Last week the Joint Contracts Tribunal published the long-awaited new design and build contract, the first of the new suite of 2024 JCT contracts. In this short article, we briefly set out what the main changes are, the vast majority of which have been signposted by JCT in advance, although it remains to be seen the extent to which these are welcomed within the industry.
We will consider the impact of the changes made to the new suite of contracts, particularly in relation to Building Safety legislation, collaborative working and sustainable development, in a series of future articles and will also provide updates on when the next 2024 contract will be released.
What are the main changes?
- Modernisation
The contract uses gender neutral language throughout and there is an option in the contract particulars for the parties to select an entry for the majority of notices to be sent by email. However, notices in relation to payment after termination cannot be by email.
JCT also acknowledges that in most cases, it will now be signed electronically.
- Extensions of time
A new Relevant Event has been added where an epidemic causes a delay to the works as a result of the unavailability of labour and/or materials.
The existing Relevant Event relating to the exercise of statutory powers by the UK Government and changes in law has been updated and includes the publication of any guidance by the UK Government or Local Authorities etc and the Construction Leadership Council.
The Relevant Event relating to the discovery of antiquities has also been expanded to include the discovery of asbestos, contaminated material and unexploded ordnance.
The period for the Employer to notify the Contractor of its decision on interim extensions of time has been reduced from 12 to 8 weeks. If the Employer requires further information to assess an extension of time claim they must now request that information within 14 days from receipt of the Contractors’ claim.
- Loss and expense
There is an optional entry in the contract particulars to select whether an epidemic and/or the exercise of statutory powers by the UK Government and changes in law outlined above are also Relevant Matters.
As with the corresponding Relevant Event, the Relevant Matter relating to the discovery of antiquities has also been expanded to include the discovery of asbestos, contaminated material and unexploded ordnance.
- Payment provisions on termination
The contract now includes a specific clause relating to the timings and process for the payment due date after termination.
The Contractor’s entitlement to loss and expense in the event of a termination has also been narrowed slightly by making it clear such entitlement arises only where the Employer is in default or has caused the loss of damage to the works.
- Fitness for purpose
There is now clarity that the Contractor shall have no greater liability in respect of the design than to exercise the required level of skill and care as to be expected of a qualified and experienced architect or other appropriate professional designer. A fitness for purpose obligation in relation to the design is now expressly excluded..
- Insolvency
Two new insolvency grounds have been added to the definition of insolvency to reflect changes in insolvency legislation.
- Liquidated damages
The liquidated damages provisions in the contract have been amended to reflect the Supreme Court’s decision in the case of Triple Point Technology Inc v PTT Public Company Ltd [2021] UKSC 29 by setting out that liquidated damages will be recoverable until the works are completed or, if earlier, the contract is terminated. Any delay losses suffered after the date of termination will form part of a claim for general damages.
- Fluctuations
The printed text of the fluctuation options are no longer included in the contract but can be downloaded from the JCT website as separate supplemental documentation.
- Building Safety Act
A new Article has been added to identify who will be appointed as the principal designer and principal contractor for the purposes of the Building Regulations.
The Employer and the Contractor now have contractual obligations to comply with their duties under the Building Regulations.
The contract does not specifically address issues in relation to higher-risk building work, save to reference to the design and build contract guide.
- Collaborative working, substantiality and disputes
The clauses for collaborative working (including working in good faith), sustainable development and environment considerations and notification and negotiation of disputes now all apply by default and there is no option for the parties to choose whether they apply or not.
Initial Conclusions
The majority of the changes were known about before publication and there was nothing particularly unexpected in the new contract. Whilst parties will need to get to grips with whether some of the new changes need to be amended or adapted, our overall feeling is that the new JCT design and build contract is very recognisable to anyone familiar with the 2016 version.
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