On 17 April 2024, the Joint Contracts Tribunal (JCT) introduced a new suite of contracts that would follow the previous 2016 and 2011 editions.
In their Launch Event broadcast live on 01 May 2024, a panel of experts discussed the new JCT 2024 contracts, detailing the main changes and new features within the suite.
Below are a few of the key points discussed.
JCT Modernisation
Extension of Time
Victoria Peckett, of Clyde and Co, noted that changes to this section were designed to streamline the process for dealing with interim Extension of Time claims.
As part of the changes, the party receiving such a claim will have 14 days to ask for further information.
Relevant Events
Following Covid-19, Relevant Events will cover epidemics, with an option for parties to include epidemics under the Relevant Matters list.
Unforeseen Conditions
Further adjustments have been made within the Antiquities provisions, found under clause 3.15 of the Design and Build contract, and 3.19 of the sub-contract.
The new provisions will cover UXOs, asbestos, and contaminated materials. Here, parties will be required to report on and comply with instructions relating to such discoveries.
Legislative Changes
JCT Building Safety Act 2022
Following the tragic events of the Grenfell fire on 14 June 2017, the Building Safety Act 2022 was introduced to improve the construction and safety of higher risk buildings.
The new JCT 2024 suite reflects this through Part 2A of the Building Regulations 2010, where those involved in construction/design will have accountability for the safety of each building.
Termination of Accounting and Payment Provisions
Ben Patton, of Ashurst, stated there would be "no changes to the principles for calculating the amounts due". However, there would be additional defined terms including 'Termination Payment', as well as minor adjustments to the termination of accounting provisions, specifically s.8.7, 8.8, and 8.12.
An interesting point was made by Julian Bailey, of Jones Day, on the Barton Legal Webinar, when discussing key developments in construction law. He noted that under 233B(3) of the Corporate Insolvency and Governance Act 2020 (CIGA), "a provision in a contract that allows a [Contractor]to terminate because the counterparty, in this case the Employer, has become insolvent; that provision is legally ineffective".
Therefore, the provisions under clause 8.10 of the JCT Design and Build 2016 and 2024 contracts, which allow a Contractor to terminate where an Employer has become insolvent, will need to be amended to reflect this update in CIGA.
As an additional point, Singapore introduced a similar provision in 2018 under the Insolvency, Restructuring, and Dissolution Act, which became effective in 2020.
Insolvency Grounds
Within the new suite, the definition of 'Insolvency' has been updated, and there are now two new tests for company insolvency:
- Moratorium procedure, under Part A1 of the Insolvency Act 1986.
- Arrangement procedure, as referred to in Part 26 of the Companies Act 2006.
Future Proofing
Collaborative Working
In the previous contract editions, parties had a choice of opting in or out of this provision. However, this is now a mandatory provision, and will appear in the 2024 contracts as an Article. The aim is to encourage collaborative working, and address non-collaborative behaviour.
Sustainable Development and Environmental Considerations
This is now a mandatory provision, with revisions referring to sustainability and environmental impact.
Notification and Negotiation of Disputes
Also previously a supplemental provision, parties' senior executives will be required to meet as soon as practicable, to resolve issues in good faith. Although this will be the first step when a dispute arises, it will not prevent parties' rights to adjudicate.
New Family – JCT Target Cost Contract (TCC)
Following multiple requests, the Target Costs family of contracts now includes a main contract, a sub-contract, and a guide, where changes can be made in a similar fashion to the Design and Build form of contract.
In the Launch Event, John Riches noted "payment is made of the Allowable Cost, the Contract Fee and the Difference Share"; "The Difference is the Amount determined by deducting the Allowable Cost plus the Contract Fee from the Target Cost"; and "The Difference Share is then distributed in the proportions stated in the Contract Particulars".
The aim of this is for risk sharing amongst the parties, potentially reducing costs to the project as a whole.
Additional Note:
Whilst the JCT 2024 contracts have been rolled out, it is worth noting that the 2016 and 2011 editions continue to be used in the construction industry today.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.