JCT Design and Build Contract 2024 – Key changes from the 2016 edition

The Joint Contracts Tribunal (JCT) 2024 edition

The new edition of the JCT Design and Build Contract was published on 17 April, along with its related Sub-Contract and revisions of the Design and Build Contract Guide and the Design and Build Sub-Contract Guide. It is the first of the 2024 editions of the JCT suite of contracts to be published. There is also going to be a new form of contract this year: a Target Cost Contract and sub-contract.

In this article, we highlight some of the main differences between the 2016 and 2024 editions of the JCT Design and Build Contract.

Some of the changes are necessary to deal with the impact of the Building Safety Act 2022, some reflect the growing emphasis on collaborative working and sustainable development in the industry and others deal with various matters from email service of notices to shorter periods for an employer to act in relation to requests for extensions of time. It is also good to see that the new contract is gender neutral – with references to “it” instead of “him/her”.  Some of the key changes are summarised below.

No doubt many users will wish to revisit their standard form of JCT amendments to address these new or altered standard clauses as well as continuing to seek to amend many of those clauses that have not changed.  As a law firm Brachers, is always available to assist in such activities.

Collaborative working, sustainable development and environmental performance

These issues were covered by optional clauses in the 2016 edition but are now in the main body of the contract and will therefore apply unless deleted by agreed amendments.

New Article 3 requires that the “…parties shall work with each other and with other project team members in a co-operative and collaborative manner, in good faith and in a spirit of trust and respect. To that end, each shall support collaborative behaviour and address behaviour which is not collaborative.”

New clause 2.1.5 encourages the Contractor to suggest economically viable amendments to the Works (but not the design) which, if instructed as a Change, may result in an improvement in environmental performance and sustainability.

New clause 2.2.2 requires the Contractor to provide to the Employer information that the Employer reasonably requests regarding the environmental impact of the supply and use of materials and goods which the Contractor selects.

Building Safety Act 2022 (BSA) changes

No specific amendments have been made relating to the construction of “higher risk buildings” (in essence, blocks of 7 storeys or more or which are above 18 metres in height up to the ground floor of the top storey, that, in England, contain at least two dwellings), however, footnote [40] on page 52 of the new contract refers you to the Design and Build Contract Guide, where the project involves higher risk building work.

Article 7 is new space for the parties to fill in who is to be the Principal Designer and the Principal Contractor under the amended Building Regulations. These are new roles that are in addition to the roles with the same names under the Construction (Design and Management) Regulations 2015, in respect of which Article 6 has to be completed. Unless someone else is specified, the Contractor is the default duty holder in each case.

Clause 3.16 has been expanded to impose obligations on the Contractor in relation to the new Principal Designer and Principal Contractor roles under the Building Regulations.

Clause 2.17.2 is expanded so that the Contractor’s design obligations in clause 2.17.1 are deemed to include not only the Contractor’s obligations under the Defective Premises Act 1972 in relation to the construction of dwellings but also now (because of the insertion by the BSA of new section 2A into the 1972 Act) works to existing dwellings.

Design

The Contractor’s design warranty has been reworded and is now in clause 2.17.1.1.

It is subject to new clause 2.17.1.2, which states that: “To the extent permitted by the Statutory Requirements, the Contractor shall have no greater duty, obligation or liability than to exercise reasonable skill and care as provided in clause 2.17.1.1 in respect of such design and under no circumstances shall the Contractor be subject to any duty, obligation or liability which requires that any such design shall be fit for purpose.”

The reference to Statutory Requirements is meant, presumably, to ensure that statutory obligations, such as those in the Building Regulations and the Defective Premises Act 1972, should override the limitation of the Contractor’s design liability to reasonable skill and care in accordance with clause 2.17.1. The Defective Premises Act requires that dwellings should be “fit for human habitation.”

Extensions of time

Under new clause 2.24.4, the Employer now has only 14 days (previously there was no express time limit) from receipt of a notice from the Contractor of a delay to the progress to the works, to request further information from the Contractor. Under clause 2.25.2, the Employer now has only eight weeks, not 12, to assess an interim application for an extension of time.

“Relevant Events” for extensions of time are extended to include compliance with the Employer’s instructions in relation to: unexploded ordnance, asbestos and other contamination (clause 2.26.4 – and see clause 3.15.3 and 3.15.4 regarding the Employer’s instructions on these); epidemics (2.26.7); new laws (2.26.8.1); and guidance issued by government, public authority or the Construction Leadership Council (2.26.8.3).

Under the 2016 Contract, the Contractor might have been liable to deal with asbestos and contamination at its own expense if the risk of it was reasonably foreseeable by an experienced contractor – Obrascon Huarte v Attorney General for Gibraltar [2014]. That risk seems now to have been passed to the Employer. New clauses 2.26.4 and 4.21.3 (Relevant Matters) may therefore need to be amended on behalf of Employers.

