How To Set Up And Use A JCT Contract
What is a JCT Contract?
A JCT contract is one of a suite of building contracts that are available as pre-prepared contracts for your use in order for you to make a formal, clear, and legally binding contract on the parties to your own construction project(s).
The JCT Contract suite of contracts is one of the most commonly used suites of contracts in the UK construction industry, and it is popular for a number of reasons. This can be partially attributed to the JCT Contract suite of contracts having designed standard forms to suit a wide range of projects and procurement options, and the forms having been drafted to be fair for each party to the contract. Additionally and very importantly, these contracts are tried and tested by a range of users in the construction industry.
The Joint Contracts Tribunal is made up of representatives from all the regular users of the JCT suite of contracts, ie, client bodies, designers, project managers and administrators, contractors, and subcontractors. Thus these users have many years and decades of using the JCT contracts in practice and the advantages and disadvantages of various forms in use. Hence the JCT Contract Tribunal has updated the contracts over decades of use incorporating and continuing to use what works well and modifying what has not worked, so it has evolved to reflect best industry practices.
JCT Suite Of Contracts
The JCT publishes a range of contracts from those designed for use on simple home extensions, known as the JCT Minor Works Form of contract, right through to other contract forms that may be suitable for the most complex projects up to multi-million-pound values.
The JCT state that their most commonly used contracts are the JCT Standard Building Contract, the JCT Contract Design and Build Contract, and the JCT Contract Minor Works Building Contract.
Standard JCT Contract
The Standard JCT Contract is designed to suit larger works, rather than Minor Works, or it could be possibly works that are of a complex nature that involve a high degree of building services or specialist work (for example) and it is designed to include provisions that allow:
- for the contractor to design specific parts of the works.
- for the works to be carried out in sections, stages or phases.
- for specialist subcontractors to be named in the contract.
The Standard JCT Contract envisages the works are to be designed or detailed on behalf of the Employer, and for the Employer to be contractually obliged to provide drawings and documentation to define the scope of the works and the quality of the works. The Standard JCT Contract is available in several different variations depending on whether the contract is to be a lump sum or is subject to remeasurement, both of which may be acceptable in certain circumstances.
The Standard Form is most often encountered on large complex commercial construction projects, particularly those where the specification and the design of the works are particularly important factors to the Employer.
JCT Design and Build Contract
The JCT Design and Build Contract is designed to suit projects where the Contractor is to be responsible for both completing the detailed design of the works and the construction of the works. In such circumstances, the Employer will provide preliminary information to the Contractor, in a tender document entitled The Employer’s Requirements and the Contractor responds with his Contractors´ Proposals (the Contractor´s offer). The Contractor´s Proposals may not correspond exactly with the Employer´s Requirements, and so there may well be a period of negotiation during which an agreement may be found in some revised Contractor´s Proposals before both parties enter into a Negotiated Contract on a Design and Build basis. Ideally, under this type of contract, the Contractor will be paid a lump sum price to complete the detailed design and construction of the works envisaged in the Employer’s Requirements, as may be revised during the negotiation period before the contract signature. In practice, there may need to be provisions made for the evaluation of variations to the originally agreed scope of the works as contracted. For example, fitting out of a shell and core contract for a commercial building could well be a mutually agreeable means of valuing works for the benefit of the Employer and the Contractor, where tenant fitting out is now known at the outset.
This form of Design and Build contract is very popular due to its single point of design responsibility, which means that if a defect is found in either the design or construction scope, then the Employer need only pursue the single Contractor rather than ascertain whether it arises from faulty workmanship or the design of one of the various consultants, as would have taken place traditionally when the client appointed various designers, and then a separate contractor to implement those designs.
The Design and Build Contract is frequently seen on a wide range of commercial projects, particularly where the certainty of cost and speed of construction are important factors for the Employer.
Importantly there still needs to be good relationships between the parties in order for the project to be successful.
