We survey the changes in the JCT 2024 Design and Build contract and Measured Term Contract, the Joint Contracts Tribunal's (JCT) long-awaited new edition of its standard building contracts. Here's what's new and what could be improved.
The 2024 edition incorporates JCT's response to recent insolvency legislation and the new obligations imposed by Building Safety Act 2022.
JCT Design and Build Contract 2024
JCT has been publishing new editions of its contracts throughout 2024 which started with the initial release of the Design and Build Contract 2024 Edition (DB 2024) with associated sub-contracts and guidance notes. The DB 2024 introduces amendments aimed at operational efficiency, including electronic execution and specific provision for email communication along with gender neutral wording throughout.
The definition of "Insolvent" has expanded and now includes grounds from the Corporate Governance and Insolvency Act 2020. Payment provisions have been aligned with the Housing Grants (Construction & Regeneration) Act 1996, providing a due date for final payment after termination. These changes should provide greater clarity, given the increased number of contractor insolvencies in the current market.
The DB 2024 provides new Relevant Events, allowing contractors to claim additional time and costs for epidemics and changes in law. Further, the discovery of asbestos, contaminated material, or unexploded ordnances not identified in the contract documents are now Relevant Events. Clients and Employers Agents will need to keep on their toes, as they now have 8 instead of 12 weeks to respond to extension of time claims.
Given the difficult economic climate and the contraction of the professional indemnity insurance market, caps on liability are becoming more common in construction projects. The Guide to the DB 2024 provides an example clause to cap the Contractor's overall liability, leaving it to the parties to decide whether to adopt the wording. Helpfully, the duty of care provisions now excludes a fitness for purpose warranty for Contractor's design.
DB 2024 also reflects the Supreme Court's decision in Triple Point Technology Inc v PTT Public Company Ltd (2021), applying liquidated damages clauses up to the date of termination of the contract, but not beyond.
Three previously optional supplemental provisions within DB 2024 have been made mandatory: collaborative working, sustainable development and environmental considerations, and dispute notification and negotiation. These changes align with the government's Construction Playbook, though the lack of any binding commitments in these provisions means that little is likely to change in terms of day-to-day working practice.
JCT has largely failed to respond to the massive changes in construction practice required by the Building Safety Act and related legislation. In DB 2024, the CDM Regulations clause has been expanded to address the new Dutyholder roles set out in Part 2A of the Building Regulations 2010. However, the drafting does not make it sufficiently clear that existing health and safety roles and the new Dutyholder roles are separate regulatory obligations, with different duties of care and sanctions for non-compliance.
DB 2024 is surprisingly silent on the new three-stage building control approval ("Gateway") process for Higher-Risk Buildings and the extension of limitation periods for claims under the Defective Premises Act 1972. Clients and contractors using DB 2024 for higher-risk building projects will need to amend the published form to ensure compliance with the new regulatory regime It remains to be seen whether JCT will revise its Pre-Construction Services Agreement to provide for "Gateway 2" building control applications, which must be approved prior to an in-scope project starting on site.
JCT Measured Term Contract 2024
JCT most recently released the 2024 edition of its Measured Term Contract (MTC 2024) and the amendments mirror those across the rest of the JCT 2024 suite. The changes aim to make the contract more user-friendly and aligned with current industry standards and legal frameworks.
Most specifically, there is a new Article 3 relating to mandatory collaborative working. Previously an optional supplemental provision, it is now a requirement for parties to work collaboratively, in good faith, and with trust and respect, reflecting the ethos of the Construction Playbook. The MTC 2024 goes further still and encourages contractors to suggest economically viable amendments that could improve environmental performance and sustainability, integrating these considerations into the core contract text rather than as supplemental provisions. It remains to be seen whether there will be any tangible day to day changes.
Unlike the JCT DB, there are no new Relevant Events in MTC 2024 because the MTC deals with extensions of time simply for 'matters beyond the Contractor's control' rather than by reference to a defined list of Relevant Events.
A new defined term "Termination Payment" has been introduced to clarify the financial settlements upon termination which includes detailed provisions for calculating payment due dates and handling notices related to termination payments. The MTC 2024 also includes amendments to ensure adherence to the payment and the notice requirements under the Housing Grants, Construction and Regeneration Act 1996 providing clearer guidelines on payment processes.
With regards to the Building Safety Act, the MTC 2024 now incorporates provisions to align with Part 2A of the Building Regulations, highlighting the roles and responsibilities of duty holders. But like the DB 2024, the updates do not include provisions for works to Higher-Risk Buildings and parties will need to add their own provisions if required, through a bespoke schedule of amendments.
Other legislative updates include new insolvency grounds which have been added to reflect changes in how companies enter insolvency, ensuring that termination provisions are up to date with current law.
On the theme of legislative change, more changes are due to come into effect with the Procurement Act 2023 now expected to come into force on 24 February 2025 and for contracts procured under the new regime, there are a number of other new requirements which need to be reflected in the contract terms. The Procurement Act changes will only be relevant to public contracts procured under the new regime and it will include obligations with respect to setting, monitoring and publishing KPIs. For contracts with existing KPI mechanisms, it will be important to check that these are compatible with the new requirements and to develop the provisions to align fully with all the latest Procurement Act requirements.
Both JCT contracts discussed above marks an attempt to streamline operations, enhance compliance with new regulations and promote better working practices through collaborative and sustainable approaches although there are shortcomings. However, there are shortcomings in the JCT 2024 suite and so this offers clients and contractors an opportunity to update their precedent terms and conditions and ensure that their legal and commercial positions are adequately protected.
