Suspension in construction

The following Construction practice note provides comprehensive and up to date legal information covering:

  • Suspension in construction
  • Suspension at common law
  • Statutory right to suspend for non-payment
  • What costs can be claimed by the suspending party?
  • The right to suspend under pre-1 October 2011 contracts
  • Impact of IA 1986 on the right to suspend
  • Suspension for non-payment in standard form contracts
  • JCT Standard Building Contract
  • NEC Engineering and Construction Contract
  • FIDIC Red Book
  • More...

Suspension in construction

This Practice Note examines statutory and contractual rights to suspend performance of obligations under a construction contract, which principally arise in the event of a failure by an employer to pay an amount due. The statutory right arises under the provisions of section 112 of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) which deal with when and how the right to suspend can be exercised. This Practice Note then considers how the standard form JCT, NEC and FIDIC contracts deal with suspension as a consequence of the HGCRA 1996 or non-payment, and also looks at wider contractual rights for a contractor to suspend performance of its obligations (ie not just because of non-payment).

Suspension can be a valuable tool for putting pressure on an employer that is not paying its bills (either at all, or on time). It can also be useful in a situation where there is no realistic prospect of obtaining further payment, for example where the employer or main contractor is insolvent or on the brink of insolvency but the contract does not provide the right to terminate for insolvency. In this case, if the statutory or contractual prerequisites are satisfied, suspending all work is an effective means of cutting costs and reducing likely losses. However, the right to suspend where the employer is subject to an

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