This new Act has been introduced to encourage the resolution of disputes by adjudication and to enable better management of cash flow. Within the JCT contracts payment terms and conditions have been amended but, because the contracts refer to The Scheme for Construction Contracts England and Wales Regulations, adjudication has not required any changes. The due dates are: Up to practical completion, at intervals of 4 weeks calculated from the date for commencement of the Works 7 days after the date of practical completion Every two months after practical completion until the expiry of the rectification period. Interim certificates payment notice must be issued by the CA within 5 days of the due date.
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United Kingdom The Joint Contracts Tribunal JCT is currently rolling out the latest major update to its family of standard form construction contracts.
We provide a review of the changes to date and assess the implications for employers, contractors and insurers. In this article, we will collectively refer to these as the Contracts.
Overall, the risk allocation between the parties has not changed. However, parties should note some practical and administrative issues in order to avoid falling foul of the new provisions. Our views on three key changes are set out below. We recommend our extended analysis and guide for any parties who intend to enter into, or administer, the Contracts in the future. Payment terms The payment provisions in section 4 of the Contracts look quite different to those in the edition.
The aim of the changes is as follows: To simplify the payment terms as far as possible. Interim payments do not have to be listed in a payment schedule. This avoids the situation that arose in Balfour Beatty Regional Construction Ltd v Grove Developments Ltd , where the Court of Appeal upheld a first instance decision that no further interim payments were due after those listed in the payment schedule.
To regularise the payments within a contract chain and facilitate payment to all tiers of the chain contractor, subcontractor and sub-subcontractor within 31 days of the IVD. Comment The new provisions create a more straightforward and holistic payment scheme. In addition, the simplified scheme relies on the payment provisions being un-amended throughout the contractual chain.
Care must be taken to carry any bspoke amendments in the main contract through to any subcontracts and sub-subcontracts to avoid creating an inconsistent payment regime.
Loss and expense The changes to the provisions relating to loss and expense in the DBC and SBC are intended to improve communication between the parties and create a timeframe for information to be provided and assessed.
Comment The changes provide helpful guidance as to when and how information in relation to loss and expense claims is to be provided by both parties.
Some commentators have questioned whether the new wording creates a condition precedent to the contractor recovering compensation for loss and expense. The JCT Council drafting sub-committee has confirmed that this was not the intention. It will be interesting to see if this point is tested in the courts. This change acknowledges that many employers are tenants and therefore not responsible for insuring the existing structures.
Comment The changes are welcome insofar as they allow for more flexibility and acknowledge the need for alternative arrangements. However, it is still necessary for the parties to liaise with their insurers and brokers to establish exactly what those arrangements will be and to draft appropriate contract terms to be contained within the Replacement Schedule.
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