We have previously blogged on payment notices, and this week we will concentrate on the mechanics of service of such notices and other documents.
The Construction Act gives parties the freedom in a construction contract to agree how notices or other documents are served. This may be for example by post, email or fax and parties should specify a preferred address. Contracts may also specify who can issue notices on behalf of the Employer, for example the Project Manager.
If the contract is silent on how notices should be served, the default provisions in section 115(3) apply. This means that a party should serve a notice or other document by post at i) the last known principal residence, if the party is an individual; ii) the principal business address, if the party carries on a trade, profession or business; or iii) the registered or principal office if the party is a company. If sent in such a manner, the notice shall be treated as effectively served.
Bear in mind also that there may be timescales for when notices of certain items require to be served. The Act makes provision for reckoning time. Where an act is required to be done within a specified period after or from a specified date the period begins immediately after that date. Certain days are excluded including Christmas Day, Good Friday and other bank holidays. When is a bank holiday a bank holiday for the purposes of the Act? When it is listed in the Banking and Financial Dealings Act 1971. It is important to note that not all of the traditional bank holidays which businesses take (and when banks are closed) are listed in that Act.
What Do The Standard Form Contracts Say?
The SBCC Design & Build Contract and SBCC Minor Works Contract follow the rules above and stipulate that a notice or other communication between the Employer and Contractor shall be effectively served if:
- It is in writing
- It is sent or transmitted by the means (electronic or otherwise) and in such format as the parties agree in writing.
- it is delivered by hand or sent by pre-paid Recorded Signed For or Special Delivery post to the recipients address stated in the contract particulars, or other address as the recipient may notify to the sender. If no such address is current, the recipients last known principal business address or its registered or principal office if it is a body corporate is acceptable.
Where sent this way, the notice shall be deemed to have been received on the second business day after the date of posting.
The NEC3 Engineering and Construction Contract requires notices and other documents to be communicated in a form which can be read, copied and recorded (ie, in writing). Written notices are to be in English, and are to be served at the last address notified by the recipient for receiving communications, or if none is notified, at the address of the recipient stated in the Contract Data.
Importance of Serving Notices Correctly
It is critical that a party seeking to serve a notice of any kind follows the contractual notice requirements to the letter. That may sometimes result in a crude or absurd interpretation whereby a "notice" is to be served at a different address to the address which the parties use for other means of communication. To be effective though, the contract (or the Act) tells the parties what to do and they should be guided by that (even where it seems ridiculous or over the top).
Throughout any construction project various items require to be served using the notice provisions including:
- Notices in relation to payment (payment, pay less and final payment notices)
- Instructions, variations and changes to the contract
- Termination of the contract
- Assignation of the contract
We recommend taking advice at an early stage if the notice procedure in your construction contract is unclear. Failure to issue notices in the correct form, within the specified timescale, could result in the notice being declared invalid. If a notice is invalid then the consequences can be quite severe (including potentially a liability for damages).
For advice in either serving notice under the Act or the Contract or assistance with what to do if a notice has been served on you, please contact any member of our construction team.