Ian McCann: Time will tell how Scotland interprets new JCT building contracts

Ian McCann: Time will tell how Scotland interprets new JCT building contracts

Ian McCann

Formal building contracts are a fundamental part of any construction project, specifying the contractual obligations on all parties, avoiding any ambiguities and the need for third-party interventions that can add to project costs and timescales, writes Ian McCann.

The Joint Contracts Tribunal (JCT) in England & Wales was established 1931 to create a contractual framework for construction works. Numerous revisions, reflecting market changes, have followed.

The JCT Design and Build (JCT D&B) 2024, the first of the new suite, was launched in April, providing an update on the established legal frameworks.

While the full suite will be published on a rolling basis over the coming months, notable changes are already apparent. This includes with regards to the recent Building Safety Act 2022 – specifically concerning the Act’s effect in England. The JCT appears to have adopted a balanced approach in their revisions of the suite of contracts, undertaking an evolution rather than a wholesale rewrite. Market trends, including industry issues caused by Covid, have also influenced the JCT’s approach.

These latest JCT building contracts aren’t applicable to the construction industry in Scotland. Rather, it’s the responsibility of the Scottish Building Contracts Committee (SBCC) to review the suite of building contracts produced by the JCT and to subsequently produce ‘kilted’ contracts that are compliant under Scots’ Law.

To give the SBCC time to examine JCT’s contracts and ensure they are effectively adapted for our jurisdiction, their introduction in Scotland will be sometime in 2025. While there will be specific differences to reflect Scots Law, it’s anticipated the key elements of the JCT documentation will be adopted.

Relevant parties need to be cognisance of these key changes. For example, amendments have been made to the timetable and procedures for dealing with extensions of time. A new Relevant Event has been introduced for epidemics and the exercise of statutory powers has been expanded.

Revisions have also been made to the termination accounting and payment provisions. It should be noted that in the new contract, the JCT “acknowledges that increasingly limitation of liability is being used as a tool to address the apportionment of risk” and includes an option for an overall cap on liability, reflecting recent market trends.

Other JCT amendments include introducing supplementary provisions around collaborative working, sustainable development and environmental considerations. Notification and negotiation of disputes is now incorporated into the main contract, rather than being an option.

The JCT has also adopted gender neutral language, providing service by email and rephrasing “Statutory Undertaker” to “Statutory Provider”. Parties can also specify their own adjudicator nominating body or arbitrator appointer body.

The contracts now also incorporate new powers for the employer in Clause 3.15 in relation to discoveries of asbestos, contaminated materials and unexploded ordnance (UXBs). This is pertinent to Scotland’s construction industry, as development in areas like along the Clyde in Glasgow could unearth unexploded ordnance and affect construction timescales.

Equally, asbestos issues continue to arise in Scotland as old inner-city buildings are repurposed to create new hotels, office blocks and purpose-built student accommodation. Its discovery can also impact on cost and timescales.

With the SBCC not expected to announce its amended ‘kilted’ contracts before 2025, it’s likely contractors will nevertheless adopt many of the new JCT provisions in their Scottish contracts before they are formally adopted in Scotland. This scenario may lead to some interesting contractual discussions in the months ahead.

Ian McCann is head of construction and engineering at Shoosmiths for Scotland and Northern Ireland. This article first appeared in The Scotsman.

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