When it comes to payment provisions within construction contracts – timing is everything. The Construction Act was introduced, in part, to ensure that payments throughout the supply chain were made promptly, with the parties required to meet their obligations, either under their contract or the Scheme for Construction Contracts, or risk incurring additional costs or failing to recover the full monies owed to them. The need to promptly serve payment notices and pay less notices by the relevant dates remains key to ensuring this new method for payment works effectively, yet as technology has developed, so too have the methods of service.
As a result, despite their importance, very few construction contracts outline clearly when notices are considered to have been received by either party. Perhaps more worrying still is, in a period where the construction industry is undergoing a technological renaissance, is the absence in many contracts (the JCT suite included) of a provision outlining when documents are deemed to have been received electronically, whether by email or otherwise. The absence of such a provision can lead to a considerable amount of confusion for either party and can lead to unnecessary disputes, particularly where one party claims to have sent a document electronically and the other disputes receipt.
While the Construction Act is quiet on receipt of such notices, the Companies Act 2006 is not. Here, Section 1147(3) states clearly that:
(a) the document or information is sent or supplied by electronic means, and
(b) the company is able to show that it was properly addressed,
it is deemed to have been received by the intended recipient 48 hours after it was sent.”
This delay as to when electronic documents are deemed to be served on another party can betray the efficiency and surety expected of email and other forms of electronic communication, leaving a party exposed to considerable risk despite having taken steps to seemingly serve the notice promptly.
As a result, it is recommended that both parties, prior to signing a contract or appointment, agree the means in which documents may be delivered but also when they are considered to have been received electronically. Such negotiations are invaluable in alleviating doubt and can ultimately be the difference in receiving payment promptly or facing a lengthy legal battle to recover the monies owed.