The JCT have taken the opportunity to deal with some drafting issues and tighten up a number of clauses in a new suite of 2016 Building Contracts with the publication of the JCT Minor Works Building Contract 2016 (MW 2016), JCT Minor Works Building Contract with Contractor’s Design (MWD 2016) and JCT Minor Works Sub-Contract with Sub-contractor’s Design (MWSub/D 2016).
DTM will focus on the legal updates to the Minor Works Building Contracts, ‘JCT 2016 Editions’.
Consents and approvals
In the interpretation section, a new clause provides that any consent to be provided under the JCT 2016 Editions by the Employer, Contractor or Architect/Contract Administrator shall “not be unreasonably delayed or withheld”.
The exceptions to this being if the Employer’s consent has been given to the Architect/Contract Administrator instructing the Contractor not to make good a defect at its own cost instead being able to make a deduction from the Contract Sum; and/or the consent of either party required for any assignment of the Contract.
Oral instructions
Instructions need to be in writing and where given orally confirmed in writing before taking effect.
Payment provisions
The payment provision is where the bulk of the drafting changes have been made to the JCT 2011 Editions.
There is a new definition for the Interim Valuation Date, the first Interim Valuation Date being not more than one month after the Works commencement date and thereafter at intervals of not more than one month.
The due date for payment is now defined by reference to the Interim Valuation Date and is 7 days after the defined Interim Valuation Date. The final date for payment is 14 days from the respective due date, that is a 21 day payment term from the Interim Valuation Date, extending the JCT 2011 Edition payment term by 7 days.
Interim payments “up to practical completion” and “on and after practical completion” are no longer separately dealt with, as they were in the JCT 2011 Editions; the monthly payment cycle continuing up to the due date of the final payment.
To recognise what more than likely happens in practice, the Contractor is expressly allowed to make an application for payment.
Insurance
The JCT 2016 Editions insurance provisions have been amended to allow for “Insurance of the Works and existing structures by other means” from the JCT 2011 Editions reference only to “Insurance of existing structures by the Employer in their own name”.
Existing structures cover for Contractors is not readily available to Employers at a reasonable cost, where for example the Employer is a domestic homeowner or where they are a tenant and the structures cover is affected by the Landlord. The amendment seeks to make it more flexible in obtaining relevant insurance.
The Guidance Notes at the back of the Contracts make it clear that specialist insurance advice should be taken and that the parties liaise to ensure that appropriate insurances are in place before commencement on site.
Conclusion
The JCT 2016 Editions make changes to consent methods, payment and insurance with a number of drafting changes, all of which you might expect to be replicated in the remainder of Contracts when released. If you use the Minor Works Contracts regularly you may need to address your current procedures and documentation, in particular pay attention to payment provisions.
If you would like to find out more about the new suite of 2016 building contracts, contact Guy Thomas on 01244 354812 or guy.thomas@dtmlegal.com.
