JCT 2024 has landed! This is the ideal time to update your contracts

The JCT 2024 suite of contracts has arrived, with the Design and Build Contract being the first to be released.

The JCT has cemented its position as the provider of the most widely used standard form suite of contracts in the UK construction industry, so a new edition to the JCT forms is always an important development for our industry. 

Following our initial review of the JCT Design and Build Contract 2024, we have set out some of the key headline updates to the 2016 edition below. Given the focus this time round on important legislative updates, we anticipate the market (including funders) will take a swift approach to transitioning to the JCT 2024 forms.

Legislative changes: updates have been made to reflect:

• some of the requirements of the Building Safety Act 2022;
• the key changes brought about by the Corporate Insolvency and Governance Act 2020; and
• the Supreme Court's decision in the case of Triple Point Technology, Inc v PTT Public Company Limited (2021) UKSC 2019/0074, i.e. the liquidated damages provision has been amended to state explicitly that liquidated damages can be levied up to the date of termination of the contract.

Our view is that JCT has taken a 'light' touch approach to addressing the key issues arising from the Building Safety Act 2022 and, as such, we expect certain bespoke amendments will still be required particularly in respect of the design and construction of higher risk buildings.  However, generally, using the JCT D&B Contract 2024 instead of the JCT D&B Contract 2016 will significantly reduce the number of amendments needed to reflect the current legislative position.

Risk allocation:

• Design: a new exclusion clause has been introduced dealing with 'fit for purpose' type obligations which could have implications for employers expecting strict compliance with specification in return for paying a design and build premium.
  Asbestos, contaminated materials and unexploded ordnance (UXB): new provisions to manage the discovery of asbestos, contaminated materials and UXBs have been added.  There are new Relevant Events and Relevant Matters (giving rise to an extension of time and loss and expense respectively) for the discovery of asbestos, a contaminated material or UXB requiring the Contractor to cease work, and for compliance with the Employer's instructions to permit investigation, disposal or removal of the same.
• Epidemics: there is a new Relevant Event and optional Relevant Matter for epidemics which impact on the availability of labour, goods, materials or services necessary for the proper performance of the works.
• Exercise of a statutory power: this Relevant Event from the 2016 edition has been broadened to include the passing of new laws, changes to existing laws and the publication of new guidance, and now includes devolved administrations of the UK government and local and public authorities as well as the Construction Leadership Council (in the case of guidance).  A matching optional Relevant Matter has been added and the related termination right in clause 8.11 has been updated accordingly.
• Extension of time procedure: the time available to the Employer to assess extension of time claims has been reduced from 12 to 8 weeks.  However, the Employer now has 14 days from a Contractor's notification or particulars of a likely delay to request further information to allow it to reach a decision on an EoT, in which case the 8 weeks' period would run from receipt of such further information.
• Environment and sustainability: the sustainability and environmental considerations provisions have been revised and moved from the Supplemental Provisions to the operative clauses (in section 2).  The Contractor is encouraged under these provisions to suggest "economically viable amendments to the Works" which "may result in an improvement in environmental performance and sustainability" during the carrying out of the Works or of the completed project and a reduction in environmental impact.
• Overall cap on liability: while a total liability cap has not been introduced into the JCT D&B Contract 2024, the related JCT Guide comments on how the parties may wish to include one as an alternative to the long-standing limit on the Contractor's loss of use etc. under clause 2.17.3.  The Guide also goes as far as providing example cap drafting, containing a handful of carve outs.

Conditions of sub-contracting: a requirement has been added for subcontracts not to terminate upon termination of the main contract where the Employer and/or a funder have step-in rights under third party rights or a collateral warranty, until the relevant period has expired or a notice to step in has been issued.

Dispute resolution: a new requirement for parties to notify potential disputes to senior executives to seek a negotiated settlement has been added.

Termination:

• Grounds: there is a new termination right for either party in the event of an epidemic which causes the whole or substantially the whole of the uncompleted Works to be suspended for a continuous period.
• Payment: revisions to the termination provisions at clause 8 have been made to ensure clear compliance with the Construction Act (including the introduction of a due date and final date for payment for each termination scenario) where the Contactor's employment is terminated under these provisions and a final payment becomes due to either party.

Modernisation and streamlining: adoption of gender-neutral language and providing

The new 2024 edition of the JCT D&B Contract does not alleviate the need to amend the form to reflect the commercial market's and your business' expectations where such works are procured, and at RPC we are on hand to provide you with tailor made schedules of amendments to the JCT 2024 forms and to provide any training required to support you in making a seamless transition to the new suite of contracts.