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This article contains a brief summary of some of the changes made by JCT ‘98 Amendment 4 (Amendment 4) to the JCT Standard Form of Building Contract 1998 Edition (the Contract). These changes were issued in January 2002 and apply to Clause 25 (extension of time), Clause 26 (loss and expense) and Clause 30 (certificates and payment). The amendment to Clause 30 applies to private JCT contracts only.
New "relevant event" for EOT claims
Pursuant to Amendment 4 a new definition of relevant event for extension of time claims has been added to Clause 25:
"25.4.19 – Save as provided for in Clause 25.4.1 to 25.4.18 any impediment, prevention or default, whether by act or omission, by the employer or any person for whom the employer is responsible except to the extent that it was caused or contributed to by any default, whether by act or omission, of the Contractor or his servants, agents or sub-contractors."
The new definition was introduced on the basis that the original list of relevant events did not deal adequately with acts by the employer that led to potentially legitimate claims for time extension but which did not fall within any one of the original definitions of relevant event. The new definition attempts to rectify this shortcoming and thereby preserve the employer’s right to liquidated damages.
The new definition of relevant event is very broad. The words contained in the phrase 'impediment, prevention or default’ are not defined and will therefore need to be considered by the employer on a case by case basis. Given the wide range of acts that could fall within the phrase, it is likely that there will be a relative increase in the number of claims for an extension of time in any one project. However, the new definition provides for mitigating circumstances in that if the contractor, his servants, agents or sub-contractors have caused or contributed to the ‘impediment, prevention or default’ by the employer then the contractor’s claim for an extension of time, under this definition of relevant event, may be denied.
New "matter" materially affecting regular progress of works
In order for the contractor to claim monetary compensation as a result of disruptions to the progress of the works, he must fulfil the requirements set out in Clause 26 of the contract.
Pursuant to Amendment 4 a new matter has been added to Clause 26.2:
‘Clause 26.2.11 - Save as provided for in Clause 26.2.1 to 26.2.10 any impediment, prevention or default, whether by act or omission, by the employer or any person for whom the employer is responsible except to the extent that it was caused or contributed to by any default, whether by act or omission, of the contractor or his servants, agents or sub-contractors.’
The new definition mirrors the definition of relevant event set out above. Indeed the new definition contained in clause 26.2.11 was introduced because it was thought that the same new grounds for granting an extension of time should be used for granting an increase in the contract sum as a result of disruptions to the regular progress of the works.
Certificates and payment: advance payments
The amendment to Clause 30 of the Contract, dealing with certificates and payment, relates to the private versions of JCT only. Amongst other things Clause 30 deals with the submission of interim certificates by the architect stating the payment amount due to the contractor from the employer. Clause 30.2 allows the architect (or quantity surveyor) to make various deductions from the interim certificate. These include a percentage of the interim certificate in the form of retention money as well as any advance payment due for reimbursement to the employer.
Amendment 4 applies to advance payments. The relevant part of Clause 30.2 originally provided:
‘30.2 - The amount stated as due in an interim certificate, subject to any agreement between the parties, shall be the gross valuation as referred to in clause 30.2 less
2 - the amount of any advance payment or part thereof due for reimbursement to the employer in accordance with the terms for such reimbursement stated in the Appendix pursuant to clause 30.1.1.6 and’
Pursuant to Amendment 4, the words "the amount of any advance payment or part thereof" in Clause 30.2.2 have been replaced by "the total amount of any advance payment", to make it clear that it is the cumulative amount of any advance payment due for reimbursement which is to be deducted from the gross valuation.
The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.
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