JCT: The Next Evolution

Blog Authors: Michael Bennett and Amber Wright – Shoosmiths

At a recent event, Karen Kirkham (chair of JCT) and Sean Smylie (vice chair of the JCT) outlined the eagerly anticipated changes to the JCT Suite of contracts. Speaking to members of the SCL in Birmingham on 28 February 2023, it was confirmed that the next edition is likely to be called JCT 2024 and is anticipated to be issued in the early part of next year. The final decision on the release date will be determined by when the secondary legislation necessary to implement many of the provisions of the Building Safety Act 2022 has been published. This secondary legislation is largely expected to be finalised by October 2023 and the JCT want to ensure the new suite reflects this new legislation.

What changes can we expect?

  • Modernising and streamlining – changes will include the long overdue adoption of gender-neutral language, provision for execution by electronic signature and the facility for notices to be sent electronically.
  • Fluctuation provisions – Price uncertainty is set to continue in 2023 and the JCT has launched a new fluctuations hub to offer guidance on its Fluctuation Options and also plans to move the fluctuation provisions to an online document to increase prominence and accessibility. Currently, fluctuation Options B & C are available online while Option A features in the JCT contracts.
  • Extensions of Time: There will be new relevant events to cover epidemics, updates to how ‘statutory powers’ are dealt with and ‘Statutory Undertakers’ will be redefined to ‘Statutory Providers’. In addition, the period of time for the Employer to assess an interim extension of time will be reduced from 12 weeks to 8 weeks from receipt of the Contractor’s particulars. The relevant event dealing with antiquities will be extended to deal with UXB’s, contamination and asbestos.
  • Loss and expense: The Contract Particulars will provide for parties to include optional additional grounds for the contractor to claim loss and expense. These include epidemics and the exercise of statutory powers by the UK Government which directly affects the works. The relevant matter dealing with antiquities will be extended to deal with UXB’s, contamination and asbestos.
  • Liquidated damages – The JCT is also making amendments to reflect the Supreme Court’s decision in Triple Point Technology Inc (Respondent) v PTT Public Company Ltd (Appellant) (2021). The decision restores the orthodox position that liquidated damages clauses apply up to termination of a contract, but not thereafter. Clear wording must be used if parties want to agree a different approach. The planned updates to the JCT will provide that where works are not complete at termination, LDs can be levied up to termination and only general damages for delay can be claimed thereafter.
  • Resolving disputes, arbitration and adjudication: Parties will be able to choose a nominating body or appointer of their choice, as opposed to the original short list. However, it is anticipated that the particulars will still include a list of bodies, as the AICA is being removed (due to it now being defunct). The notification and negotiation of disputes, set out at Supplemental Provision 10, will no longer be an optional provision. Subject to the parties right to refer a dispute to adjudication, this provision deals with the avoidance or early resolution of disputes or differences by requiring each party to promptly notify the other of a matter that is likely to give rise to a dispute or difference. It also requires senior executives to meet “as soon as practicable, for direct, good faith negotiations to resolve the matter”.
  • Allocation of risk: There will be a new provision added to the contract to deal with unexploded ordnance, contaminated materials and asbestos.
  • Legislative changes: There will be updates to reflect recent legislation including the Building Safety Act and its secondary legislation (once this has been finalised) and the two new insolvency grounds that were introduced under the Corporate Insolvency and Governance Act 2020 will be added.
  • Construction Act: There will be revisions to termination accounting provisions to reflect the requirements of the Construction Act, in particular a due date for the final payment after termination will be added.
  • Future proofing: The contract has been drafted with consideration to the Construction Playbook, sustainable development, collaborative working and environmental considerations.

In addition, a new set of contracts will be added to the suite. The Target Cost Contract, the Target Cost Sub-Contract and the Target Cost guide will be published alongside the updated suite.

While the final amendments are not public as yet, the above is understood to be a good guide for the changes that are being implemented. It will be of particular interest to see how the JCT 2024 tackles the potential contractual risks that may arise following the implementation of the new regulatory regime for higher-risk buildings under Part 3 of the Building Safety Act 2022. For now however we will have to wait expectantly for the JCT launch event and the reveal of the full terms.