Why use a JCT contract and what to do when things go wrong?
In the world of building works you have probably heard about the JCT (Joint Contracts Tribunal) Contract concept. It’s a standard form of contract widely used in the industry. There is no single JCT contract to answer all the needs. There are various contracting methods and various JCT contract’s addressing these scenarios. But for the purpose of this blog let’s discuss a Traditional form where the contract is signed between you as the Client (or the Employer) and the Builder referred to as the Main Contractor.
Actually before we dive into the JCT environment let’s also explain what is meant by ‘traditional’ in this case. You might have heard about different procurement methods in the industry. If you’d like more details on it you can go back to this blog 👇 where I talked about it in more detail.
But just as a quick refresher a Traditional contract is when you as a Client employ all of the designers and the ultimate design responsibility stays with you. The contractor might also have limited responsibility (usually referred to as Contractors Design Portion) but that wouldn’t include everything typically. Of course there are JCT forms of contract addressing Design and Build scenarios as well but that’s another subject for another blog.
So when we talk about a JCT Contract for a traditional procurement we are usually talking about:
Now each of those is slightly different and more complex as you go down the list. But the format of them is fairly similar. They would all include these five sections:
Agreement - stating who the parties are, where and what needs to be done and what the supporting documents are (drawings, schedules etc)
Articles - stating what the contract sum is and identifying the assisting parties, consultants and the like
Contract Particulars - containing details of the appointment such as start/completion date, payment terms, insurances etc
Conditions - standardised terms describing roles and responsibilities, defining processes and procedures for all typical events including disputes.
Appendices - all supporting documents including Drawings, Schedules, Quotes, Specifications, Requirements and the like.
So for clarity, JCT contract should not really end on the last page of the book. It should ALWAYS contain additional documents.
Who is a Contract Administrator? JCT contracts are quite administration heavy. It’s also been proven that construction contracts are the most disputed. In other words - people argue a lot. And when you have 2 parties against each other that’s a recipe for a dispute right there. Therefore JCT has introduced an additional person in this equation that should be impartial and ensure the terms of the contract are followed.
Which form of the JCT family should I choose then?
The form used would normally be dictated by how complex your project is, what information is available at the point of contract, what supporting documents you have and what the chances are of things going wrong.
For example; a pure refurbishment work of an apartment at £50k contract value wouldn’t necessarily need JCT Standard. But a £5M one - most likely would benefit from it.
These types of decisions are led by the risk assessment carried out by whoever advises on the tender process. If that’s an architect, quantity surveyor, project manager they should be able to advise on which JCT to go for and why.
Are JCT contracts good?
My favourite question. When people come to me to check their contract and ask if it’s good they usually mean - is it good for me? Is it good for the project I’m trying to use it for? And my answer is usually the same. Any contract is as good as the terms and supporting documents contained within it. But unless they are followed for the duration of the work - they won’t give you much security.
JCT contracts were created nearly 90 years ago, updated and adapted as per court proceedings on a regular basis. We are currently using 2016 revisions that include all of the 2015 legislation changes. But there is no one correct answer to every project. Everything in the contracts world is based on minimising risk and maximising benefits. It’s sad to see people spending lots of time researching forms of contract, even getting legal advice before signing them but then completely ignoring the terms before the ink has even dried. If you or your Contract Administrator don’t follow procedures within a JCT contract you might be in breach. You might not be as well protected as you wish to be. And yet! These things come to light when things have already gone wrong and people start seeking help or legal advice to resolve the issue. If you’re one of them by Emergency Rescue Session is for you 👇👇👇
Before going down the lawyers route, let me help you build your
timeline of events and evaluate at what point things have gone wrong. It’s always cheaper to find a mutual solution than get lawyers involved. Just saying!