UK: Plus Ça Change ... The case of the disappearing dots

Last Updated: 26 July 1999

By Tony Blackler

Sir John Egan apparently believes the construction industry can do without the standard form (or indeed any) contracts. ("Rethinking Construction" – Chapter 4 paragraph 69).

At the other end of the spectrum sits the Joint Contracts Tribunal (now a limited company) charged with responsibility for promoting the standard form(s) of building contracts, which plainly believes not only that we should have contracts and lots of them, but that they should be longer and more prolix with every passing year. A visiting Martian could be forgiven for thinking that JCT stands for Jaded Contracts Tendency.

We await a package of contracts for the construction management system which may emerge later this year. Let us hope that history does not repeat itself in this context. Remember the JCT 1987 Management Contract? Eventually this was published long after management contracting ceased to be flavour of the month.

This review considers JCT 98 which was published in January. It is the updated version of JCT 80 which is now consigned to history.

What’s different about JCT 98? A note on the back cover tells us that "it is based on the 1980 edition incorporating Amendments 1 to 13 and 15, with the further incorporation of Amendments 14, 16, 17 and 18 and various corrections." So those who prepare contract documents no longer have to collect those free standing amendments and make sure they get into the contract package. So far so good, but in the process some interesting things have happened, not least the disappearance of the black dots which had surfaced in Amendment 18 last year. The dots were there to help the reader distinguish between new clauses required as a matter of law by the Construction Act (identified by black dots) and new clauses that were optional and only to be used if thought appropriate by the client’s advisers (no black dots).

The loss of that subtle distinction means that the so-called Information Release Schedule is now assumed to be part of the routine contract documentation. This document (not to be confused with a contractor’s Information Requested Schedule) is created by the professional team and sets out dates by which production information will be released to the contractor. The rationale is the supposed benefit to the professional team of being in control of the process and thus not subject to ambush by a contractor seeking information for an unexpected sequence of working. But failure to meet the dates is of course a contractual breach by the client and though there is a mechanism to change the dates it depends upon agreement "not to be unreasonably withheld". Information not mentioned in the Schedule is to be provided when necessary, which is the old test for all information in JCT 98’s predecessor forms. But here again a subtle change – the contractor only has to make a written request for such information if he considers the architect is unaware of his need. This subjective test means that in practice it will be difficult to insist on written requests in many cases. Bearing in mind that the "master programme" remains outside the contract document package it seems unlikely that the professional team will use this new system except in the most straightforward of projects.

Amendment 18 had also introduced another optional clause prompted by the Latham report’s recommendation that variations should be priced in advance. The new clause allows the contractor the option to respond to a variation instruction by submitting his Price Statement for the work which would include the value of the work itself, plus a sum in lieu of loss and expense and a period for extension of his contract time. If the Quantity Surveyor does not accept the quotation (or any part) within 21 days the contractor can take the matter to adjudication. Employers’ advisers will need to be aware that this procedure – just like the clause 13A procedure by which the architect can seek a quotation for the price of a proposed variation – is dependent upon the contractor choosing to operate it. No black dots, but perhaps a few black marks for the Tribunal for side-stepping a positive Latham suggestion?

Other "optional" elements from Amendment 18, namely the revised payment regime for off-site materials, coupled with provision for an advance payment bond; an obligation on the QS to tell the contractor why he disagrees with any valuation; and, most important of all, provision for interest on late payment at 5% or over Base Rate – all become standard clauses.

No prizes for guessing which of the JCT Colleges did best out of this round of negotiations. And no surprises either when developers’ lawyers lengthen their own list of amendments to JCT 98.

Perhaps the most far reaching of all these alterations to the contract is the change of approach as far as dispute resolution is concerned. Amendment 18 introduced JCT’s own adjudication procedure (as it had to) in order to comply with the Construction Act and avoid the impact of the statutory Scheme for Construction Contracts. But for the first time users of the form were given the option to elect for litigation as opposed to arbitration as the preferred way to finally resolve disputes. That policy is now followed through in JCT 98.

Arbitration had its make-over in the 1996 Act, designed to speed up the process and give the arbitrators more authority to manage recalcitrant parties. With the Woolf reforms now in operation consumers are offered a choice between two new systems, and it will be intriguing to follow the competition in the years ahead.

For lawyers a key distinction between the two systems is the court’s ability to handle multi-party disputes, which is so frequently a feature of construction contracts. In that context arbitration so far appears to be the poor relation.

This article was first published in Macfarlanes' Contruction Press Newsletter in July 1999.

Macfarlanes' Construction Press is intended to provide general information about developments which may be of interest. It is not intended to be comprehensive nor to provide any specific legal advice and should not be acted or relied upon as doing so. Professional advice appropriate to the specific situation should always be obtained. If you would like further information or specific advice, please contact Tony Blackler.

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