JCT contracts: reviewing the 2016 changes
7 November 2017
Jill Hamilton reviews recent changes to the JCT suite of contracts
As a general point, JCT’s 2016 suite does not include any new law, but the contracts do incorporate the updates made since the 2011 suite was published. Furthermore, the risk profile between the employer and the contractor remains largely unchanged, though there are still a number of significant material changes.
One of the most notable is that the payment processes have been streamlined. The employer is now required to specify an 'Interim Valuation Date' in the contract particulars.
If the contractor’s application for payment is received before this, that payment is due 7 days after the Interim Valuation Date; if the Interim Payment Application is received by the employer later than the Interim Valuation Date, the due date for payment is 7 days after this application was received.
There have also been changes to the provisions relating to final account and final adjustment, and the final date for payment is now 14 days after the due date.
There is a new provision that applies to relevant events, which requires the employer to notify the contractor of their assessment of a loss and expense claim within 28 days of receipt of the initial assessment from the contractor. It is assumed that further updates will be provided by the contractor in relation to the claim, to which the employer is to respond within 14 days.
The JCT 2016 suite also makes provision for the use of building information modelling (BIM), but stops short of requiring the parties to use it. Instead, there are various provisions relating to BIM that are stated to pertain 'where applicable'; for example, where there is a BIM protocol it will be deemed to be a 'Contract Document' and design information provided under the protocol is included in the definition of 'Contractors’ Design Documents'.
Insurance Option C
There has also been a change to Insurance Option C to deal with the recurring issue of insuring an existing building where refurbishment or extension works are being undertaken. Previous editions of the JCT assumed that, where Option C applied, the employer could insure the works under their existing building cover; but in some cases that was not possible, for example, where the employer was a tenant and the building was insured by the landlord. The 2016 JCT Design and Build Contract allows for the parties to draft a replacement Option C, effectively acknowledging that there is an issue but without seeking to impose a solution.
There is now an explicit option, too, for an employer to require a performance bond or parent company guarantee from the contractor, although the JCT does not specify the form this should take.
Standard Building Contracts
The changes seem fairly consistent throughout the suite, but there are some changes specific to the Standard Building Contracts that are worth noting. There are new named specialist supplemental provisions, and additional relevant events and relevant matters where the contractor has a reasonable objection to the identity of a specialist, and where a named specialist becomes insolvent.
There is also an amendment to the calculation of the final adjustment. The new default position is that, if the contractor does not supply the documents that are required for the architect or contract administrator to calculate the final payment within 6 months of practical completion, then the latter can give the contractor one month’s notice, and if the documents have still not then been provided, they can calculate the adjustment based on their own document.
In addition to the above substantive changes, the language in the contracts has been tidied up and a number of clauses consolidated or simplified.
Although the 2016 suite does not represent a sea change in the risk profile of JCT contracts, there are still plenty of significant alterations with which employers and contractors alike will need to get to grips, and potential pitfalls for the unwary.
Jill Hamilton is a partner at the law firm Taylor Wessing