Demystifying The Jargon Of JCT Contracts

A JCT is a type of contract.

More specifically, it is a standard form of building contract published by the Joint Contracts Tribunal. The JCT publishes many different contracts, so simply referring to a JCT may cause confusion.

The most commonly used JCT contracts are the Standard Building Contracts. The JCT publishes three forms of the Standard Building Contract, each with similar terms, but which vary in how the price of the works is calculated and how the contractor is paid for the works.

(The Design and Build Contract is also very popular)

Some of the most popular JCT standard form of building contracts include:

• Minor Works Building Contract
• Intermediate Building Contract
• Standard Building Contract
• Design and Build Contract
• Major Project Construction Contract
• Management Building Contract
• JCT CE Contract
• Measured Term Contract
• Prime Cost Building Contract
• Repair and Maintenance Contract
• Home Owner Building Contract

The JCT range of standard building contracts are revised, rewritten and new editions are published every decade.  Although the revised contracts retain many of the key clauses from the previous editions, each contract is rewritten and updated to reflect the growing changes in the market and the law.  It is also a good opportunity for the JCT to rectify any confusion or ambiguity which may exist in previous versions.

Responsibility for the JCT lies with each of the parties to the contract.

Each party will have their own duties, obligations and not to mention, risks, when entering into a contract.

The contract itself merely exists as an attempt to determine exactly what is expected from each party and attempts to allocate risk accordingly.

The JCT standard form of contracts are the most popular construction contracts in use in the UK and as such, they are suitable for almost any kind of works.

There is an appropriate JCT form of contract for any size or scale of works, whether it be a smaller project, such as a house renovation, or a complex construction of a major sports stadium (and almost everything in between), it is simply a case of using the most relevant JCT contract to that particular project.

The JCT also has very useful sub-contracts which are ‘stepped down’ from the main contracts and thus reflect, and where suitable pass, the risk allocation down the supply chain.

Yes, a JCT contract will affect everybody who is a party to that contract.

As a school, and the employer for a project, your main priorities will be to ensure that any building works you contract out are completed on time, within budget, to the highest level of quality and that most importantly, you get exactly what you had planned or asked for.

The best way to make this happen is to ensure that any works which are conducted have a suitable written contract in place, whereby each of the above issues can be addressed and outlined prior to works proceeding.  This will ensure that you get exactly what you had hoped for and to prevent any nasty surprises along the way.

We often encounter projects where no written contract is ever put in place, which can lead to all sorts of problems for either party involved, as the works progress. Remember, everyone is friends at the outset, and they don’t think they will need a contract but having a written contract is undoubtedly the best way of protecting your interests throughout the duration of a project.

A written contract is the easiest and strongest form of protection, and a JCT contract is often a good fit.

Are there typical terms written in a JCT contract that commonly cause problems for contractors?

When looking at the terms of a JCT, a contractor should pay particular attention to any clauses which impose any form of risk onto the contractor.

A sensible contractor will always understand the implications of any contract that they are signing up to and this will be dependent upon the contract in question.

However, the most common clauses, which are of interest to a contractor, are any clauses relating to payment.  It is vitally important that a contractor understands how the payment clauses work.  He needs to know when to make his application and when to expect payment.

The JCT largely incorporates the legislative changes to payment brought about by the revised Construction Act – or if you wish to give it its full name –  The Housing Grants, Construction and Regeneration Act 1996 as amended by The Local Democracy, Economic Development and Construction Act 2009.

A contractor should also understand how extensions of time work under the JCT.  They need to know when they will be able to recover time and money, or when they might be accountable for paying out money due to a delay which has been attributed to them.  This will require an understanding of the clauses which are concerned with time and loss and expense, and for the contractor to become more comfortable with phrases such as “relevant event” and “relevant matter”.

Again, one of the main pitfalls and areas of concern for a client has to be its understanding of how payment works under a JCT contract.  The client must be aware of when each payment application is due and most importantly its rights and obligations with regards to issuing “payment notices” and “pay less notices”.

Failure to adhere to the time frames within the contract when issuing either a payment notice, or a valid pay less notice can mean that the client may have to pay the value of the contractor’s application for that period in full, i.e. whatever the contractor has applied for he will be paid, without deduction.

Although this can normally be off set during further interim payments or at final account stage, it can still be a scary and risky position for a client to find themselves in.

Is design and build more onerous for contractors? If so why?

In one sense, a design and build contract could be described as more onerous for a contractor.  Not only are they held accountable for the quality of their workmanship, but this also extends to the quality of their design and ensuring that the design is fit for purpose.

Throughout the process, the contractor may have to open up the works for inspection by the employer and must ensure that the works meet not only the Employer’s Requirements but also match whatever the contractor put into his Contractor’s Proposals for the works.

When agreeing to undertake a design and build contract, a contractor must ensure that they have relevant experience in projects which are of a similar size and nature and they must fully understand the works which they are being asked to design.

Who does a JCT protect?

A JCT contract ultimately seeks to protect the interest of all parties to that contract.  Not only does having a written contract seek to reduce the chances of any dispute further down the line, it also sets out the obligations and duties of each party to that contract.  As with all written contracts, a JCT contract seeks to provide a degree of certainty for the parties.

Amendments do have the potential to cause problems for either party to a contract. When agreeing to any amendments considerable thought should be given to what each amendment could potentially mean in the long term, and what implications it may have for either party were anything to go wrong.

The English Courts have also been very clear in setting a precedent that they will not interfere should a party freely agree to terms within a contract that turn out to be “unfair” or “a bad bargain” for either one of the parties.  Therefore, it is of the utmost importance that special consideration is given when agreeing to any amended terms.

Finally, the party who drafts the amendments must be aware of the Latin term contra proferentem which translates as “interpretation against the draftsmen”.  This legal rule provides that where a promise, agreement or term within a contract is ambiguous, the courts will infer that the preferred meaning will be the one which works against the party who provided the wording.  Therefore, it is of utmost importance when drafting amendments to a contract that the amendments are clear and that there is no ambiguity with regards to the meaning of the amendment.

A useful tip would be that if you are inserting an amendment, then always track through the document to see how it affects all other clauses, as you may need to make further amendments to allow for this impact.

What is your top tip?

Very simple, but read the contract, be familiar with how it operates and what your rights and obligations are.  Keep a copy to hand.

The amount of people who don’t actually read the contract until a dispute has arisen is surprising, and the risk by that stage is that the ‘horse has bolted’ and you are into the damage limitation zone.

Many thanks to our guest bloggers Quigg Golden. Quigg Golden are leading specialists in the field of construction and procurement law in the UK & Ireland. With over 20 years experience Quigg Golden provide a comprehensive service for contentious and non-contentious construction and procurement matters. With consultants coming from various legal and construction backgrounds, Quigg Golden bring a multidisciplinary approach to representing organisations within both the public and private sectors, main contractors, sub-contractors and suppliers.

Rap Interiors work on JCT projects across London and the UK. For all your London fit out needs and more, contact us on 0333 600 1234 or email refurb@rapinteriors.co.uk