The Joint Contracts Tribunal (JCT) has published the third of its 2016 edition of contracts, the JCT Standard Building Contract suite.
The contracts available include:
- Standard Building Contract With Quantities;
- Standard Building Contract Without Quantities;
- Standard Building Contract With Approximate Quantities;
- Standard Building Sub-Contract Agreement;
- Standard Building Sub-Contract Conditions;
- Standard Building Sub-Contract with sub-contractor’s design Agreement; and
- Standard Building Sub-Contract with sub-contractor’s design Conditions.
The JCT issued the JCT Minor Works 2016 suite on 24 June 2016 and JCT Design and Build 2016 suite on 23 September 2016 and our previous articles sets out the key changes to both editions of contracts.
JCT 2016 guides to accompany the Standard Building Contract and Standard Building Sub-Contract have also been provided.
Tracked changed documents showing the differences between the previous 2011 edition and the current 2016 edition are available on the JCT website.
What are the key changes?
In addition to the changes highlighted by our previous article, the key changes of the 2016 Standard Building contracts include:
- Payment - the payment provisions have been revised and simplified to:
- establish (for fair payment purposes) Interim Valuation Dates that apply to main contract, sub-contract and sub-sub-contract levels;
- enable Interim Valuation Dates in certain months to be altered to the nearest business day in a month, a change which will affect the due date and the 5 day period for the issue of the payment notice, the last day for giving a Pay Less Notice and the Final Date for Payment;
- increase flexibility in relation to fluctuations provisions; and
- consolidate the notice requirements of the Housing Grants, Construction & Regeneration Act 1996.
The JCT has also sought to simplify its approach to payment, by using elements of a common payment regime for interim and final payments. Whilst the Interim and final payments remain separate, they share procedural drafting.
- Insurance of the works - the insurance provisions relating to the works and existing structures have been amended to make them more flexible. Parties should take care in defining their chosen insurance arrangements.
- Termination – a new right to terminate in relation to the Public Contracts Regulations 2015, where the employer is a public authority, has been included. Regulation 73 of the Public Contracts Regulations 2015 requires a contracting authority to include a condition in all contracts allowing it additional rights to terminate consistent with the provisions of the Regulations.
What to consider when using the Standard Building 2016 contracts
Users of the JCT Standard Building Contract 2016 should note the changes to the payment, insurance and termination clauses. The JCT may reflect these changes in the remainder of its 2016 edition standard form building contracts and sub-contracts.
Practically, users should consider the following when using the Standard Building Contract 2016 suite:
- it is likely that there will be a transitional period in which both the new and previous editions of contract can be used;
- employers, contractors and those advising them may need to review current business processes and update their standard form documents to reflect the new editions;
- a prospective employer should seek specialist insurance advice prior to tender;
- an employer-tenant should consult his landlord on the insurance arrangements;
- due to the change in counting days due to bank holidays, employers and in relation to sub-contracts, contractors should bear in mind the importance of serving payment notices and pay less notices on time and the consequences of not doing so; and
- users of the new documents will need to be trained in their use.
The JCT suites are being updated on a suite by suite basis; however, the date for publication of the other updated suites of contracts has not yet been confirmed.
For more information on the new suite of JCT contracts or if you would like assistance with drafting a suite of JCT documents for an upcoming project please contact David Rintoul.