The Next Generation: A Brief Guide to the JCT DB 2024

The Next Generation: A Brief Guide to the JCT DB 2024

Author: Eugene Lenehan

19 April 2024

Introduction

On 17 April 2024 the Joint Contracts Tribunal (JCT) published its new Design and Build 2024 and Design and Build Sub-contract 2024 standard forms of contract. These are the first in the long-awaited JCT 2024 suite of contracts, which are also expected will include a new JCT Target Cost Contract (TCC). The JCT Target Cost Contract will rival NEC ECC Options C and D. Other standard form target cost contracts are also already available from the ICC and IChemE.

Provided below is a brief guide to the main changes to the JCT Design and Build contract, where it will be seen that JCT contracts continue to take on some characteristics of the NEC4 contract.

Gender Neutral

JCT 24 follows the way of the NEC4 (published in 2016) and FIDIC contracts, by introducing gender-neutral language. This differs from previous JCT editions, which used male pro-nouns only, so there are no more references to the likes of ‘he’ and ‘workmen’.

Collaborative Working

New Article 3 requires the parties to “work with each other and with other project team members in a co-operative and collaborative, in good faith and in a spirit of trust and respect”. This clause was previously buried in the supplemental provisions but is now promoted to a similar status to the equivalent clause in the NEC. This was one of my predictions that has proved accurate. Refer to the article entitled Fussed about Trust?  A Brief Guide to Good Faith and NEC Clause 10, in which I said it was a matter of time before the JCT changes this from being an optional clause to a standard clause.

Electronic Communications

Notification provisions have been amended to expressly allow for the majority of notices, communications and documents to be sent by email. Those relating to default / termination, which are governed by clause 1.7.4, may also be sent by email, providing the parties have specified this in the relevant part of the Contract Particulars.

The new form also makes provisions for contracts to be signed electronically, which has become increasingly popular in recent years, especially with the rise in remote working since the pandemic.

Sustainable Development and Environmental Impact

One of the provisions moved from the supplemental provisions to the conditions indicates the increasing importance for contractors to consider environmental factors. Pursuant to new clause 2.1.5 the Contractor is:

encouraged to suggest economically viable amendments to the Works which … may result in an improvement in environmental performance and sustainability … and a reduction in environmental impact”.

Whilst the above new clause merely ‘encourages’ the Contractor to make suggestions, new clause 2.2.2 obligates the Contractor to provide “all information that the employer reasonably requests regarding the environmental impact” of the materials and goods selected by the Contractor.

Building Safety Act 2022

The JCT has made significant amendments to help deal with the monumental changes brought in by the Building Safety Act 2022. Basic provisions have been added dealing with the new dutyholder requirements under Part 2A of the Building Regulations 2010.

The amendments to JCT D&B include:

  • New Article 7 details who is to be appointed as Principal Designer and Principal Contractor for the purpose of the Building Regulations
  • Clause 3.16 (which previously dealt with the CDM Regulations only) has been amended to add obligations on both the Employer and the Contractor to comply with their respective duties as set out in Part 2A of the Building Regulations. Failure to comply with clause 3.16 remains a specific and mutual ground for termination.
  • An amendment to clause 2.7.2 obliges the Employer to supply any building information required to be provided to the Contractor under regulation 11A (4) of the Building Regulations.

As significant as these amendments are, the JCT seems to have taken a restricted approach, and has not addressed the new regime for Higher Risk Buildings, other than providing a footnote (43) that refers to the ‘Design and Build Contract Guide’, which in turn refers to the JCT website.

Fitness for purpose

There is a new fitness for purpose clarification (e.g., at clause 2.17.1.2 of the JCT design and build contract), which confirms that the Contractor owes “no greater duty, obligation or liability” in respect of design than to exercise “reasonable skill and care”, and there is no requirement that any design is fit for its purpose. However, this is caveated by the words “to the extent permitted by the Statutory Requirements”.

Extensions of Time

New Relevant Events are introduced in respect of epidemics (clause 2.26.7) and the exercise of statutory powers (clause 2.26.8). The antiquities provision (clause 2.26.4) is also extended to deal with unexploded ordinance, contamination and asbestos.

The outdated term of ‘Statutory Undertakers’ is redefined to ‘Statutory Providers’.

The period for the Employer to assess an interim extension of time is reduced from 12 weeks to 8 weeks, from receipt of the Contractor’s notice and particulars. In addition, if the Employer requires further information to substantiate an extension of time claim they must now request that within 14 days of receipt of the claim. No such time limit exists within the 2016 edition.

Liquidated Damages

New clause 2.29.5 takes into account the Supreme Court’s decision in the case of Triple Point Technology Inc -v- PTT Public Company [2021] UKSC 29. The decision restored a previous position that liquidated damages can be levied up to termination of a contract, but not after. The 2024 JCT now makes it clear that where the Works are not complete at termination, liquidated damages can be levied up to termination and only general damages for delay can be claimed after that.

