08/20/2024 | News release | Distributed by Public on 08/21/2024 02:00
A round-up of new and updated construction contracts published recently.
The Joint Contract Tribunal (JCT) continues to launch the 2024 updates to its various suites of standard forms of contract. We have had the design and build, minor works and intermediate suites and now await the release of the 2024 Edition of the Standard Building Contract family on 21 August 2024 (see the latest press release).
The JCT's aim was to modernise and streamline the contracts and reflect recent legislative changes such as the Building Safety Act 2022 (BSA 2022) which introduced the new Part 2A of the Building Regulations 2010. It has also updated the termination, accounting and payment provisions in keeping with the Housing Grants, Construction and Regeneration Act 1996 (as amended) (Construction Act) and made amendments to reflect the new insolvency grounds introduced in the Corporate Insolvency and Governance Act 2020.
To date, revised suites published include:
Updated pre-construction services agreement, collateral warranties and project bank documents have not yet been released. In the case of collateral warranties, that delay could be down to the JCT drafting committee awaiting the Supreme Court's decision in Abbey Healthcare (Mill Hill) Ltd v. Augusta 2008 LLP (formerly Simply Construct (UK) LLP) (2024) UKSC 23 on whether a collateral warranty is a construction contract.
The Supreme Court gave its decision on 9 July 2024, finding that a collateral warranty is not a construction contract for the purposes of the Construction Act. As Kirsti Olson noted in her recent article on the Abbey Healthcare decision for Construction Law here, the decision might mean that "drafters make a simple change to their contract forms [to give a right to adjudicate] and move on". As the Supreme Court noted, parties may still choose to contract into the adjudication regime. However, Kirsti thought this unlikely to be a common practice: "It is not in the best interests of contractors (or their insurers) to give a third party the right to adjudicate against it [in a collateral warranty], at short notice, at any time in the 12 years after a building project has been completed."
Focusing on DB 2024, the following summarises the key changes and gives a general flavour of the JCT's approach to the 2024 amendments:
The JCT has reminded users in Scotland that JCT contracts are for use in England, Wales and Northern Ireland.
The Scottish Building Contract Committee (SBCC), the Scottish College of the JCT, "will be adapting most JCT 2024 contract suites in the coming year to produce contracts compliant with Scottish law and practice".
In the meantime, current editions of SBCC contracts (mostly comprising the 2016 edition) should be used in Scotland.
Refer to www.sbcconline.com for more information about the SBCC 2024 or get in touch with [email protected].
The Royal Institute of British Architects (RIBA) has published its Building Regulations Principal Designer Professional Services Contract.
It is aimed at commercial clients or public authorities appointing a Building Regulations Principal Designer on projects using a traditional form of procurement.
"It is suitable for larger, more complex commercial projects and provides a comprehensive set of contract terms, including a clear set of roles and associated services" and … "can also be used for commissions procured on the basis of a traditional form of building contract where tendering occurs at the end of Stage 4 (Technical Design)".
RIBA also advises that this new contract form is "not suitable for the appointment of a Principal Designer on non-commercial work undertaken for a consumer client, such as work done to a client's home" and is also unsuitable for the appointment of a CDM Principal Designer.
The City of London Law Society (CLLS) has replaced its 2007 edition of the CLLS letter of intent with a 2024 edition for use on construction projects taking place in England.
Key objectives of the letter of intent remain (as highlighted by the guidance at the letter's end): the identification of the contract form into which the parties intend to enter; a statement of a "limited scope of activities" that the contractor is to carry out; and the mechanism for payment of "an agreed/capped amount with an expiry date for the same".
The CLLS's 2024 revisions include changes that reflect the introduction of the BSA 2022 and enable the document to be adapted "for use efficiently from project to project" by including a separate Table of Particulars to allow project-specific details to be added without having to amend the body of the letter.
Finally, the CLLS guidance comes with a sensible reminder that "letters of intent should be regarded as an interim construction procurement solution".
For further information or to discuss any issues arising from the above that affect your business, please get in touch with one of the Key Contacts.