Lawyers claim loophole in new Construction Act

The government has been accused of botching a key revision to the Construction Act amid claims it has left a loophole in the legislation.

Lawyers claim the amended act will permit the use of a much-maligned contract clause known as a “Tolent clause”. This clause has been used to discourage parties, usually subcontractors, from exercising their right to refer a dispute to adjudication by insisting they pick up all the legal costs of a challenge.

The government admitted it had received letters from lawyers but rejected any suggestion this reflected weakness in the legislation.

The government was thought to have outlawed Tolent clauses - named after a case brought against Tolent Construction in 2000 - in the new act, which has been passed by parliament.

But lawyers have this week drawn attention to the alleged error in the legislation’s wording of Part 8, which is designed to improve payment practices and dispute resolution.

Dominic Helps, consultant at Corbett & Co, said: “There is a real risk that what the government has pushed through parliament may actually achieve the opposite of what was intended.”

A spokesperson for the business department said: “We have received representations from the industry but we do not consider they have identified any real weakness in the act’s provisions prohibiting contractual agreements on adjudication costs.”