JCT 2005
A rough guide
Richard Wade
Partner, Head of Construction and Development
Blake Lapthorn
15 May 2009
OWNER PURCHASER/
TENANTS
AB Developments Limited
FUNDER
(Employer)
MAIN CONTRACTOR ARCHITECT M & E ENGINEER STRUCTURAL Q.S
ENGINEER
SUB-CONTRACTORS SUPPLIERS SUB-CONSULTANTS
The 2005 suite (and some helpful
abbreviations)
The main family
Standard building contract (SBC)
Design and build (DB)
Intermediate (IC) (ICD)
Minor works (MW) (MWD)
Major project (MP)
The 2005 suite
Some cousins and Other relations
Collateral warranties
Framework agreement
Adjudication agreement
Construction management
Measured term
Management contracts
Prime cost
Procurement options
Structure/layout
Overview
Consistency of structure across the suite
Arranged in chronological sections
Modular feel to contracts
Use of various default provisions
Omission of unnecessary provisions (for example
statutory procedures; VAT, CIS, CDM)
Structure/layout
Basic structure
Articles of agreement
recitals
articles
contract particulars; new replaced appendix in older
versions split into parts one and two (part two deals
with third party rights)
attestation ie signatures
Conditions
arranged in nine chronological sections
Schedules
Structure/layout
Default provisions
Examples
clause 4.8 advance payment bond; default position that
bond will be required
clause 6.16 risk for change to Joint Fire Code; now
with the contractor
Dispute resolution; litigation not arbitration
Rectification (DLP): six months
Retention: 3%
Structure/layout
Some examples of simplification
Adjustment of completion date (SBC clause 2.26; DB
clause 2.23)
no longer a requirement for extensions of time
procedure similar to JCT 98 but simplified wording
number of relevant events reduced from 19 to 13 (SBC
2.29; DB 2.26)
In construction contracts time = money (or does it!)
Structure/layout
Relevant events
2.29 The following are the relevant wvents referred to in clauses 2.27 and
2.28:
.1 variations and any other matters or instructions which under these
conditions are to be treated as, or as requiring, a variation
.2 instructions of the architect/contract administrator
.1 under any of clauses 2.15, 3.15, 3.16 (excluding an instruction for
expenditure of a provisional sum for defined work), 3.23 or 5.3.2 or
.2 for the opening up for inspection or testing of any work, materials or
goods under clause 3.17 or 318.4 (including making good), unless the
inspection or test shows that the work, materials or goods are not in
accordance with this contract
.3 deferment of the giving of possession of the site or any section under
clause 2.5
.4 the execution of work for which an approximate quantity is not a
reasonably accurate forecast of the quantity of work required
.5 suspension by the contractor under clause 4.14 of the performance of his
obligations under this contract
.6 any impediment, prevention or default, whether by act or omission, by the
employer, the architect/contract administrator, the quantity surveyor or any
of the employers persons, except to the extent caused or contributed to by
any default, whether by act or omission, of the contractor or of any of the
contractors persons
.7 the carrying out by a statutory undertaker of work in pursuance of its
statutory obligations in relation to the works, or the failure to carry out such
work
.8 exceptionally adverse weather conditions
.9 loss or damage occasioned by any of the specified perils
.10 civil commotion or the use or threat of terrorism and/or the activities of the
relevant authorities in dealing with such event or threat
.11 strike, lock-out or local combination of workmen affecting any of the trades
employed upon the works or any of the trades engaged in the preparation,
manufacture or transportation of any of the goods or materials required for
the works or any persons engaged in the preparation of the design for the
contractors designed portion
.12 the exercise after the base date by the United Kingdom Government of
any statutory power which directly affects the execution of the works
.13 force majeure
Structure/layout
Loss and expense
Divorced from adjustment to completion date
(breaking old clause 25/26 link); so time does not
always = money
Dealt with in section four, which relates to payment
Procedure similar but simpler wording
Contained in clauses 4.23 - 4.26 (SBC; 4.19 - 4.22 in
DB)
Structure/layout
Termination section eight
Not determination
Procedure hugely simplified
Enables contract to remain live for settlement of
outstanding matters following termination
Structure/layout
Termination (cont.)
