April 2024 saw the long-awaited publication of the first in the JCTs updated suite of contracts: the JCT Design and Build Contract. (DB 2024), which the JCT formally launched in partnership with Building Magazine on Wednesday 1 May.
And with a bumper release of updated contracts to come on 15 May, including the Minor Works family of contracts, we look at some of the key changes which JCT have made to the 2024 suite with the aim of streamlining and modernising the suite; specifically in the context of the DB 2024.
Key Supplemental Provisions now mandatory
The first thing to note is that DB 2024 has taken key Supplemental Provisions from the 2016 version and incorporated them into the contract as mandatory terms – whether by introduction through the articles, or as distinct contractual obligations. This enforces the desire of the JCT Drafting Committee to reflect the spirit of the Construction Playbook. You may recall from our earlier article here that this encourages collaboration at all levels of the supply chain and a greater focus on sustainability.
For example:
Collaboration
Following the approach long adopted by the NEC, parties under the DB 2024 are now specifically required to work in a collaborative and co-operative manner, with a positive obligation to act should uncollaborative behaviour occur. This is addressed in new Article 3, which provides:
“The Parties shall work with each other and with other project team members in a co-operative and collaborative manner, in good faith and in a spirit of trust and respect. To that end, each shall support collaborative behaviour and address behaviour which is not collaborative.”
Sustainability and environmental considerations
New clauses 2.1.5 and 2.2.2 have been inserted in lieu of the ‘old’ Supplemental Provision 8, both of which refer to the environmental impact of the Works. Whilst typically ‘light touch’ in its approach, this change does nevertheless highlight the importance the 2024 suite of contracts places on environmental considerations. It is worth noting, that any instruction in relation to environmental improvement does not change the contractor’s responsibility for design. The parties can expand on this theme further by including enhanced requirements and considerations in the contract documents, as necessary.
Notification and negotiation of disputes
Finally, ‘old’ Supplemental Provision 10 has been deleted and replaced with a distinct requirement for the parties to notify each other of a potential dispute, and for their nominated senior representatives to seek to negotiate disputes in Section 9. As before, the names and contact details of the nominated senior executives will need to be inserted into the Contract Particulars. Whilst this requirement does not affect the statutory right to adjudicate at any time, there is a sense that in the case of legal proceedings courts may take a dim view of those who have failed to either take this step or participate meaningfully in the process. For example, the courts may stay proceedings to allow for ADR or impose cost consequences.
Building Safety Act 2022 (BSA 2022) amendments
As you will no doubt expect some of the key changes to the 2024 suite centre around legislative changes arising from the BSA 2022. Most notably, updates to the DB 2024 include the following.
Dutyholders – the new dutyholder roles that are required under the BSA 2022 and Part 2A of the Building Regulations 2010 (BR 2010). These dutyholder roles include the principal contractor and the principal designer, which must now be identified under a new Article 7 of DB 2024. Clauses have been added to the main contract body to refer to exact provisions of the BR 2010 and the obligations arising from them in accordance with Part 2a of the BR 2010, in much the same way as the old 2016 suite referred to specific obligations under the CDM Regulations.
Defective Premises Act – further BSA 2022 amendments to DB 2024 include reference to the Defective Premises Act 1972 (DPA 1972). Clause 2.17.2 makes clear that where the works relate to the design and construction of a dwelling, then the contractor’s design liability at clause 2.17.1 extends to liability under the Defective Premises Act 1972. In consequence, the new 15-year extended limitation period for claims for negligent design of dwellings will apply. Again, we refer to our earlier article which discusses changes made to the limitation provisions here.
Higher risk buildings – one point to note is that the 2024 suite does not deal with any of the additional amendments which are required to address additional legislative requirements for higher risk buildings. Again, reflecting a ‘light touch’ approach, and the fact that most projects procured using the DB 2024 will not be for the design and construction of higher risk buildings, the DB 2024 does not include provisions required for the procurement of higher risk buildings. JCT instead directs you to their guidance notes, and their website, which will include a schedule and supplementary checklists that can be appended (to include specific requirements i.e. around the Gateway Regime and mandatory occurrence reporting).
Modernisation
With the aim of reducing the number of bespoke amendments, and reflecting accepted market practice, the 2024 suite includes several amendments designed to modernise the suite. These include:
- Gender neutral language
- Electronic communications and e-signature – an acknowledgement that in a world increasingly dominated by technology, electronic signature and communications is becoming ever more prevalent. As such, it is now possible to serve both termination notices and third-party rights notices electronically (albeit to specially identified email addresses) under DB 2024.
- Fluctuations Provisions – continuing with the ‘electronic’ theme and reflecting the fact that they are often not incorporated the Fluctuations Provisions have been removed from the DB 2024 and are instead now available online to be incorporated as schedules into the contract where appropriate.
