In the last fortnight, two suites of standard forms of contract have been updated. Last week, the Association for Consultancy and Engineering (ACE) published an updated suite of professional appointments, the ACE Agreements 2009, and, on Monday, the Joint Contracts Tribunal (JCT) began publishing its 2009 revisions, a process that will last into August.
Anyone who is involved in construction and engineering projects has to decide whether to buy the updated forms of contract. In many cases there is no real choice, the updated forms must be purchased because the old ones will no longer be available and also because nobody in our industry wants to appear out of touch with the latest developments. This gives rise to some important questions:
- Are the updated contracts fairer, or at least more likely to be agreed by both parties without amendment?
- Was it essential to update the contracts?
- If changes were necessary, why not publish them in (cheap or free) amendment sheets?
- Why do updated contracts cost so much?
- Why does a publisher delay publishing its electronic updates until after the hard copies are out? (The JCT 2009 revisions have been published in hard copy, but will only be released in electronic form next month.)
Trouble in future?
While these issues have been highlighted by the publication of the ACE Agreements 2009 and the JCT 2009 revisions in close succession during a recession, they are by no means limited to the ACE and JCT. Nevertheless, these issues raise some real concerns for the construction and engineering industry:
- Unnecessary cost. There is a danger, especially in the current economic climate, that users of the contracts are facing an unnecessary additional cost. In response, users will either purchase the updated contracts and cut corners elsewhere, or choose not to purchase the updated contracts, to the detriment of their business and potentially any project on which they are engaged. This cost of purchasing standard form contracts is felt most keenly by smaller contractors, sub-contractors and professional consultants (not to mention other professionals such as lawyers, adjudicators and experts).
- Copyright theft. If contracts are updated frequently and seen as expensive, more people will turn a blind eye to illegal photocopies or PDFs of the contract. In the long term, standard form contract sales may be undermined by an increase in the tacit acceptance of copyright theft.
- More mistakes. With more frequent updates to standard form contracts (and a greater number of changes in each update) it is easy for users to lose touch with the way a contract operates. This may lead to mistakes in administering a contract or performing works/services under it. This is a particular concern in relation to the JCT 2009 revisions, which were published on 18 May even though the accompanying guidance documents are currently not available for purchase. RIBA Bookshops informed us on 19 May that there was no date for when the guidance would be available, although the JCT expects them to be published later this month (May 2009).
- Increased project costs. Project costs may increase because of the time and effort involved in examining updated standard forms of contract and negotiating new amendments. Whether or not standard form contracts should be subject to amendment, we have to accept that amendments are a fact of life. Again, more frequent changes to standard forms expose smaller organisations to a disproportionately high risk, as they are the least likely to be able to take professional advice when negotiating contract terms or when considering the meaning of an updated contract term in the event of a dispute.
- Loss of trust. Users’ trust in the authors of standard form contracts may falter. This is inevitable if users begin feeling that contract updates are published with contract sales as a factor. At some point, users will begin turning to those standard forms that are updated less frequently, even if they fail to reflect the most up-to-date industry practice. If this happens, it may hinder the construction and engineering industry’s progress in key areas, such as environmental impact, health and safety, dispute avoidance, and workers’ rights.
