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Procurement and Outsourcing Journal: March/April 2016

Matthew Collingwood-Cooper and Mike Trodden look at the operation of pay less notices in construction contracts

In Harding v Paice [2015], the Court of Appeal revisited the authorities dealing with the consequences of a failure by a paying party to issue a pay less notice in accordance with the Housing Grants, Construction and Regeneration Act 1996 (as amended) (Construction Act). The Court of Appeal’s judgment means that different rules apply depending on whether a payment application is for an interim or a final account.

Neil Mirchandani and Alice Jowitt report on the role of mediation across the EU

The Mediation Directive (2008/52/EC, the Directive) is not necessarily something that contracting authorities in England and Wales think much about. The culture of mediation, and alternative dispute resolution (ADR) generally, is well embedded here, and when the Directive came into force in 2008 there was little the UK government needed to do by way of implementation. However, the situation is different in some other EU member states, where the Directive has been a force for good in promoting mediation as an alternative to legal proceedings, or as a means of resolving disputes before too much time and money is invested in the court or arbitration process.

Ian Green and James Hall analyse the implications of the Spending Review and Autumn Statement 2015 for housing

George Osborne’s Spending Review and Autumn Statement 2015 promises to double the housing budget from 2018/19 and focuses on support for low-cost home ownership for first-time buyers. We go behind the headlines to see what this could mean in practice.

Clare Auty and Doris Woo examine the application of penalty clauses in procurement contracts

The use of liquidated damages clauses and service credits, such as those found in many commercial contracts, including public service network supply agreements and managed service agreements, are subject to the penalty test established in Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co [1914]. Provisions deemed by courts to be penalty clauses are unenforceable and bear the following characteristics:

Dr Sam De Silva highlights the merits of a key commercial principles document

Given the complexity of strategic outsourcing contracts, once the parties have reached agreement on principle deal points, they may wish to shape a deal and qualify it at various stages by executing a non-binding key commercial principles document (also known as a heads of agreement or memorandum of understanding). The key commercial principles document is a short non-legal document that captures the essence of the deal under discussion. As such, it should provide sufficient information about the shape and scope of the deal to enable the parties’ legal advisors to produce an initial draft of the outsourcing contract.

Peter Kershaw pinpoints the arrival of a new era for major development opportunities

A key point I often find myself stressing in discussions with anybody considering investing time and money in developing land or property is that:

RPC

Mark Lynch considers the problems underlying the housing shortage

Headlines focus on the emotive issue of hard-working families being unable to afford their own homes, and the government’s pledge to get Britain building. However, the government’s massive pipeline of major construction projects (like Crossrail), its recent announcements to get directly involved in housebuilding, and a collaborative risk-sharing contracting philosophy (NEC3), all point towards a housing shortage that is unlikely to abate without major investment by the government in skills-development across the construction industry.

Mark Lewis and Elisabeth Mason assess a recent case of difficult drafting

In BT Cornwall Ltd v Cornwall Council [2015], the High Court has ruled that Cornwall Council and others were entitled to terminate an outsourcing contract with BT Cornwall Ltd (BTC) due to BTC’s failure to meet certain key performance indicators (KPIs). The judgment provides some interesting practical pointers for those negotiating and drafting these complex documents and those considering terminating contracts.