What’s in store from JCT 2024?

The Joint Contracts Tribunal 2024 Design and Build Contract was released on 17 April (along with its guide and tracked change version, highlighting changes against the 2016 edition). The tracked change version looks cleaner than its predecessor (2016 vs 2011) and, for the headline events that it covers, does not look too dramatic, either in relation to adopting the standard terms or in looking to update template schedules of amendments. JCT’s description of this as an “evolution” rather than revolution seems to be a fair one. That said, there will be some work for legal teams now to process the amendments and to flow these through their existing template schedule of amendments, both to finesse the language (now gender neutral) and to make some important decisions on the more substantive changes. Headline points Some of the notable issues covered in the update are: 1. “Epidemics” are included as a new delay event. The definition is still wide enough to cover Covid-19 (and not as an event of “force majeure”, which remains undefined). Parties have the option of electing that this “relevant event” is also a “relevant matter”, so at the employer’s risk for both time and money. 2. The introduction of the Building Safety Act 2022 and its subsequent regulations. However, aside from naming the new duty holders in the same way as for the Construction (Design and Management) Regulations 2015 (with “contractor” the default for all the roles), the committee seems to be generally relying on existing obligations to comply with law and expects further work, whether by amendment to the terms and/or elaborated on in the contract documents, to deal with further 2022 Act requirements, particularly for higher-risk buildings and the accompanying “golden threads” and gateway requirements. 3. An extension of statutory powers and legislative changes that may give rise to an extension of time claim and which, as for epidemics, may also be selected as a relevant matter. The change seems linked to (if not inspired by) the two issues mentioned above, particularly in now expressly covering the guidance of the Construction Leadership Council. 4. A fitness for purpose exclusion, to the extent permitted by statute, alongside a tweaked standard of skill and care applying to the contractor’s design. The skill and care drafting is more in line with where we tend to see this provision end up, but does not go so far as to confirm a full wrap by the contractor of any design in the employer’s requirements, as we also tend to see. 5. Clarification of parties’ responsibilities for risk relating to the discovery of asbestos, contaminated material and/or unexploded ordnance, which sits alongside, but separate to, existing rights and responsibilities relating to antiquities. 6. General modernisation and updates to incorporate gender-neutral language (for instance, replacing he/him/workman where used) and to allow e-mail as a means of communication (save for notices relating to the newly branded, but otherwise substantially the same, “termination payments”). The future-proofing forewarned by the JCT committee is covered by moving to the front end the relevant (previously optional) supplemental provisions from Schedule 2, relating to collaborative working, sustainable development, environmental considerations and internal dispute resolution. It is worth noting on these changes that: (i) this includes a reciprocal good faith obligation for the parties to co-operate with each other and project team members, which may be problematic for some in the corporate context; and (ii) any suggestions from the contractor to improve the environmental performance and sustainability of the works will not extend its obligations in respect of design (ie in line with the fitness for purpose exclusion already noted). Finally, and interestingly given the pricing pressures we have seen in negotiations in the past couple of years, fluctuation schedules have been removed or, rather, re-homed, as the substantive provisions remain the same but the schedules are no longer included as a matter of course. These are instead available as stand-alone documents via the JCT website. This reflects wider market trends, as these are rarely incorporated and the pages tend to be deleted outright. The move may also be seen as a nod to ESG concerns in reducing the total number of pages for those still using hard copies. (Another change acknowledging Covid consequences, electronic execution is now expressly acknowledged as a viable option in the front of the contract.) More seriously, with an eye to future-proofing, this separation of schedules will give the option to revise these more regularly and provide some other pricing options where needed in challenging markets, independent of updates to the full suite. It is also worth noting here that, as an alternative pricing route, the JCT is throwing its hat into the ring with a target cost contract, set to arrive as part of these 2024 updates. What next? More is to follow – the JCT official D&B launch happened on 1 May (the recording available via JCT’s website, including some very useful and pithy cartoons on the amends), the Minor Works Building Contract family went live on 15 May and the remainder of the 2024 suite is to come, though dates are still to be confirmed this will include a new Target Cost Contract – watch out for the “pink” (cover page that is). There will be some work for in-house teams in updating schedules of amendments as, while it is a neater transition on the face of it than the 2016 revisions, there are still a number of points (both of form and substance) to flow across templates. In particular, legal teams will need to make decisions as regards the new default offerings around fitness for purpose, epidemics and “good faith”, and how far they are prepared to move with the JCT in having those on the table from the outset, if at all. In respect of such matters, we also expect a degree of jostling in the short term (primarily between lawyers) as we seek to realign our unwritten understanding of what comprises “institutionally” or “market” acceptable terms against these changes, especially when it comes to reporting to clients. We expect that others will generally approve of and welcome the alignment of the conditions with the private and public sector playbooks, as well as the necessary (but refreshingly light) approach to the 2022 Act updates. Read the Design and Build Contract here >> Phoebe McLarty is a construction partner at Mishcon de Reya