JCTs 2024: Where we are now and key changes in the new suites

Since May 2024, ten families of the JCT 2024 contracts have been released on a staggered basis, with a mix of main contracts, sub-contracts, model forms, collateral warranties and guides.

These are the JCT 2024 Standard Building Contract; Design and Build Contract; Minor Works Building Contract; Consultancy and Pre-Construction Service Agreements; Repair and Maintenance Contract; Prime Cost Building Contract; Major Project Construction Contract; Constructing Excellence Contract; Measured Term Contract; and Intermediate Building Contract.

Tracked change documents have also been released, showing changes from the equivalent 2016 editions. A new JCT Target Cost Contract suite is also expected, the aim being to share risk between the parties in the hope of overall savings to the project (commonly known as a pain/gain mechanism).

Key themes arising from the 2024 editions are:

• Legislative changes – reflecting building safety legislation, termination, accounting and payment provisions in the Construction Act and new insolvency grounds in the Corporate Insolvency and Governance Act 2020.
• Future proofing – reflecting the objectives of the Construction Playbook (which sets out key policies and guidance for how public works projects and programmes are assessed, procured and delivered) and the incorporation of previously optional supplemental provisions relating to Collaborative Working and Sustainable Development and Environmental Considerations, into the main Conditions.
• Modernising and streamlining – increasing flexibility around the use of electronic notices and changes adopting gender neutral language.
  
  

Key changes

Using the JCT Design and Build Contract 2024 as a reference, the key changes appearing across various suites are as follows.

• Building safety legislation
  A light touch has been taken to reflect developments in the English building safety regime. For example, there is a new undertaking by each party that it will comply with Part 2A of the Building Regulations 2010 (covering dutyholders and competences) as appliable, in addition to compliance with the CDM Regulations (clause 3.16 D&B) which the dutyholder roles align with, but are distinct from. Parties are also required to specify the Principal Designer and Principal Contractor for the purposes of the Building Regulations (Article 7 D&B). Specific drafting has not been included for higher-risk buildings (HRBs) – JCT’s rationale being that HRBs are just one of many projects JCT contracts will be used for and that it was not appropriate to provide detailed drafting for them in what is a more generic contract.
• Contractor’s design liability
  The Contractor’s standard of care for design has been amended to the commonly used skill and care to be expected of the architect, or other appropriate professional designer, experienced in designing works of a similar scope and character (clause 2.17.1.1 D&B). There is also an express exclusion of any fitness for purpose design obligations, to the extent permitted by law.
• Electronic notices
  The Contract Particulars and relevant clauses (clause 1.7.3 and 1.7.4 D&B) now allow parties to specify email addresses for the service of standard notices, rather than relying on clause 1.7.2 which refers to the means and format parties have agreed. Parties can also opt in (to clause 1.7.4.2) for the service of other notices such as those around defaults, termination and third-party rights by email.
• Collaborative working
  A new Article, previously an optional Supplemental Provision in the 2016 version, provides for an express duty of co-operation, collaboration and good faith (Article 3 D&B). This is similar to the wording of the well-known clause 10.1 (the duty of mutual trust and co-operation) in the NEC suite of contracts. There may be questions about what these duties will mean in practice and how the courts will interpret them. Meantime JCT has said its intention is that this Article will support the Conditions, by putting collaboration at the forefront of the parties’ minds and encouraging them to call out non-collaborative behaviour, chiming with themes in the UK Government’s Construction Playbook and the Hackitt Review.
• Notification and negotiation of disputes
  In keeping with the theme of collaboration parties are now required, “with a view to avoidance or early resolution of disputes”, promptly to notify the other of any dispute. Following that notification, nominated senior executives from each party are to meet for direct, good faith negotiations to resolve the matter (clause 9.1). This is not expressly a condition precedent to formal dispute resolution and is of course subject to the parties’ right to refer a dispute to adjudication at any time. However, JCT noted that the drafting encourages parties to engage in discussions with an emphasis on problem solving rather than blame and the opportunity to resolve matters early.
• Sustainable development / environmental considerations
  Another previously optional Supplemental Provision (8 D&B), has been moved into the main Conditions with minor amendments, reflecting the growing focus on ESG matters. Clause 2.15 encourages the Contractor to suggest economically viable changes to the Works which may result in an improvement in environmental performance and sustainability and a reduction in environmental impact; whilst clause 2.2.2 requires the Contractor to provide all information that the Employer reasonably requests regarding the environmental impact of the supply and use of materials and goods which the Contractor selects. JCT recognised however that such issues are commonly dealt with at the pre-construction stage. Therefore, the Guidance Notes in the 2024 Pre-Construction Services Agreements provide further wording around the parties working together to explore ways to improve environmental performance and sustainability of design, such as a reduction in waste, CO2 emissions, materials from non-renewable sources, mains water and energy consumption.
• Extensions of time and loss and expense
  The 2024 updates seek to streamline the procedure for extension of time claims, by shortening the timeframes (clauses 2.24 and 2.25 D&B). There are also new Relevant Events including those prompted by Covid i.e. (i) the occurrence of an epidemic after the Base Date, or whose effects change after the Base Date, which limits the availability of labour, persons, goods or materials; and (ii) an expanded change in law event which includes publication after the Base Date of any guidance by the UK Government, Local or Public Authority or the Construction Leadership Council (clauses 2.26.7 and 2.26.8 D&B). These may also be selected as Relevant Matters in the Contract Particulars (against clauses 4.21.6 and 4.21.7). And bear in mind that these changes come as recent Scottish case law found that the Contractor’s compliance with notification procedures in clause 4.21 of the SBCC with Quantities 2016 (which has the same wording as the 2024 JCT D&B 2024), is a condition precedent to a claim for loss and expense.
• Liquidated damages
  A new clause (2.29.5 D&B) expressly deals with liquidated damages in the event of termination. This gives effect to the Supreme Court decision in Triple Point Technology Inc v PTT Public Company Ltd [2021], where a commercial interpretation approach restored what was understood to be the orthodox position. The clause provides for liquidated damages up to the date of termination, following which the Employer can rely on other rights and remedies (i.e. to general damages).
• Insolvency and termination
  The definition of “Insolvent” has been expanded to include the new grounds of insolvency created by the Corporate Governance and Insolvency Act 2020 (the moratorium and restructuring plan) at 8.1.4 D&B. There are also various amendments to the termination, accounting and payment provisions, including a new Termination Payment in section 8, to provide expressly for the payment and payment-related notice requirements of the Construction Act. There are not however changes to the principles for calculating the amounts due on termination.
  
  

What’s new for Scotland?

The Scottish Building Contract Committee (SBCC) which produces the SBCC contracts compliant with Scottish law and practice, has yet to publish its equivalents of the JCT 2024 editions. We understand the intention is for the Minor Works Suite to be published shortly, followed by the design and build and traditional suites. SBCC has indicated it will not be “kilting” the JCT Intermediate Contract, Major Project Construction Contract, Management Building Contract, Prime Cost Building Contract or Repair and Maintenance 2024 suites, on the basis there is little demand for these contracts in the Scottish market. A decision awaited on whether an SBCC version of the JCT Target Cost Contract 2024 will be produced.

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