Joint Contracts Tribunal
Encyclopedia
The Joint Contracts Tribunal, also known as the JCT, produces standard forms of contract for construction
, guidance notes and other standard documentation for use in the construction industry. From its establishment in 1931, JCT has expanded the number of contributing organisations. Following recommendations in the 1994 Latham Report
, the current operational structure comprises 8 members who approve and authorise publications. They are the Association of Consulting Engineers, the British Property Federation
, the Construction Confederation, the Local Government Association
, the National Specialist Contractors Council
, the Royal Institute of British Architects
, the Royal Institution of Chartered Surveyors
and the Scottish Building Contract Committee.
(RIBA
) and the National Federation of Building Trades Employers (NFBTE). The common purpose was to publish and where necessary amend a standard form of building contract. Its first chairman, from 1931 to 1956 was Sydney Tatchell, followed by Sir Percy Thomas
.
The JCT published important new editions of the form in 1939, 1963, 1980, 1998, 2005, and 2011. In 1998 JCT became a limited company.
and produced to enable them to be used together, including the following where applicable:
JCT publish guidance on which contract to select.
In 2007 JCT published the Constructing Excellence Contract (JCT/CE), a contract designed to support collaborative working, as advocated by the Latham Report, and can trace its roots back to the "collaborative contract" published in 2003 by BE, a joint venture between the Reading Construction Forum and the Design and Build Foundation (and now part of Constructing Excellence
).
The JCT encourages Retention
of an agreed percentage of the contract sum until Practical Completion and then a percentage until a period after Final Completion. This avoids payment in advance for such things as minor defects or snagging which need to addressed at the end of the project or come to light after the project completes. So the invoice at each point is for a percentage of the value of the work certified complete. The payer can deduct an amount, however under the 2009 amendments the method for calculating the new amount must be stated.
The JCT encourages up front agreement of Liquidated and Ascertained Damages
(LAD) as an estimate of the payers weekly losses if the payee fails to reach Practical Completion by the Contractual Completion Date. If delays are for reasons beyond the contractor's control, the contractor can request an Extension of Time: if the Contract Administrator allows this, it in effect extends the period before which the contractor is liable to pay the LAD.
The JCT introduced the concept of Determination, whereby the contract can be terminated for suspension of works, failure to proceed regularly and diligently, failure to remove defective works, failure to execute works in accordance with the contract, and bankruptcy of the contractor. If one party has ceased to perform in the contract (e.g. the contractor has gone past the Contractual Completion Date and has no plan to complete the contract), Determination enables the other party to end their obligations (e.g. to pay the contractor to finish the project). This is in addition to the Common Law remedy of Repudiation
.
Reference is made to Adjudication
as a quick way of resolving disputes which the parties cannot resolve between them, with appeal to either Arbitration
or Litigation
depending on the preferences of the parties.
One of the most common disputes around building contracts is with regard to the interpretation of failure to proceed regularly and diligently, and whether the contractor is able to make a claim for loss of profits after Determination. In contrast in the US, building contracts can normally be terminated for convenience of the client, only paying for the work already done.
The JCT makes no distinction between work completed by subcontractors and work completed by the contractor. So the client can end up paying the contractor for work certified and yet the contractor may not pay the subcontractor, for example through insolvency. It may then be hard to work with that subcontractor to complete the work. In contrast in some US states, monies due to subcontractors must be held in trust by the contractor.
ICE
Conditions, New Engineering Contract
, FIDIC
, GC/Works/I, Model Form, and IChemE
Form are alternative formats for building contracts.
Construction law
Construction law is a body of law that deals with matters relating to building construction and related fields. It covers a wide range of legal issues including contract law, bonds and bonding, guarantees and sureties, liens and other security interests, tendering, construction claims, and related...
, guidance notes and other standard documentation for use in the construction industry. From its establishment in 1931, JCT has expanded the number of contributing organisations. Following recommendations in the 1994 Latham Report
Latham Report
The Latham Report, titled Constructing the Team, was an influential report written by Sir Michael Latham, published in July 1994. Latham was commissioned by the United Kingdom government and industry organisations to review procurement and contractual arrangements in the UK construction industry,...
, the current operational structure comprises 8 members who approve and authorise publications. They are the Association of Consulting Engineers, the British Property Federation
British Property Federation
British Property Federation is a membership organisation that promotes the interests of companies those involved in property ownership and investment. It was incorporated in 1963 as a limited company...
, the Construction Confederation, the Local Government Association
Local Government Association
The Local Government Association is a voluntary lobbying organisation acting as the voice of the local government sector in England and Wales, which seeks to be an authoritative and effective advocate on its behalf....
, the National Specialist Contractors Council
National Specialist Contractors Council
The National Specialist Contractors' Council is a United Kingdom construction organisation comprising 32 specialist trade associations representing companies involved in planning, design, construction, refurbishment and maintenance of the built environment.-Members:*Association of Concrete...
