JCT 98 provided a series of options to the user which required a selection to be made or the consideration of including one of the further supplements. In many instances JCT 05 has moved away from this, and provides a default position from which the parties must specifically choose to deviate if they require other options to be incorporated. By using a standard default position, it is less likely that the contract will be incorrectly formulated as a result. Specific Changes The payment system remains unchanged but is clearer with regard to payment notices and withholding notices.
If care is taken to ensure that reasons for withholding are given, then the payment notice may also serve as the withholding notice and one the initial notice is required. The Employer is responsible for issue of these notices, not the ACA. The JCT 05 form includes a new section called Contract Particulars at the front of the document which includes all project specific information and is frequently completed by hand. JCT 98 placed most of this information at the end of the contract and spread throughout the Recitals, Articles and main text of the contract. Whilst JCT 98 provided for arbitration in all disputes under the contract, JCT 05 has changed the default position from arbitration to litigation.
Obviously, the parties can amend the default position if they prefer to resolve disputes via arbitration. The adjudication process has been changed and is now carried out under the rules of the Scheme for Construction Contracts Regulations rather than JCTs own rules. The contract also includes a new clause which suggests that the parties consider the mediation of disputes.
It has been common practice over recent years to accommodate the needs of third parties where subcontractors designers and the like entered into collateral warranties with funders and purchasers. The need for such warranties has been slightly tempered due to the introduction of the recent Contract Rights of Third Parties Act , which provide certain rights to third parties such as funders and purchasers. In JCT 98, if you required a collateral warranty it was necessary to purchase the standalone supplement and incorporate the terms on a job by job basis.
Now JCT 05 in section 7 includes a standard set of rights for each kind of third party that typically requires them. The rights themselves are set out in Schedule 5 and may take the form of collateral warranties or alternatively by adoption of the Contract Rights of Third Parties Act The provision of rights to third parties is not mandatory but must be specifically selected in Part 2 of the Contract Particulars. Under JCT 98 a contract would automatically terminate in the event that a party became insolvent.
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This has changed in JCT 05 under which a contract will not automatically terminate unless a notice of termination is served. Importantly, the parties can now agree the methods of electronic communications by completing the Contract Particulars section. This could mean that email can now be deemed a contractual method of serving notice. The JCT 05 includes provisions that were previously addenda or separate supplements to the main contract.
However, unlike JCT 98, the new form includes facility for an element of design work to be carried out by the Contractor the Contractors Design Portion. A key distinction for the new Standard Building Contract is that the Contractor is now obliged to obtain PI insurance, which was not a previous requirement of the Contractors Design Portion. The new JCT 05 Standard Building Contract includes provision to allow the adjustment of the time for completion to preserve the Employers right to the deduction of liquidated damages.
The Relevant Events giving rise to the need to adjust the Completion Date have been revised and updated. For instance the Contractor is now more thoroughly responsible for his supply chain including labour and materials as the clauses relating to labour relations and strike difficulties have been deleted. As the contract specific information is now included in one section Contract Particulars rather than in separate sections, Recitals, Articles, etc. The default dispute provision has been amended from arbitration to litigation The new form includes a standard set of rights to third parties Contracts will not automatically terminate in the event of insolvency, unless a notice of termination is served Email can now be deemed a contractual method of serving notice which can ensure correspondence can be issued efficiently and allow smooth progress of the contract The new form includes the Contractors Design Portion to allow an element of the design to be undertaken by the Contractor The Contractor will no longer be entitled to a Relevant Event for difficulties in obtaining labour due to strike action The ACA must state reasons when adjusting the Completion Date.
These changes and principles are found across the whole suite of contracts. These general changes are not repeated below. The reader should refer to the general changes detailed above relating to the JCT Standard Building Contract with Quantities above. Specific Changes to the Design and Build form Under the form, the payment provisions provided that the Contractor was entitled to the sums contained within his application for payment, if the Employer failed to comply with the payment provisions and not issue a payment notice or withholding notice.
This caused many arguments as to the correctness of the various notices issued by the Employer. The new Design and Build form provides that if the notices are not issued correctly and yet sums are withheld, then in any event the Contractor is only ever entitled to be paid the amount due rather than the sums he states in an application for payment.
The Design and Build form clearly places an obligation on the Contractor to do the design. The form did not require the Contractor to take out design liability insurance.
