Practical Law

The JCT announced the headline changes in Revision 2 2009 to its Standard Building Contract and the Design and Build Contract on 18 May 2009. It also confirmed that it would publish revised guides to the two contracts, showing which clauses have changed from the Revision 1 June 2007 versions.

As we keep our maintained resources up to date with law and practice, we set about making sure the references to these contracts all remained correct. Nearly all of them did. However, we have noticed some small changes throughout the contracts. The question is, are they significant?

Fixing the completion date

As we say in our practice note, Revision 2 2009 has amended clause 2.28.1 of the Standard Building Contract by changing “in the opinion of the Architect…” to “in the Architect…’s opinion…”.

In practice, we anticipate that this will be unlikely to affect the interpretation of the clause. However, note that clause 4.23 of the same contract still uses the phrase “as soon as the Architect… is of the opinion”. While changing this clause to use “Architect’s opinion” would have required a more detailed amendment than the simple substitution of words, this does leave a standard form contract with inconsistent references to the architect’s opinion.

Loss and expense

Revision 2 2009 removes the words “from time to time” from clause 4.23 of the Standard Building Contract, in the context of the architect’s duty to ascertain the contractor’s loss and expense (or instruct the quantity surveyor to ascertain that loss and expense) (see our practice note).

The amendment obliges the architect to make that ascertainment “as soon as” he decides that regular progress has been or is likely to be materially affected. It is no longer as clear, at least in clause 4.23 itself, that the duty to make that ascertainment is a continuing duty.

In contrast, clause 4.25 of the Standard Building Contract still refers to amounts ascertained “from time to time”, suggesting that ascertained amounts may be reviewed and kept up to date.

It is conceivable that this change could lead to a dispute, for example about whether the architect has ascertained loss and expense promptly enough or re-assessed loss and expense in accordance with the contract.

Notices and the electronic communications clause amalgamated

The JCT has amalgamated the notices clause and the electronic communications clause in both the Standard Building Contract and the Design and Build Contract (clauses 1.7 and 1.8 in the Revision 1 June 2007 versions). In the 2009 versions, clause 1.7 has been re-written entirely.

Once users are familiar with the new clause, it certainly makes sense to unify the notices and communications requirements in one contract term.

Notices: a change to “in writing” and clauses re-numbered

Throughout the contract, it appears that references to individual clauses’ written notices or communications requirements have been deleted. For example, in the Standard Building Contract:

• In clause 3.10.1, “in writing” is deleted.
• In clause 7.1, consent to an assignment does not now expressly refer to written consent.

We anticipate this amendment will generally be welcome.

One knock-on effect of the amendment is that the clauses in the 2009 versions that deal with the effect of the Final Certificate or Final Statement, have been re-numbered (clause 1.9 in the Standard Building Contract and clause 1.8 in the Desing and Build Contract).

In the past, when a clause was deleted, to avoid later clauses having to be re-numbered, it was common for the JCT to insert “Number not used” where the deleted clause used to stand. This helped to minimise the need to re-learn key clause numbers, change a schedule of amendments or alter a contract document that referred to the clause.

If a dispute arises, the Technology and Construction Court (TCC) will no doubt more than cope with any issues caused by a discrepant reference to an “old” clause number. However, it may be harder for parties of limited financial means to keep up to date with changing clause numbers in contract negotiations or, for example, adjudication proceedings.

Although “number not used” may look messy, if it helps contract users in practice, might that practice have been adopted here?

Liquidated damages (LADs)

In the 2009 versions, clause 2.29.2.2 of the Design and Build Contract and clause 2.32.2.2 of the Standard Building Contract now refer to LADs being deducted from “sums” due to the contractor, instead of “monies” due to the contractor.

It would be a brave party who took the point that an employer’s or architect’s notice that referred to an intention to deduct LADs from “monies” not “sums” was somehow invalid and yet, if the clause was not “broke”, why did it need to be fixed?

This amendment may now create discrepancies between the text of a previously well-known JCT clause and the text of the well-rehearsed letters and notices sent by JCT contract users in practice, when LADs need to be deducted. As LADs are commonly a contentious area under any construction contract, creating a greater potential for arguments is unwelcome.

More limited professional indemnity insurance

Construction insurance can be a contentious area on a project. The JCT may simply be “moving with the times”, but note that in the JCT Contract Particulars, alongside reference to clause 6.11 in both contracts, Revsion 2 2009 now refers to a default aggregate amount of professional indemnity insurance cover (if required under the Standard Building Contracts) for both:

• Pollution and contamination claims (this already appeared in the earlier revisions of both contracts).
• “Asbestos claims”.

The parties also have to specify whether cover for “fungal mould” claims is required.

Note: the JCT Contract Particulars do not give a default position on fungal mould claims, so this is something the parties must now agree on, for each project.

We don’t claim that this is a universal list: it is a list of some of the issues we came across when updating our maintained resources. Please feel free to add your own thoughts as comments, below.