, the Royal Institute of British Architects
Royal Institute of British Architects
The Royal Institute of British Architects is a professional body for architects primarily in the United Kingdom, but also internationally.-History:...
, the Royal Institution of Chartered Surveyors
Royal Institution of Chartered Surveyors
The Royal Institution of Chartered Surveyors is an independent, representative professional body which regulates property professionals and surveyors in the United Kingdom and other sovereign nations....
and the Scottish Building Contract Committee.
History
The Joint Contracts Tribunal was established in 1931. It initially consisted of the Royal Institute of British ArchitectsRoyal Institute of British Architects
The Royal Institute of British Architects is a professional body for architects primarily in the United Kingdom, but also internationally.-History:...
(RIBA
Riba
Riba means one of the senses of "usury" . Riba is forbidden in Islamic economic jurisprudence fiqh and considered as a major sin...
) and the National Federation of Building Trades Employers (NFBTE). The common purpose was to publish and where necessary amend a standard form of building contract. Its first chairman, from 1931 to 1956 was Sydney Tatchell, followed by Sir Percy Thomas
Percy Thomas
Sir Percy Edward Thomas OBE , was an award-winning British architect based in Wales for the majority of his life. He was twice RIBA president ....
.
The JCT published important new editions of the form in 1939, 1963, 1980, 1998, 2005, and 2011. In 1998 JCT became a limited company.
Suite of Standard Forms
Suite of Standard Forms means a group of all the mutually consistent documents necessary to operate a particular method of procurementProcurement
Procurement is the acquisition of goods or services. It is favourable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location...
and produced to enable them to be used together, including the following where applicable:
- consultant agreements
- a main contractContractA contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
between the employer and the main contractor; - sub-contracts between the main contractor and its subcontractorSubcontractorA subcontractor is an individual or in many cases a business that signs a contract to perform part or all of the obligations of another's contract....
s (both for sub-contractors selected by the employer and for other sub-contractors); - a standard form of sub-sub-contract between a subcontractorSubcontractorA subcontractor is an individual or in many cases a business that signs a contract to perform part or all of the obligations of another's contract....
and such sub-contractor's sub-sub-contractors; - a design agreement between an employer and a specialist designer;
- forms of tender for issue by an employer to prospective main contractors and for issue by a main contractor to prospective subcontractorSubcontractorA subcontractor is an individual or in many cases a business that signs a contract to perform part or all of the obligations of another's contract....
s and for issue by a subcontractorSubcontractorA subcontractor is an individual or in many cases a business that signs a contract to perform part or all of the obligations of another's contract....
to prospective sub-sub-contractors; - a form of contractContractA contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
for the supply of goods; - forms of bondSurety bondA surety bond is a promise to pay one party a certain amount if a second party fails to meet some obligation, such as fulfilling the terms of a contract...
(including performance bonds) and collateral warranties. - the Construction Industry Model Arbitration Rules, adapted from those of the Society of Construction ArbitratorsSociety of Construction ArbitratorsThe Society of Construction Arbitrators is a learned society of arbitrators, adjudicators and mediators in the construction industry, based in London. It has as its object the development and support of commercial methods of alternative dispute resolution...
JCT publish guidance on which contract to select.
Main Forms
JCT substantially revises and rewrites the family of forms every decade. The most recent suite, replacing the 1998 version, is the 2005 suite, as is commonly referred to as JCT 05. There are now, however, 2009 amendments published. The 2011 versions will replace 2009 amendments for all contracts signed after October 1st 2011. They are considered to be the most popular construction contracts in use in the UK.Main Contracts
- Major Project Form (MP05)
- Standard Form of Building Contract (SBC05)
- Intermediate Form of Building Contract (IC05)
- Minor Works Agreement (MW05)
- Management Contract (MC05)
- Design and Build Contract (DB05)
- Construction Management Documentation
In 2007 JCT published the Constructing Excellence Contract (JCT/CE), a contract designed to support collaborative working, as advocated by the Latham Report, and can trace its roots back to the "collaborative contract" published in 2003 by BE, a joint venture between the Reading Construction Forum and the Design and Build Foundation (and now part of Constructing Excellence
Constructing Excellence
Constructing Excellence is a UK-based construction industry membership organisation. In the UK, it is unique insofar as its member organisations are drawn from across the industry supply chain, ranging from clients, through contractors and consultants, to suppliers and manufacturers of building...
).