The version provides an option for the Contractor to take out such insurance through an inclusion in the Contract Particulars which include a requirement for specifying the minimum level of the insurance to be maintained. If the Contract Particulars are not completed then the Contractor is not obliged to take out the insurance. Further, the obligation is not absolute in that if the insurance is not available at reasonably commercial rates then the Contractor does not need to take out the insurance.
The new Design and Build form includes provision to enable the savings or additional cost associated with design work arising out of a variation to be included in the valuation of any variation. As a result of this amendment, the cost consequences of varying the works will be to the Employers account. The procedure is mandatory and requires that the Contractor issues all drawings to the Employer before they are used. The Employer then has 14 days to review the drawings. If he fails to pass comment then the Contractor may proceed and use the drawings.
It should be noted that this does not in any way relieve the Contractor from ensuring his design is in full compliance with the contract. It should be noted that the JCT 05 Design and Build contract, like its predecessor, still does not include provisions which allow the Employers design team to be effectively novated into the design and build contractors team.
Further, the design and build forms do not create roles or responsibilities for an Architect, Contract Administrator, Quantity Surveyor or Project Manager. As these roles are essential to any project being delivered successfully, the roles are ordinarily undertaken by employees of the Contractor, or as a subcontractor to him. Important Changes and Implications The Contractor is now only ever entitled to sums properly due, even if the Employer fails to issue the requisite payment and withholding notices.
The Contractor is required to take out design liability insurance but only if the ACA has specifically included the requirement in the Contract Particulars The new contract requires the Contractor to issue design to the Employer who has 14 days to comment. This should aid procedure. This form has been extensively used over recent years and bridges the gap between the JCT Standard Building Contract and the simple minor works forms.
General Changes There are a limited number of substantive changes in the new form, and the changes generally are generic and follow the general changes to the suite as a whole.
JCT have introduced a number of key concepts and changes from the previous edition. Changes specific to the Intermediate Building Contract are considered below. Specific Changes to the Intermediate Building form Clause 5. The new form also provides that an advanced payment bond be issued by the Contractor in instances where the Employer provides an advance payment. The new contract retains a method for appointing a Named Subcontractor, similar to the process in the previous form.
Other new JCT forms have dispensed with the naming provisions. This form is probably the most popular form within the JCT suite of documents. Indeed, as the JCT have now issued a new separate Minor Works contract with provisions for Contractors design, this popularity is likely to snowball. General Changes As with the Intermediate Building Contract, there are a limited number of substantive changes in the new form, and the changes generally are generic and follow the general changes to the suite as a whole.
Changes specific to the Minor Works Building Contract are considered below. Specific Changes to the Minor Works Building form The contract layout has been improved and is now set out in one column of text rather than the previous two columns of text. There have been great economies in the text wording. The payment process has been stated with greater clarity, which now makes clear that either, both, or only one certificate can act as a withholding notice so long as it has sufficient detail and it served at the correct point in time. The contract specific information is embodied into the Contract Particulars at the beginning of the contract rather than scattered throughout the previous form.
The new form also includes default provisions for many of the issues. For instance the ACA automatically becomes the planning supervisor for the purpose of the CDM Regulations unless this default position is specifically altered. The adjudication provisions have changed substantially from those contained in the form. The new form provides that the parties may include an Adjudicator Nominating Body or a specific named Adjudicator in the Contract Particulars.
If the Contract Particulars are left blank then either party wishing to have a dispute adjudicated may select any of the nominating bodies stated in the contract to make a nomination. The default position for all disputes has also been changed from arbitration to litigation. Again, the contract includes provision to suggest that the parties should consider mediation in the first instance.
If the Employer terminates the contract, under the new JCT 05 form the Employer is now obliged to prepare an account to determine the sums due rather than wait for the Contractor to take action. The new form requires the completed contract to include the company registration number in the contract to provide an absolute way of identifying the contracting entity. Importantly, as the Minor Works Building form is used for minor works where the parties are reluctant to seek guidance from professional advisors when executing the contract, there are better and clearer guidance notes contained within the contract which should assist.
Important Changes and Implications Contract now drafted in a single column of text easing reading Notice of withholding can be provided using one or both of the normal certificates if sufficient detail is included There is a default position stating that the ACA automatically becomes planning supervisor for CDM Regulations.
CPD Questionnaire 1. In which 2 key areas have the JCT contracts been amended to simplify use?