- Design liability – JCT have adopted the commercially accepted definition of standard of care in clause 2.17, being that of an architect or other appropriate designer carrying out similar works in similar circumstances. However, there is also now a specific exclusion of fitness for purpose liability in relation to design (to the extent permitted by law), reflecting the fact that typically this is an uninsurable liability and therefore it is in the best interests of both parties to clarify that it does not apply. Whilst DB 2024 does not go so far as to include an overall cap on liability, the footnote at clause 2.1 does highlight it as being something the parties may wish to consider. The guide also includes suggested wording which the parties may wish to adopt to deal with this.
- Insolvency – the definition of Insolvent under clause 8.1 has been amended to reflect the wording of the Corporate Insolvency and Governance Act 2020, a company becomes Insolvent where:
“a moratorium pursuant to Part 1A of the Insolvency Act 1986 comes into force with respect to it; or
… an order is made sanctioning a compromise or arrangement pursuant to Part 26A of the Companies Act 2006 with respect to it.”
- Updates to the definition of Relevant Events – which acknowledge that parties were not relying on the general applicability of force majeure, and instead including bespoke drafting to provide for pandemics and epidemics to constitute a Relevant Event. As such, there are two new Relevant Events to cover epidemics and the publication of any guidance that may affect the execution of the works where the unavailability of labour and materials affects the contractor’s ability to progress the works. The 2024 suite now also allows parties to include these Relevant Events as optional Relevant Matters where they are included in the relevant section of the Contract Particulars. They also trigger a right for either party to terminate the contract.
In addition, JCT has expanded the provisions of clause 3.15 which previously was limited to the discovery of antiquities on site. Now, it also addresses the discovery of asbestos, contaminated land, and unexploded ordnances. Where the contractor discovers any of these ground conditions during construction, they are required to leave it undisturbed, and to notify the employer forthwith. The employer shall then issue an instruction, setting out what action they require the contractor to take. Compliance with any such instruction now constitutes a Relevant Matter pursuant to clause 2.26.4.
Delays
In addition to the amendments made to the definitions of Relevant Events, the 2024 suite also tightens the procedure for determining interim applications for extensions of time. Previously in DB 2016, where the contractor notified the employer of any delays to progress the employer was entitled to request further information at any time. However, under DB 2024, this request must now be made within 14 days of either the particulars of the delay or the notification of the delay.
Similarly, the employer must provide a decision on an interim delay claim within eight weeks from the date of the receipt of the initial notification or the date of a request for further information by the employer. Previously this was 12 weeks under the DB 2016.
However, the 2024 suite makes no changes to the wording relating the contractor’s obligations to apply and give notice. In particular, those of you at the launch event will note that the drafting committee commented that the notification requirements do not operate as condition precedents. Bespoke drafting will therefore no doubt continue, with the aim of addressing this issue.
Termination changes
Finally, the 2024 suite makes several changes relating to termination.
Firstly, DB 2024 clarifies the position of any sub-contractor following the termination of the contractor under the contract. Where previously a sub-contract would be terminated immediately, DB 2024 includes wording to ensure that the termination of any sub-contract is subject to any step-in rights that may exist through collateral warranty. The sub-contractor may suspend its service following the contractor’s termination while they wait for the service of a step-in notice and if no step-in notice is served the sub-contract will terminate. The sub-contractor is entitled to relief during this suspension.
Additionally, a new clause 2.29.5 has been inserted into DB 2024 to clarify that where the contractor’s employment has been terminated before the practical completion date the employer’s right to liquidated damages applies up until the date of termination. Thereafter the employer’s remedy is in general damages in the usual way.
Finally, some of the more substantial changes to DB 2024 are the amendments that have been made to the provisions relating to payment following termination. There is now express provision for the payment and payment notice requirements of the Housing Grants, Construction and Regeneration Act 1996 (Construction Act). There is a new defined term – “Termination Payment” under clauses 8.7, 8.8 and 8.12 together with mechanisms for calculating the due date for the Termination Payment, with rights for termination payment notices and pay less notices. DB 2024 inserts a new clause 8.13 which introduces a new payment mechanism for amounts that are payable on or following termination depending on the circumstances in which the contract was terminated.
The Birketts view
Whilst the 2024 suite undoubtedly represents a welcome addition in the JCT family, parties are of course free to contract on any terms they wish. As such, we do not anticipate a wholesale departure from use of the 2016 suite any time soon. JCT have nonetheless confirmed that the 2024 suite will overtime replace the 2016 on its website, and so will therefore be unavailable to buy. However, the benefits of switching over to the 2024 suite is clear, not least because it will reduce the number of bespoke amendments required!
That being said, and whilst the 2024 suite does address several key points, none of these amendments address the perception that JCT is typically ‘contractor’ friendly in several key areas, nor the fact that project specific amendments will continue to be required to address project specific risks.
If you require any advice in modernising your existing contract documents or are looking to put in place new schedules of amendments for the DB 2024, please do not hesitate to contact us.
Key Contacts
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 May 2024.