New clause 6.13.5.4 states that, in relation to Insurance Option A (New Buildings – All Risks Insurance of the Works by the Contractor), reinstatement work shall be treated as a Change, for the purposes of claiming an extension of time under clause 2.26.1. Previously it was only treated as a Change under Insurance Options B (insurance of new buildings by the Employer) and C (joint names insurance of existing buildings and the Works in or Extensions to them), or where loss or damage was caused by an Excepted Risk (which remains the case under clause 6.13.6). Excepted Risks are radiation, pressure waves and terrorism that is not covered by required insurance.

Loss and Expense

Relevant Matters for claiming loss and expense are extended to include, under clause 4.21.3, Employer’s instructions in respect of unexploded ordnance, asbestos and other contamination. The parties can also opt to apply clause 4.21.6 so that the effect of epidemics on the availability of labour can be a Relevant Matter and clause 4.21.7 so that the exercise of statutory powers and guidance that affect the progress of works is a Relevant Matter.

Asbestos and contamination

Clause 3.15.3 requires the Contractor not to disturb asbestos or contamination and to cease work if it is dangerous or carrying on work would prevent or impede its removal. The Contractor must inform the Employer of its discovery and where it is and the steps being taken not to disturb it and to cease work if appropriate. Under clause 3.15.4, the Employer is then to issue instructions.

Fluctuations

The price fluctuation provisions referred to in clauses 4.2, 4.12 and 4.13 are now all on-line only (from the JCT). The 2016 edition included Fluctuation Option A as printed Schedule 7.

Termination

The ability to terminate following a suspension of work that extends as long as the period stated in the Contract Particulars, has been expanded to refer to epidemics (8.11.1.5), changes in the law (8.11.1.6.1), exercise of statutory powers (8.11.1.6.2 is a shortened version of old 8.11.1.5) and the publication of guidance (8.11.1.6.3). As before, notice of proposed termination has to be given and if the suspension ceases within seven days of that notice, then there is no right to terminate. The default period of suspension (if no other is inserted by the parties in the Contract Particulars) is 2 months.

The definition of “Insolvent” in the termination provisions has been updated to include reference to the new moratorium introduced by the Corporate Insolvency and Governance Act 2020.

Termination Accounting

Termination accounting and payment provisions in clause 8 have been updated. A new definition, “Termination Payment”, has been introduced, regarding the sums payable by one party to the other, depending on the grounds for termination. New clause 8.13 sets out a formal mechanism and timetable for payment of the Termination Payment, with a due date for payment, service by the Employer of a Termination Payment Notice, a final date for payment and a pay less notice.

The provisions for payment of the termination account in the JCT DB 2016 were less prescriptive, and did not set out any process regulating payment of the final amount due, or make clear whether sums calculated as due on termination may be subject to a pay less notice.

Subcontracts

Clause 3.4.1 now requires not just that the form of any subcontract must provide for its termination if the main contract terminates but adds that such termination will not occur where a third party has the benefit of rights to step into that contract, under a collateral warranty or third party rights document, until the period for exercise of the step in rights has expired without them being exercised. In the meantime, the sub-contractor can suspend its work from the date of termination of the employment of the main contractor. Any such suspension is deemed to be as a result of an instruction of the Employer under the main contract, passed on to the sub-contractor as a direction by the Contractor.

Disputes

Under clause 9.1, each party must promptly notify the other of a matter that is likely to give rise to a dispute or difference and senior executives must meet “as soon as practicable, for direct, good faith negotiations to resolve the matter”. This was optional Supplemental clause 10 before, in very similar wording. Its inclusion reflects the government’s Construction Playbook. Compliance with it is not a pre-condition to commencement of legal proceedings and, of course, does not delay or prevent the right to refer a dispute to adjudication.

Clause 9.4: arbitrations have to be under the JCT Construction Industry Model Rules 2024, once published, unless the parties amend clause 9.4.

Notices

Clause 1.7 contains wording to regulate service of notices by email. Clause 1.7.3 permits service of notice by email in all cases, except where the parties have agreed otherwise and also subject to clause 1.7.4. Where a clause in the Contract requires a notice to be served in accordance with clause 1.7.4, email service is only permitted if the parties have expressly agreed in the Contract Particulars (against the reference to clause 1.7.4.2) to permit that.

The JCT Design and Build Sub-Contract 2014

Of course, the Sub-Contract contains back-to-back amendments but also the following.

The indemnity given by the Subcontractor for putting the Contractor in breach of the Main Contract (2.5.1) now includes a requirement that the Contractor must take reasonable steps to mitigate any claim, damage etc..

There is a new time limitation provision (clause 2.5.2) restricting the right for the Contractor to make a claim against the Sub-Contractor after six/12 years from practical completion of the main contract works or the end of the Rectification Period, depending on when the breach occurred.

Further guidance and support

Our team of construction lawyers can help you revisit your standard form of JCT amendments to address these new or altered standard clauses.

This content is correct at time of publication