Joint Contracts Tribunal

The Joint Contracts Tribunal, also known as the JCT, produces standard forms of contract for construction, guidance notes and other standard documentation for use in the construction industry. From its establishment in 1931, JCT has expanded the number of contributing organisations. Following recommendations in the 1994 Latham Report, the current operational structure comprises 8 members who approve and authorise publications. They are the Association of Consulting Engineers, the British Property Federation, the Construction Confederation, the Local Government Association, the National Specialist Contractors Council, the Royal Institute of British Architects, the Royal Institution of Chartered Surveyors and the Scottish Building Contract Committee.

History

The Joint Contracts Tribunal was established in 1931. It initially consisted of the Royal Institute of British Architects (RIBA) and the National Federation of Building Trades Employers (NFBTE). The common purpose was to publish and where necessary amend a standard form of building contract. Its first chairman, from 1931 to 1956 was Sydney Tatchell, followed by Sir Percy Thomas. In 1998 JCT became a limited company.

The JCT published important new editions of the form in 1939, 1963, 1980, 1998, 2005, and 2011.

Suite of Standard Forms

Suite of Standard Forms means a group of all the mutually consistent documents necessary to operate a particular method of procurement and produced to enable them to be used together, including the following where applicable:

• consultant agreements
• a main contract between the employer and the main contractor;
• sub-contracts between the main contractor and its subcontractors (both for sub-contractors selected by the employer and for other sub-contractors);
• a standard form of sub-sub-contract between a subcontractor and such sub-contractor's sub-sub-contractors;
• a design agreement between an employer and a specialist designer;
• forms of tender for issue by an employer to prospective main contractors and for issue by a main contractor to prospective subcontractors and for issue by a subcontractor to prospective sub-sub-contractors;
• a form of contract for the supply of goods;
• forms of bond (including performance bonds) and collateral warranties.
• the Construction Industry Model Arbitration Rules, adapted from those of the Society of Construction Arbitrators

JCT publish guidance on which contract to select.

Main Forms

JCT substantially revises and rewrites the family of forms every decade. The most recent suite, replacing the 1998 version, is the 2005 suite, as is commonly referred to as JCT 05. There are now, however, 2009 amendments published. The 2011 versions will replace 2009 amendments for all contracts signed after October 1st 2011. They are considered to be the most popular construction contracts in use in the UK.

Main Contracts

1. Major Project Form (MP05)
2. Standard Form of Building Contract (SBC05)
3. Intermediate Form of Building Contract (IC05)
4. Minor Works Agreement (MW05)
5. Management Contract (MC05)
6. Design and Build Contract (DB05)
7. Construction Management Documentation

In 2007 JCT published the Constructing Excellence Contract (JCT/CE), a contract designed to support collaborative working, as advocated by the Latham Report, and can trace its roots back to the "collaborative contract" published in 2003 by BE, a joint venture between the Reading Construction Forum and the Design and Build Foundation (and now part of Constructing Excellence).

Smaller project contracts

Traditional JCT contracts were seen as too detailed and difficult to use in smaller domestic projects so JCT launched a consumer friendly range of contracts called the "Building Contract for the Home Owner".

• Building Contract for Home Owner/Occupier (where client deals directly with the builder) (HOB)
• Building Contract for Home Owner/Occupier (who has appointed a consultant) (HOC)
• Contract for Home Repairs and Maintenance (HO/RMI)

Key features

The JCT contracts avoid up front payments from payers to payees. Instead, the payee invoices the payer once work has been certified as completed by an independent third party, the Contract Administrator (often an architect or surveyor). Often interim certificates are issued where itemised components of the work have been completed, or are a verifiable percentage complete. In the 2009 amendments, the payee or payee can issue the certificate if the Contractor Administrator fails to do so.

The JCT encourages Retention of an agreed percentage of the contract sum until Practical Completion and then a percentage until a period after Final Completion. This avoids payment in advance for such things as minor defects or snagging which need to addressed at the end of the project or come to light after the project completes. So the invoice at each point is for a percentage of the value of the work certified complete. The payer can deduct an amount, however under the 2009 amendments the method for calculating the new amount must be stated.

The JCT encourages up front agreement of Liquidated and Ascertained Damages (LAD) as an estimate of the payers weekly losses if the payee fails to reach Practical Completion by the Contractual Completion Date. If delays are for reasons beyond the contractor's control, the contractor can request an Extension of Time: if the Contract Administrator allows this, it in effect extends the period before which the contractor is liable to pay the LAD.

The JCT introduced the concept of Determination, whereby the contract can be terminated for suspension of works, failure to proceed regularly and diligently, failure to remove defective works, failure to execute works in accordance with the contract, and bankruptcy of the contractor. If one party has ceased to perform in the contract (e.g. the contractor has gone past the Contractual Completion Date and has no plan to complete the contract), Determination enables the other party to end their obligations (e.g. to pay the contractor to finish the project). This is in addition to the Common Law remedy of Repudiation.

Reference is made to Adjudication as a quick way of resolving disputes which the parties cannot resolve between them, with appeal to either Arbitration or Litigation depending on the preferences of the parties.

Criticisms/Alternatives

Lawbuild has proposed a number of amendments to the JCT contract further to protect the client, with the top four being: to ensure the contractor posts a 10% bond to cover the costs of finding a replacement contractor if the contractor goes into liquidation, to ensure the contractor obtains building regulations certificates before Practical Completion, to ensure the contractor must accept design changes, and to ensure the employer can control the identities of the contractor's designers.

One of the most common disputes around building contracts is with regard to the interpretation of failure to proceed regularly and diligently, and whether the contractor is able to make a claim for loss of profits after Determination. In contrast in the US, building contracts can normally be terminated for convenience of the client, only paying for the work already done.

The JCT makes no distinction between work completed by subcontractors and work completed by the contractor. So the client can end up paying the contractor for work certified and yet the contractor may not pay the subcontractor, for example through insolvency. It may then be hard to work with that subcontractor to complete the work. In contrast in some US states, monies due to subcontractors must be held in trust by the contractor.

ICE Conditions, New Engineering Contract, FIDIC, GC/Works/I, Model Form, and IChemE Form are alternative formats for building contracts.

References

• Chappell, David (2007) Understanding JCT Standard Building Contracts - 8th ed ISBN 978-0-415-41385-5.
• Anthony Speaight, Gregory Stone (2005) Architect's Legal Handbook - Eighth Edition ISBN 0-7506-6130-5

External links

• JCT Contracts Website
• JCT Homeowners Website