Beware "Hybrid" Contracts That Only Partly Cover "Construction Operations"

Severfield (UK) Ltd v Duro Felguera Ltd [2015] EWHC 3352

Duro engaged Severfield under a contract to carry out the design, supply and erection of steel structures on a site in Manchester.  Some of the work comprised "construction operations" under the Construction Act 1996 (the "Act"), but some were not (because they related to power generation and were excluded from the provisions of the Act).  Being unaware of the distinction at the time of entering into the contract the parties agreed a payment regime that was not Act compliant.  Severfield made an interim payment application for approximately £3m and such application did not divide up the work between the operations that were and those that were not covered under section 105 of the Act.