· Late Payment of Commercial Debts (Interest) Act 1998 (parts I, II and III) 1998 Chapter 20

· Late Payment of Commercial Debts Regulations 2002. SI 2002 No 1674 (contains minor amendments to the Act)

· Late Payment of Commercial Debts (Rate of Interest) (No 3) Order 2002. SI 2002 No 1675 (sets the interest rate) (but keep an eye out for any changes in rate – probably order No 4)

The Act applies to the majority of contracts with which we deal, where both parties are acting in the course of their business (exceptions are few and can be checked by reference to the Act).

By s.1, the terms of the Act are implied into every applicable contract as though they were express terms.

By s.8 of the Act, statutory interest will not apply if the contract includes a substantial remedy.

Interest runs from the day after the debt becomes due and at a rate (currently 8%) above the ‘bank rate’ which was in force at 30 June or 31 December (i.e. the rate is fixed for 6 months).

I see some problems arising from the Act.

Firstly, the Act applies where the purchaser and supplier are each acting in the course of a business – s.2(1). The Act clearly applies to most commercial contracts but what about Megastores Ltd (whose business is retail selling) who are building a new store. I suggest that such building contract would attract the provisions of the Act. My reasoning is that, if the company is carrying out building works then this must be included in its Articles of Association (otherwise it would be acting ultra vires) and is therefore part of its business.

Secondly, there is no definition or guidance for the ‘substantial remedy’ which can oust the provisions of the Act. I would suggest that a rate below that which would forseeably have been charged by the aggrieved party’s bank on its overdraft would not be substantial. I would therefore suggest that the rates included in (say) JCT contract of 5% above base rate would be ‘substantial’. It is up to the judgement of the tribunal and the submissions of the parties to determine individual cases.

Thirdly there is the problem of what and how much needs to be pleaded. As the interest provisions are an express term of the contract, not subject to discretion, should effect be given, regardless of whether or not interest has been pleaded (an absolute necessity for interest under the tribunal’s discretion)?

You may note that I have not made any remark as to whether the above applies to adjudication, arbitration or whatever. This is because it affects the contract terms themselves and is unaffected by provisions of the Arbitration Act or Construction Act. Indeed, I suggest that the arbitrator’s (or adjudicator’s) discretion will now only be used in cases where the Act does not apply – he should always use contract provisions before discretion.

They’ve been at it again – I mean that the EU has issued a Directive (1999/44/EC) to interfere with the right to contract freely (or to protect consumers, depending upon your point of view). This has resulted in SI 2002 No 3045 The Sale and Supply of Goods to Consumers Regulations 2002. As with the Unfair Terms in Consumer Contracts Regulations, the regulations only affect contracts with natural persons (e.g. not a body formed under statute) who are acting for purposes which are outside their trade, business or profession. The latest regulations amend the Sale of Goods Act 1979, the Supply of Goods and Services Act 1982, the Supply of Goods (Implied Terms) Act 1973, the Unfair Contract Terms Act 1977.

If anyone thinks that they may be affected by consumer regulations (i.e. if they are dealing with contracts with individuals) they should look at the full text, available on www.hmso.gov.uk

Reading Francis Miller’s article in issue 51 (about the developing expert), I was reminded that, at the beginning of last year, I checked through my own CPD. Although I record, I do not unless needed categorise or total up the hours. Although I had carried out far more than required by any of my institutions, I was disturbed to note that virtually all of my time had been spent on legal or dispute resolution topics. Francis mentioned that you cannot be an expert without keeping up to date with current technology, and I suggest that the same applies to all who specialise in dispute resolution, whether as a resolver or party representative.

I wonder how many others are affected in the same way?

We all blame lawyers for having insufficient technical knowledge and lay professionals for insufficient knowledge of law; but I suggest that we all need to pay attention to obtaining a balance in our CPD.

Those of you who, like me, think that RICS has completely lost the plot, may have noticed that it is intended to change the title from CPD to LLL (life long learning)!

Those of you who attended the meeting on 17 June will have heard Geoff Brewer refer to Orange BS Ltd –v- ABB Ltd. Others may have seen various press commentary or even have obtained the judgement. The salient facts of the case were that Orange submitted its final account on 2 December 2002; ABB asked for time to comment, until 20 January 2003; Orange’s representatives said that they were seeking instructions; without further correspondence, Orange commenced adjudication on 6 January 2003. The adjudicator found that the dispute on the final account had crystallised and proceeded with the adjudication. HH Judge Frances Kirkham agreed.

I am concerned that this case will be used as a precedent that the construction industry Christmas break should be disregarded when examining time for responding to a claim and that a request from the receiving party for a specific time for response can be ignored. Firstly, Christmas is a red herring – the construction holiday does not form part of the ratio of this case. Secondly, I suggest that the finding on disregarding the request from ABB may be confined to its facts and may not be readily repeated. I invite you to study the last few paragraphs of the judgement (easy to find on www.adjudication.co.uk). It appears to me that Judge Kirkham had an extremely difficult decision (but it is only from difficult decisions that our knowledge increases) and may have decided to support rather than reject the adjudicator's decision. I also suggest that a large number of adjudicators would have decided that the dispute would not crystallise until 20 January and would take action accordingly.

This case is, at the time of writing, the latest in defining a dispute with reference to Halki –v- Sopex. I hope that we can publish an examination of this definition in the next issue. If anyone would like to write on this subject, please let me know.