The JCT Design and Build 2024 contract has now been released, marking the first major update to the JCT Design and Build standard form since 2016. The changes are a lot more significant than the updates made last time around when the 2016 version replaced the 2011 version, and the new form does look to reallocate risk in certain areas. In light of these more significant changes, it will be interesting to see how quickly the industry looks to move across to the new form.
This article sets out some of the key changes in the new 2024 form that clients should be aware of.
1. GOOD FAITH
The previously optional provision ‘Collaborative Working’ has been promoted to a core article of the contract and will now apply as standard, with the parties required to work together “in good faith and in a spirit of trust and respect”. Case law on a similar provision in the NEC3 form suggests that such clauses are not necessarily toothless and may have some practical application, however because the new article is not linked to any specific obligations in the contract (e.g., provisions requiring the exercise of discretion, provisions relating to information sharing, etc.) it may ultimately only have a limited role in governing the conduct of the parties. A separate, more specific duty introduced in the 2024 form for senior executives to meet and negotiate in good faith to resolve disputes may have greater impact.
2. THE BUILDING SAFETY ACT
The new dutyholder obligations introduced by the Building Safety Act are expressly recognised by the new 2024 contract, and each party undertakes to comply with their respective duties under Part 2A of the Building Regulations. The new roles of Building Safety Act ‘Principal Designer’ and ‘Principal Contractor’ are also recognised. However, there is no new drafting in the 2024 form to tackle the complexities of the new regime for Higher Risk Buildings, and obligations relating to the new ‘Gateways’, ‘Mandatory Occurrence Reporting’ and the ‘Golden Thread’ of information will need to be introduced by way of a schedule of amendments.
3. RELEVANT EVENTS AND RELEVANT MATTERS
The list of Relevant Events entitling the Contractor to an extension of time to the completion date(s) has been expanded with new, broader Relevant Events entitling a Contractor to an extension of time for:
a. delay consequent upon the discovery of asbestos, contaminated material and/or unexploded ordinance on the site and compliance with the Employer’s instructions relating to the same;
b. an epidemic which occurs after the Base Date (or which existed before the Base Date but whose effects change after the Base Date) and which affects the works by limiting the availability of labour or by preventing or delaying the Contractor in securing goods, materials or services, in each case as is necessary for the proper carrying out of the works; and
c. any change in law, publication of guidance or the exercise of any statutory power by the UK Government, any local authority, or (in the case of guidance) the Construction Leadership Council (CLC) which “affects the execution of the Works” (this replaces the existing Relevant Event relating to the exercise of a statutory power after the Base Date by the UK Government or a local authority).
In addition, the list of Relevant Matters entitling the Contractor to loss and expense consequent upon delay to the works have also been expanded to capture (a), (b) and (c) above (albeit Relevant Matters relating to an epidemic and changes in law/exercise of statutory power are optional only and must be selected as applying in the Contract Particulars).
Whilst many may already be familiar with amendments to the JCT contract to cater for some or all of items (a), (b) and (c), the scope of these new Relevant Events (and particularly, if selected, the accompanying Relevant Matters) arguably go beyond what is currently seen in the market, and it will be interesting to see whether Employers seek to narrow their scope, or equally whether Contractors will see these new Relevant Events and Relevant Matters as setting a new benchmark for the allocation of time and money risk as between Employers and Contractors.
4. DESIGN LIABILITY
Clause 2.17, which deals with the Contractor’s liability in respect of design, has now been reworked, and the clause now expressly provides that the Contractor is not subject to any duty that its design shall be fit for its purpose. Instead, the 2024 form provides that the Contractor shall have no greater duty than to exercise reasonable skill and care in its design. Requests for language of this nature have increased following the Supreme Court’s decision in the Højgaard [2017] UKSC 59 case, and the JCT’s decision to incorporate this into the standard form recognises that. Note also that the duty of reasonable skill and care is caveated “to the extent permitted by the Statutory Requirements”. We anticipate that Employers and Contractors alike will want to seek greater clarity with respect to which statutory obligations go beyond requiring ‘reasonable skill and care’.
5. TERMINATION
The JCT termination provisions have also been reworked to provide further clarity, and the list of insolvency events entitling termination have been updated to recognise the additional procedures introduced by the Corporate Insolvency and Governance Act 2020. Additionally, the list of events entitling either party to terminate has been expanded to include ‘epidemics’ (see 3(b) above) and changes in law/publication of guidance/exercises of statutory powers which affect the execution of the works (see 3(c) above). Again, this broader wording replaces the existing termination event of the exercise of a statutory power by the UK Government or a local authority. Time will tell if these broader termination events will be adopted by the industry, or whether they will require amendment to narrow their scope.
[View source.]
