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MEETING KINDLY SPONSORED BY SHADBOLT & CO LLP
New JCT 2005 Contracts
John L Riches, 11th October 2005
Following an enjoyable and enlightening talk on 'Bad Decisions' in February, we were delighted to once again welcome John Riches to the Branch for the October meeting; this time to bring us up to date on the new JCT 2005 Contract Forms. We were lucky to have the opportunity to learn about the many developments in the new Contracts from someone who really has been at the 'coal face' - John has spent a great deal of time over the last two years in his role as a member of the JCT drafting committee responsible for bringing the Forms up to date and in line with the requirements of the industry.
John started by giving us an extract from the judgment given by Lord Salmon in Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd [CA 1970 1 BLR 111]:
"The form of this contract has been much criticised during the course of the argument - and not without justification. Indeed, if a prize were to be offered for the form of a building contract which contained the most one-sided, obscurely and ineptly drafted clauses in the United Kingdom, the claim of this contract could hardly be ignored even if the RIBA form of contract [the forerunner to today's JCT Forms] was among the competitors."
Fortunately, JCT contracts have evolved somewhat since then!
To give an understanding of the way in which the JCT Forms are drafted and developed, John then gave us an insight into the workings of the Joint Contracts Tribunal itself. JCT has been producing standard forms of contracts, guidance notes and other standard documentation for use in the construction industry since 1930 - almost 75 years. In 1998 the Joint Contracts Tribunal became a limited company.
Prior to May 1998, JCT Forms were issued and updated by 11 constituent bodies, although this reduced to 9 when the 3 main Local Authority Associations merged to form the Local Government Association. All new Forms required the agreement of all 9 bodies before they could be published, and one can only imagine how unwieldy a process this might have been. However, following a suggestion made by Sir Michael Latham in his eponymous Report, the process was refined by making it necessary only for those bodies whose members would be a signatory to a Form to have the right to approve and authorise its publication.
Today the JCT is made up of 8 member bodies to reflect the various constituent parts of the industry. These are: the Association of Consulting Engineers, the British Property Federation, the Construction Confederation, the Local Government Association, the National Specialist Contractors Council, the Royal Institution of British Architects, the Royal Institution of Chartered Surveyors and the Scottish Building Contract Committee Ltd, the last being responsible for making the Contracts accord with Scottish law. Each has a representative on the JCT's Board of Directors. Representatives of these bodies also make up a number of 'Colleges', with input in the drafting process. The main body of work is then carried out by the Drafting Committee, which brings together the views and desires of the Colleges, ultimately reflecting the demands of the industry itself.
The 2005 Contract Forms have been created to satisfy the changing needs of the industry. The publisher has changed from RIBA and Construction Industry Publications to Sweet & Maxwell, and the JCT now owns the rights to publish the domestic sub-contracts. The long term policy is a sound one, focussed as it is on the provision of integrated suites of contracts.
There have been many developments to make the new Forms easier to use, including colour coding and a helpful system of abbreviations to help users find their way around. Loose-leaf supplements have been abandoned, with the relevant sections included in the Forms, although they are 'activated'? only if selected. Another development is that Local Authorities no longer have separate versions of the JCT Forms; all the Forms can now be used by both private and Local Authority employers alike. Perhaps the most helpful development, however, is the introduction of a 'wizard-based' electronic version, which will take users through the preparation of the Contract one step at a time, and will allow them to print only the sections they require.
John then introduced what he described as the 'template' for all the other Forms (the only exception being the Major Project Form) - the Standard Building Contract with Quantities (SBC/Q). The provisions contained in SBC/Q 'step across', or are omitted as appropriate, in the other forms based upon it. The SBC is also, of course, available Without Quantities (SBC/XQ), and with Approximate Quantities (SBC/AQ). Under the SBC Forms, users can employ the SBC Subcontract (SBCSub), which is also available with sub-contractor's design (SBCSub/D).
Two new members of the family this time around are the Short form of Sub-contract (ShortSub) and the Sub-subcontract (SubSub). ShortSub and SubSub are generic contracts for use across the whole of the JCT Suite, covering small contract packages where the work is straightforward and low risk.
The layout of all the JCT contracts has changed to make life easier, with a section headed format and easily visible 'Defined Terms'. Whenever a definition of a term exists, the term has capital letters and the definition can be easily found in section 1 of the contract Conditions. The sections have been re-ordered so that the important bits are at the front, in the main body of the Contract, rather than contained in appendices. Third Party Rights have been included.
Another area where change has been made is in the provisions for Extension of Time. The first is that an Extension of Time will no longer be granted, replaced instead with an Adjusted Completion Date. The number of Relevant Events has been reduced from 19 to 13, with a new 'sweep up'? clause covering "any impediment, prevention or default… by the Employer, the Architect/Contract Administrator, the Quantity Surveyor or any of the Employer's Persons…". A similar clause has been included in the Relevant Matters for Loss and Expense.
John finished with a summary of the changes to the dispute resolution procedures. Although the status of mediation was considered during the course of re-drafting, it is included only on an advisory basis. Rather than adopting 100 day Arbitration Rules, JCT has stuck with their own version of the CIMAR Rules, which aims to truncate the arbitration process where appropriate in any event. Adjudications will now take place under the Scheme, and there are new options for the nominating bodies; the CIArb is included for the first time. Arbitration still exists in the new contracts, but is replaced as the default by litigation. A huge amount of work has clearly taken place in the preparation of a new suite of contracts to suit the needs of the industry. Those wishing to know more may find two websites helpful: www.jctltd.co.uk (the website of the JCT itself) and www.jctcontracts.com (the publisher's site containing extensive information about the new Contract Forms).
Editor's note: The Branch committee is grateful to Shadbolt & Co LLP for kindly sponsoring this meeting. Shadbolt & Co are solicitors with offices in London, Reigate, Paris and Athens. For further information on the services that they are able to offer please contact Jonathan Gold at their Reigate office, 01737 226165, email jonathan_gold@shadboltlaw.com.