Verbal Instructions

There are a few very minor changes to clause 3.7 regarding verbal instructions, but these are no more than stylistic. This has surprised me. I had predicted that the JCT would remove the CVI procedure from its contracts, making it similar to the NEC in that respect. Given the technological advances over recent decades, including the widespread proliferation of smart phones, there surely can be extremely few occasions where a written instruction cannot be issued immediately by email. This can generally be done within minutes of giving a verbal instruction to the contractor on site.

Ground Conditions

The JCT D&B previously only dealt expressly with ground condition risk in the context of the discovery of antiquities (clause 3.15). This has now been extended to also include the discovery of “asbestos, contaminated material and unexploded ordinances”. Upon discovery of such material, new sub-clause 3.15.3 obligates the Contractor to use its best endeavours not to disturb it, and to report the steps it is taking.

New sub-clause 3.15.4 requires the Employer to issue instructions, which might mean the Contractor has to “permit the investigation, disposal or removal of such material by a third party”. The entitlements to a Relevant Event and Relevant Matter for instructions under clause 3.15 now therefore also extend to the discovery of asbestos, contaminated material and unexploded ordinances (unless the presence of asbestos or contaminated material was identified in the Contract Documents).

Loss and Expense

The Contract Particulars will allow parties to select optional Relevant Matters for the Contractor to claim loss and expense, including epidemics (clause 4.21.6) and the exercise of statutory powers by the UK government which directly affects the works (clause 4.21.7).

The antiquities Relevant Matter (clause 4.21.3) is also extended to deal with unexploded ordinance, contamination and asbestos.

Professional Indemnity Insurance

The Contract Particular entry for clause 6.15 provides for the inclusion of additional details such as exclusions to the policy cover, rather than assuming the only sub-limits which apply are in relation to pollution and contamination. This change has likely been prompted by and is reflective of, the tightening of the insurance market and the need for clarity as to the specific extent of the cover.

Clause 6.15.2 has been amended to extend the qualification for the Contractor to provide PI insurance, to the extent that insurance continues to be available at reasonable rates “and terms”.

Fluctuations

The use of fluctuation clauses is so unusual that all fluctuations options are now contained separately in supplemental documentation that can be downloaded from the JCT website for free. In the 2016 edition Fluctuation Option A was included within the printed document (at Schedule 7), but the details of fluctuation Options B and C were only available online. Now Option A is also online only.

The JCT also launched a fluctuations hub in 2023, to offer guidance on its fluctuation options and plans to move the fluctuation provisions to an online document. The fluctuations hub is a resource aimed at helping the construction sector deal with economic uncertainty and volatility, and how to correctly apply the JCT fluctuation options.

Our brief guide to fluctuation clauses can be found at Cautiously Pessimistic: A Brief Guide to Fluctuation Clauses.

Disputes

The (optional) obligation for senior executives to meet for “direct good faith negotiations ” is no longer with Schedule 2’s ‘supplemental’ provisions. Instead, it is now contained in new clause 9.1, which has similarities to NEC4 clause W2.1. The names of each party’s Senior Executives are to be provided in the Contract Particulars. Clause 9.1 will obviously not undermine party’s statutory right to refer a dispute to adjudication at any time.

This JCT provision aims at early resolution of disputes. It is an attempt to avoid more costly and time consuming methods by requiring each party to notify potential disputes to identified senior executives, which might result in a negotiated settlement.

Under the 2016 suite of JCT contracts, parties chose their preferred nominating body or appointer in respect of any adjudication from a pre-populated list. The new suite still has the list (albeit slightly amended), but now also has the option to select a body or appointer that is not listed.

Termination

The definition of insolvency is widened to include two new grounds, reflecting the Corporate Insolvency and Governance Act (CIGA) 2020 (refer to clauses 8.1.4.3 and 8.1.4.4.

The termination provisions have also been amended to make express provision for the payment and payment related notice requirements of the Construction Act. This starts with a new definition: ‘Termination Payment’.

Whilst there are no changes to the principles for calculating the amounts due for termination, there is now a due date for the Termination Payment (defined in each of clauses 8.7, 8.8 and 8.12), which will avoid uncertainty. The Termination Payment due date is different in each clause, and so careful attention is required.

There is also a new (long) clause, 8.13, which deals with the final date for payment of the Termination Payment.

Automatic Termination of Subcontracts

Previously there was an obligation on contractors to ensure that the terms of their subcontracts automatically terminated where the main contract was terminated. This has now been qualified at clause 3.4.1 to exclude circumstances where third parties wish to ‘step in’ to those subcontracts, so as not to interfere with step-in rights which are commonly included in collateral warranties.

Summary and Conclusions

All in all, the amendments amount to little more than updates to account for various changes in legislation (particularly the Building Safety Act 2022), plus some relatively minor tinkering, including replicating mechanisms in the NEC4 suite (namely, collaborative working, gender-neutral language and the option to refer disputes to senior representatives). There has certainly been no significant shift in JCT policy.

 

 

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