Smaller project contracts
Traditional JCT contracts were seen as too detailed and difficult to use in smaller domestic projects so JCT launched a consumer friendly range of contracts called the "Building Contract for the Home Owner".- Building Contract for Home Owner/Occupier (where client deals directly with the builder) (HOB)
- Building Contract for Home Owner/Occupier (who has appointed a consultant) (HOC)
- Contract for Home Repairs and Maintenance (HO/RM)
Key features
The JCT contracts avoid up front payments from payers to payees. Instead, the payee invoices the payer once work has been certified as completed by an independent third party, the Contract Administrator (often an architect or surveyor). Often interim certificates are issued where itemised components of the work have been completed, or are a verifiable percentage complete. In the 2009 amendments, the payee or payee can issue the certificate if the Contractor Administrator fails to do so.The JCT encourages Retention
Retainage
Retainage is a portion of the agreed upon contract price deliberately withheld until the work is substantially complete to assure that contractor or subcontractor will satisfy its obligations and complete a construction project.- History and Purpose :...
of an agreed percentage of the contract sum until Practical Completion and then a percentage until a period after Final Completion. This avoids payment in advance for such things as minor defects or snagging which need to addressed at the end of the project or come to light after the project completes. So the invoice at each point is for a percentage of the value of the work certified complete. The payer can deduct an amount, however under the 2009 amendments the method for calculating the new amount must be stated.
The JCT encourages up front agreement of Liquidated and Ascertained Damages
Liquidated damages
Liquidated damages are damages whose amount the parties designate during the formation of a contract for the injured party to collect as compensation upon a specific breach ....
(LAD) as an estimate of the payers weekly losses if the payee fails to reach Practical Completion by the Contractual Completion Date. If delays are for reasons beyond the contractor's control, the contractor can request an Extension of Time: if the Contract Administrator allows this, it in effect extends the period before which the contractor is liable to pay the LAD.
The JCT introduced the concept of Determination, whereby the contract can be terminated for suspension of works, failure to proceed regularly and diligently, failure to remove defective works, failure to execute works in accordance with the contract, and bankruptcy of the contractor. If one party has ceased to perform in the contract (e.g. the contractor has gone past the Contractual Completion Date and has no plan to complete the contract), Determination enables the other party to end their obligations (e.g. to pay the contractor to finish the project). This is in addition to the Common Law remedy of Repudiation
Anticipatory repudiation
Anticipatory repudiation, also called an anticipatory breach, is a term in the law of contracts that describes a declaration by the promising party to a contract, that he or she does not intend to live up to his or her obligations under the contract....
.
Reference is made to Adjudication
Adjudication
Adjudication is the legal process by which an arbiter or judge reviews evidence and argumentation including legal reasoning set forth by opposing parties or litigants to come to a decision which determines rights and obligations between the parties involved....
as a quick way of resolving disputes which the parties cannot resolve between them, with appeal to either Arbitration
Arbitration
Arbitration, a form of alternative dispute resolution , is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons , by whose decision they agree to be bound...
or Litigation
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
depending on the preferences of the parties.
Critisisms/Alternatives
Lawbuild has proposed a number of amendments to the JCT contract further to protect the client, with the top four being: to ensure the contractor posts a 10% bond to cover the costs of finding a replacement contractor if the contractor goes into liquidation, to ensure the contractor obtains building regulations certificates before Practical Completion, to ensure the contractor must accept design changes, and to ensure the employer can control the identities of the contractor's designers.One of the most common disputes around building contracts is with regard to the interpretation of failure to proceed regularly and diligently, and whether the contractor is able to make a claim for loss of profits after Determination. In contrast in the US, building contracts can normally be terminated for convenience of the client, only paying for the work already done.
The JCT makes no distinction between work completed by subcontractors and work completed by the contractor. So the client can end up paying the contractor for work certified and yet the contractor may not pay the subcontractor, for example through insolvency. It may then be hard to work with that subcontractor to complete the work. In contrast in some US states, monies due to subcontractors must be held in trust by the contractor.
ICE
Institution of Civil Engineers
Founded on 2 January 1818, the Institution of Civil Engineers is an independent professional association, based in central London, representing civil engineering. Like its early membership, the majority of its current members are British engineers, but it also has members in more than 150...
Conditions, New Engineering Contract
NEC Engineering and Construction Contract
The New Engineering Contract , or NEC Engineering and Construction Contract is a formalized system created by the Institution of Civil Engineers that guides the drafting of documents on civil engineering and construction projects for the purpose of obtaining tenders, awarding and administering...
, FIDIC
FIDIC
The acronym FIDIC stands for Fédération Internationale Des Ingénieurs-Conseils, French for the International Federation of Consulting Engineers. The fact that the organisation has a French title bears testimony to its foundation in 1913 by three countries each wholly or partly francophone...
, GC/Works/I, Model Form, and IChemE
Institution of Chemical Engineers
The Institution of Chemical Engineers is a global professional engineering institution with over 33,000 members in over 120 countries worldwide, founded in 1922, and awarded a Royal Charter in 1957.-Structure:...
Form are alternative formats for building contracts.