Novation

Novation

What is a novation and how does it arise in a construction context?

The following provides an overview of the use of novation in the construction industry: what it is, the effect of novation, issues that arise in relation to it and practical considerations. For a detailed consideration of these points, see Practice Note: Novation in construction projects.

Novation is the transfer of the rights and obligations that one party has under a contract to a third party. Novation is distinguished from an assignment as it allows for burdens and obligations to also be transferred to the third party, not just rights. See Practice Note: Assignment in construction contracts. It most commonly arises where projects have been procured on a design and build basis, whereby a design consultant’s appointment is novated from the employer to the design and build contractor.

Novation amounts to the extinguishing of the original contract and the substitution of a new contract under which the same acts and obligations are

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Latest Construction News

Construction weekly highlights—21 November 2024

This week's edition of Construction weekly highlights includes as a case in which the TCC refused to award a successful claimant costs of its enforcement claim (Complete Ceiling v DE1), an announcement from the Welsh Government on its proposals for building safety reforms in Wales, launch of a second consultation by the UK Green Building Council (UKGBC) on the Climate Resilience Roadmap, publication of the Civil Justice Council (CJC)’s phase two report on its review of the Pre-Action Protocols (including the Pre-Action Protocol for Construction & Engineering disputes), and publication of the Construction Leadership Council (CLC)’s latest quarterly report on output in the construction sector.

CJC publishes phase two report on review of PAPs

The Civil Justice Council (CJC) has published its phase two report on the review of Pre-Action Protocols (PAPs), outlining recommendations for reforming litigation-specific PAPs, including the Construction and Engineering (C&E) PAP. The report recommends maintaining most aspects of the C&E PAP, while proposing minor enhancements. Some of the key recommendations include making engagement with the C&E PAP mandatory, subject to limited exceptions such as the right to opt out by mutual consent, preserving the current timeframes, retaining the Protocol Referee Procedure to enforce compliance, as well as refraining from introducing a formal disclosure standard. It also recommends maintaining the existing without prejudice meeting format, which already incorporates a stocktake procedure.

UKGBC launches second consultation on Climate Resilience Roadmap

The UK Green Building Council (UKGBC) has launched a second consultation on the Climate Resilience Roadmap, aimed at assisting the built environment in adapting to climate change. The consultation document outlines five key policy recommendations, including prioritising climate safety at a national level under the Prime Minister's leadership, reforming the planning system, and ensuring existing and new buildings are prepared for future climate hazards. The consultation also seeks feedback on updated proposals from the UKGBC’s July 2024 consultation, with the aim of refining the roadmap before its final publication. The final roadmap, scheduled for publication in March 2025, will comprise a policy recommendations report, technical guidance, and an interactive 'vulnerability to climate hazards' web map. The consultation closes on 6 January 2025.

CLC publishes report on increasing EV uptake in the construction sector

The Construction Leadership Council (CLC) has published a report examining the low uptake of electric vehicles (EVs) in the UK construction sector, which currently stands at just 5.2%. The report identifies four key barriers to EV uptake: limited home charging infrastructure, on-site charging challenges, legislative issues concerning Light Commercial Vehicle (LCV) EVs, and high ownership costs. To address these issues, the report recommends improving public charging networks, installing separate meters in employees’ homes, adopting a more strategic approach to on-site charging, and amending legislation to remove LCV EVs from Heavy Goods Vehicle thresholds. Additionally, the report suggests offering financial incentives, such as capital offset for firms investing in EVs and reduced Ministry of Transport testing costs.