JCT Minor Works Contract
The JCT Minor Works JCT Contract is designed to suit projects where:
- the scope of the work is simple in character;
- the work is designed by or on behalf of the Employer (for example by design consultants);
- the Employer is contractually obliged to provide drawings and or specifications and or schedules of works to define totally the quantity and quality of the work; and
- an Architect/Contract Administrator is to be appointed to administer the terms and conditions of the contract.
There is also another version of the JCT Minor Works Contract which contains provisions for the Contractor to design part of the works.
The JCT Minor Works forms may be typically seen on small simple commercial or residential projects.
Which JCT Contract Should I Select?
An important question that is frequently asked is: “Which form of JCT contract should I choose for my project?”
The answer to that question of which form is the most appropriate will depend on the exact nature of the project and the most suitable procurement strategy for that project, taking into account all of the project deliverables, such as drawings for different purposes (Planning Approval, Building Control Approval, Construction Detailed information or production, As-built drawings ) and obligations on implementation to time, cost and quality. Another factor to consider is whether the terms and conditions within the standard JCT suite of contracts should be or need to be amended to suit the specific needs of your project.
Procurement strategy, contract selection, and drafting of any contract amendments are important tasks as the resulting contract will define the parties’ roles, rights, and obligations for the project. Getting this wrong can have a significant negative impact on the project or one or more parties.
As such we would recommend that you contact an expert prior to selecting a form so that we can provide detailed procurement and contract advice specific to your needs.
The Format And Content Of The JCT Contract
The majority of the JCT suite of contracts follow the standard format of:
- The Articles of Agreement
- The Contract Particulars (where the parties set out project-specific information)
- The Conditions of Contract; and
- The Schedules (which can be added to the contract if desired)
The Contract Conditions are then typically divided into the following main sections:
- Definitions
- Carrying out the works or Execution of the Works
- Control of the works
- Payment
- Variations
- Injury, damage and insurance
- Assignment, third-party rights and collateral warranties
- Termination
- Settlement of disputes
If you need contractual advice about any particular project, then please do contact us if you require detailed advice on specific contract clauses for particular projects.
Contract Amendments
Any necessary amendments to the standard form of contract to suit your particular project should be considered very carefully as they may alter and affect your rights under the contract, and if not suitably worded these may become onerous contracts, with unknown adverse effects.
Such considerations to be aware of include bespoke, special or amended payment provisions, defects liability clauses, unusual amounts of retention to be held by the Employer, rights of set-off clauses, design responsibility and warranties including collateral warranties, an extension of time, loss and expense, conditions precedent, acceleration, supplementation, and any special circumstances or conditions for JCT Contract termination.
We strongly recommend that you take expert legal advice before considering changing the fundamental terms of a standard construction contract.
Alpus Can Help You To Decide On The Right Procurement And Contracting Strategy For Your Project- Collaboration Is The Best Approach
The procurement strategy that you decide on and the sort of contracts that you may enter into has a big bearing on the likely results that you will get from your project.
It is essential to take the appropriate expert advice before entering into any form of design and or building contract. The implications of entering into a contract that does not properly reflect your intentions can lead to you taking on more risk and responsibility than you may have intended.
Many design and construction disputes can be avoided and also mitigated by ensuring that the design and or construction contracts are properly prepared and understood by all the parties prior to entering into contracts and commencement of works on design or construction.
Alpus believes in adopting collaborative contracts as a policy and we can advise you on the best way to set these up if we are involved at a sufficiently early stage in the project.
Alpus Project Management offers advice in respect of procurement strategies, contract drafting, and clause amendments, and we also strongly recommend initially undertaking a comprehensive risk assessment and then regularly undertaking risk reviews of projects that you may have in mind. There is a whole process of setting up a project for success involving the 20 Key Factors For Project Success as identified in the book “Project Deliverance: The 20 Key Factors For Project Success (or Failure) by Alan Edwards FCIOB FAPM.
If you would like to speak to us about any particular projects, then do not hesitate to call Alan on +447539141257 or +443332241257, schedule a call with Alan on https://calendly.com/alanje or drop an email to alan@alpusgroup.com.