Modular Construction: Addressing Deposit Payments In Building Contracts

Introduction

Modular construction has become increasingly popular in recent years. Once synonymous with 'pre-fab' houses and concrete tower blocks, the potential cost, programme and quality benefits mean it is now seen as a potential solution to the existing housing crisis, something my colleague Alexander Gold has written about - read more.

Modular construction does, however, give rise to a number of potential legal issues. In this article we will consider one such issue concerning payment protection for the employer.  In the coming weeks we will be writing about other issues such as design liability and collateral warranties.

The problem

Often the modular manufacturer is a sub-contractor/ supplier to the main contractor. This is particularly the case where only specific elements of the building (for example, bathroom pods in a hotel) are constructed off-site as opposed to the entire development. The nature of off-site manufacture means that factory slots