The JCT is refreshing its entire suite during 2016, with the first out of the gates being the JCT Minor Works Building Contract 2016 (with and without design). Here we look at some of the major changes, which might be mirrored across the rest of the 2016 suite.
Many expected amendments to the payment provisions, but maybe not quite to the scale that has been delivered. That said, the amendments more reflect a change of approach than major substantive overhauls.
Under the JCT MW 2011, there was a clear line in the sand between interim payments due before practical completion and after practical completion. This has been amended so that the period between interim applications during the rectification period is one month rather than two.
It was often the case that applications for payment were made by Contractors under JCT MW 2011, even though strictly speaking there was no contractual mechanism for those. The 2016 edition reflects what happened in practice, by making express provision for contractors’ applications. That means that a failure to issue a payment certificate now means the application (provided it is validly issue) will automatically become a default payment notice, ending the need for a contractor to proactively issue a payee’s notice.
Many will be glad to hear that no major changes have been made to provisions regarding payment and pay less notices – the amendments instead reflect minor maintenance and a tidy up. Clauses 4.5 and 4.6 of the 2011 edition have been merged to create a new clause 4.5, and instead clause 4.6 deals with the consequences of failing to pay an amount due.
The introduction of defined Interim Valuation Dates (IVD) seeks to cement the current position that should the contract particulars not be completed, then the first IVD is to be one month after the commencement date. With the Fair Payment Charter in the background, this is a move towards establishing a coherent and ‘fair’ payment system throughout the supply chain. With the inclusion of the defined IVD, certainty has been given to the due date for payment, being seven days after the IVD.
Risk and insurance
Maybe one of the biggest irritants of the 2011 editions was in relation to works on existing structures, especially for tenants in a multi-let property. In most circumstances ‘Option C’ insurance would be used and this assumed that the employer had taken out the relevant building insurance for the structure.
Again the 2016 edition is taking a more practical approach and has recognised that flexibility for the parties can be a positive step. The new edition allows for works to be insured by ‘other means’ and advises tenant employers to involve the landlord from the very outset and to take proper insurance advice at the earliest opportunity. Rather than applying a blanket catch all, each project should be treated as being unique and a commercial but practical approach should be taken by all parties.
The 2016 edition includes various new provisions to ensure that the contracts are public sector friendly without the need for major amendments. The ‘two day rule’ between the architect/contract administrator issuing oral and written instructions has also been removed: although written instructions are still required no time bar is in place following oral instructions. The CDM provisions have also been updated to reflect the amendments to those Regulations which came into effect last year.
It is not surprising that many of the anticipated amendments have been incorporated, but one change that has not transpired is the inclusion of a BIM protocol, or similar, which many expected to make an appearance in 2016. That may simply reflect that BIM is unlikely to affect many ‘minor works’ projects – we will have to wait until the remainder of the updated suite materialises during the rest of the year to see how BIM is dealt with (if at all).
Although the volume of amendments to the payment provisions was a surprise to many, they seem to be welcome additions that allow for more certainty and focus on the practical approach that should be taken. The JCT MW suite has not been particularly litigated upon, so it will be interesting to see how these amendments might change that and/or how the industry reacts in the course of dealing with them generally.
With these being the first of many updates to come in 2016, they give the first indication of the JCT’s approach to key issues, in particular payment. We look forward to updating you on the 2016 versions of the more substantial contracts, including design and build and standard building contracts, as and when they are released.
The content of this article is for general information only. Law covered as at July 2016.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at July 2016.