MF/1 – Changes introduced into Revision 7

Revision 7 was published in 2024, providing a much-needed refresh since its last revision in 2014. These changes include legislative updates, changes to insurance and a redress in how the governing law provisions operate. The parties’ schedule of amendments to this standard form can now be trimmed down, as these updates address points that were not included in Revision 6. In any event, parties are advised to adapt to the new revision 7 as soon as possible, as revision 6 is now out of print and will quickly fall out of use.

Changes to Governing Law Provisions

One of the most striking changes in Revision 7, which has a number of consequential effects, is the reversal of the governing law provisions:

• Revision 6 was jurisdiction neutral, so that amendments needed to be incorporated if the parties wanted the laws of England and Wales to apply.
• Revision 7 has adopted the laws of England and Wales within the contract, so that if the parties want to apply the contract to another jurisdiction, they are to incorporate a new Schedule (the International Contract Schedule) to disapply the references to UK legislation and other related changes.

Consequences of change to the Governing Law provisions

As MF/1 Revision 7 now incorporates some specific pieces of UK-centric legislation, the following contractual terms have been affected:

1. Adjudication

• Revision 6 had the option to include adjudication provisions, as set out within the Special Conditions. Instead, Revision 7 includes these provisions within the contract as a default provision (within clause 53), meaning that all disputes under MF/1 Revision 7 can be dealt with by adjudication. These adjudication provisions reflect the law as set out in the Housing Grants, Construction and Regeneration Act 1996 (HGCRA). Parties should note the following features of the adjudication provisions in Revision 7:
  • The Contractor’s right for additional profit/cost continues during the adjudication (41.2 and 53.3).
  • The Adjudicator is not required to provide reasons within their decision.
  • These are contractual adjudication provisions, which apply whether or not the contract is a “construction contract” under the HGCRA.
  • The Adjudicator’s decision does not become automatically binding after the expiry of a certain number of days.

2. Payment

To be compatible with the HGCRA, a few of the payment provisions have been amended:

• Previous references to “certificate of payment” have been replaced with “payment notice” and “Purchaser Notice” have been replaced with “Notice of Intention to Pay Less”.
• It is now the Purchaser, rather than the Engineer, who must specify the sum it considers due within the Notice of Intention to Pay Less.

3. Corporate Governance and Insolvency Act

This UK legislation provides companies and other entities in financial difficulty with a breathing space to maximise their chance of survival from insolvency. This has brought about the following contractual changes:

• A new definition of CIGA (the Corporate Insolvency and Governance Act 2020) has been added.
• If the Purchaser fails to make payment the Contractor shall be entitled to suspend, save to the extent that CIGA applies (Clause 40.5).
• Termination for Force Majeure (clause 46.3) can only happen if works have been suspended for a continuous period of 120 days, unless CIGA applies to this clause. Also, either party can terminate within 21 days after the expiry of the 120-day period (rather than “at any time”).
• Broader circumstances of insolvency apply which:
  • give the Purchaser the right to terminate or the option to continue instructing depending on receiving a guarantee (clause 50.1) and
  • give the Contractor the right to terminate (clause 51.1)

4. Anti-bribery and anti-corruption

There is a requirement to comply with anti-bribery and anti-corruption laws, including (but not limited to) the Bribery Act 2010, and to not engage in any other activity, practice or conduct which would constitute an offence under the Bribery Act 2010. Breaches of anti-bribery and anti-corruption measures provide the Purchaser with a right to terminate the contract (clause 49.1).

5. Anti-slavery and anti-human trafficking laws

There is a requirement to comply with ani-slavery and anti-human trafficking laws (including the Modern Slavery Act 2015), not to engage in any offences, and to take additional preventative measures for each parties’ supply chain. Breaches of anti-slavery and anti-human trafficking provide the Purchaser with a right to terminate the contract (clause 49.1).

6. Execution by deed

The option to execute the contract as a deed has been added to reflect the requirements of the Companies Act 2006.

7. Notices

The notices provisions have been amended to be more compatible with the jurisdiction of England and Wales:

• Service of notices by fax has been removed (clause 10)
• Notice by post is deemed to have been served within two days, rather than within four.
• A new definition of “Working Day” has been added, with a further clarification on how this applies to England and Wales (clauses 1.2.6 and 40.9), primarily for the purposes of calculating days for the issue of notices under the Construction Act.

Other notable changes

1. Timeframes

Additional clarity to the contract has been provided by changing timeframes for the service of notices in the following circumstances:

• If the Contractor has failed to commence the suspended work, a notice to terminate can be sent within 14 days after receiving written notice from the Engineer to proceed (rather than 30 days)
• The Purchaser’s notice to terminate takes effect after 14 days rather than 21 days (clause 49.1).
• The ability of the Engineer to give notice to the Contractor to recommence with work, delivery or installation now has a time stipulation. The Contractor must recommence the works as soon as possible and within a maximum of 14 days from receipt of the notice (clause 25.5).
  • The time the Engineer states within the Taking Over Certificate for the Contractor to rectify or complete anything outstanding should be “reasonable” (clause 29.4).
  • Previously clause 36.10 stipulated that the Contractor should make good defects that appear within 3 years of taking over, but now the parties are free to agree such time period in the Appendix, which is to be set out in years.

2. Linguistic changes

Parties should be aware of the following linguistic changes that have been introduced in Revision 7 to ensure that their schedule of amendments is consistent:

• Gender-neutral language has been introduced to reflect a standard move across the industry to remove references to gender-specific terminology. References to “he” and “him” have been removed and are replaced with “it” or specific references to the Contractor or Engineer (as appropriate). Also references to “workmen” have been replaced with “workers”.
• American English has been adopted in the contract, with words such as “captialized” “authorized”, “reorganization”, “minimize” etc.
• Another notable change is that “Company” is used instead of “Corporation”.

3. Professional indemnity insurance

There is a new obligation on the Contractor to take out and maintain professional indemnity insurance for the amount stated within the Appendix (clause 47.5).

4. Inspections

When the Engineer gives notice to the Contractor of the intention to inspect the site, this should now be in writing (clause 23.2).

There is an ability to state the time in the Appendix when the Performance Test are to be carried out (clause 35.1).

Performance tests can be put on hold if it is likely to cause damage to the environment and/or third-party property (as well as damage to the works and/or cause personal injury).

5. Extension of time for completion

Any dispute that is only between the Contractor and any of the Contractor’s employees and/or sub-contractors is excluded from the definition of industrial dispute (clause 33.1).

The changes outlined above show that there has been a structural shift in the compilation of MF/1 under Revision 7 so that it is more compatible for use in England and Wales. However, this should in no way deter other jurisdictions from using it, as incorporating the pre-prepared International Contract Schedule means the contract can easily become jurisdiction agnostic for use in other countries. The other category of change deals with practical usage, in particular by introducing greater formalities to timeframes for notice periods, which provides greater certainty for parties. Overall, these amendments have made the contract more user-friendly.