General provision in clauses 8.1 8.3
Termination by employer 8.4 8.8 (8.5 contains
employers right to terminate upon contractor
becoming insolvent; impact upon obligation to pay -
Melville Dundas v Wimpey (2007))
Termination by contractor 8.9 8.10
Termination by either party 8.11
Consequences of termination 8.12
Design issues
All forms provide for contractor design; note the
different variants of each standard form
Modular use of standard form; use of contractors
design portion without a separate supplement
Novation of consultants
OWNER PURCHASER/
TENANTS
AB Developments Limited
FUNDER
(Employer)
MAIN CONTRACTOR ARCHITECT M & E ENGINEER STRUCTURAL Q.S
ENGINEER
SUB-CONTRACTORS SUPPLIERS SUB-CONSULTANTS
Design issues
Design submission procedure
New and very significant!
Procedure set out at schedule one
Gives opportunity to employer/architect to review
contractors proposed design
Design issues
Design submission procedure
Contractor delivers two sets of design documents to
architect/CA
Employer/architect/CA will mark drawings either:
A proceed in accordance with document
B proceed subject to comments and
resubmit
C do not proceed, address comments and
resubmit
Design issues
Design submission procedure
Deemed A if no response within 14 days
Contractor must challenge within seven days
Absence of challenge will not give rise to variation
No payment made unless work done in accordance
with A or B status document
Does not diminish contractors design responsibility
Design issues
PI insurance
(Insurance generally dealt with in section six)
Now included as option
Details to be set out in contract particulars:
nature of cover
limit of cover (including for pollution/contamination)
Period for which insurance maintained; default is six
years
Design issues
Copyright and licences
Employers licence to use and reproduce design
documents
But not for extension or separate development
Subject to contractor being paid
Payment issues section five
Some general points
Requirement in HGCRA for adequate payment
mechanism
Process similar to old JCT but simplified
no nominated sub-contractors
no VAT agreement
no lengthy CIS provisions
Fluctuations provisions still included
One major change for design and build (see below)
Payment issues
Interim payments
Certificates (under SBC)
Retention still provided for but default reduced from
5% to 3%
For design works documents must be marked A or
B
Payment issues
Interim payments in design and build
The major change
Contractors application triggers payment
Employer may respond with payment or withholding
notice
If no payment/withholding notice contractor to be paid
amount due under contract
No automatic entitlement to application sum
Payment issues
Valuation of variations section five
Contractors price statement provisions dropped
[alternative A in old clause 13]
Schedule two gives mechanism by which payment for
variations can be pre-agreed
If valued no change to substance of previous rules
Payment issues
Final account
Generally no change!
Final certificate (4.15) has largely same effect as
before (1.10)
Third party rights and warranties section seven
No requirement for collateral warranties in JCT 98
Contracts (Rights of Third Parties) Act routinely
excluded
Why important?
OWNER PURCHASER/
TENANTS
AB Developments Limited
FUNDER
(Employer)
MAIN CONTRACTOR ARCHITECT M & E ENGINEER STRUCTURAL Q.S
ENGINEER
SUB-CONTRACTORS SUPPLIERS SUB-CONSULTANTS
Third party rights and warranties
So whats new?
SBC and DB both provide for option to procure
warranties for third parties and for setting out third
party rights
Position slightly different for MW, IC and MP
Rights/warranties will be provided upon issue of
notice by employer
Form of warranty still needs to be annexed (unless
JCT form used)
Third party rights set out in schedule five
Default provisions in contract particulars
Summary
Main forms (SBC, DB, IC) streamlined, simplified and
consistent
New concepts eg contract particulars, design
submission procedure
Otherwise procedures not greatly different from
previous forms
Integration of collateral warranties, third party rights
and PI insurance
Reduced scope for amendment!
Dispute resolution section nine
Mediation
Adjudication HGCRA requirement
Arbitration
Litigation
Proposed Construction Act amendments (1)
Payment
Prohibition of pay when certified (section 110)
Introduction of payee notice (section 110A/B)
Overhaul of withholding notices requirement to pay
notified sum (section 111)
Proposed Construction Act amendments (2)
Adjudication
Removal of section 107 (requirement for contract to
be in writing) but
New requirement for adjudication provisions to be in
writing (section 108)
Stipulations about costs and fees - including
outlawing of Tolent clauses (sections 108A/B/C)
JCT 2005
A rough guide
Richard Wade
Partner, Head of Construction and Development
Blake Lapthorn
15 May 2009
