of Conduct and Practice available with ongoing consultation regarding guidance.
Welsh Skills Body (Medr) launches ambitious plan
The new skills body brings together funding and regulation of tertiary education and research for the devolved nation.
Paul Gandy FCIOB announced as next CIOB President
Former Tilbury Douglas CEO takes helm.
UK Infrastructure: A 10 Year Strategy. In brief with reactions
With the National Infrastructure and Service Transformation Authority (NISTA).
Ebenezer Howard: inventor of the garden city. Book review.
Airtightness Topic Guide BSRIA TG 27/2025
Explaining the basics of airtightness, what it is, why it's important, when it's required and how it's carried out.