Construction

Tom Pemberton
May 2024

The JCT 2024 Design and Build Contract (JCT DB 2024) represents the first major update of the JCT forms since 2016.  The underlying structure has not changed, but the JCT has taken the opportunity for a comprehensive refresh of the JCT DB main contract and sub-contract forms.

A number of changes have been made, including the following:

New Relevant Events:  For the first time, JCT DB 2024 expressly entitles the Contractor to an extension of time if practical completion is delayed by:

  • a shortage of labour, services or materials caused by an epidemic which first occurs after the Base Date or whose effects change after the Base Date – this is the JCT’s considered response to the Covid-19 pandemic; or
  • a change in primary or secondary legislation or in guidance published by the government or other specified bodies which affects the execution of the Works – this would, for example, capture guidance by the Construction Leadership Council which is not legally binding.

While the principles seem fair, the new Relevant Events are broad in scope and we anticipate that many employers will seek to exclude them or limit their scope by making appropriate amendments. 

New optional Relevant Matters:  To complement each of the new Relevant Events noted above, there is an option in the Contract Particulars for an equivalent Relevant Matter. This would entitle the Contractor to recover the loss and/or expense it as a result of these events.  

We expect that a compromise position will be agreed in many cases allowing the new Relevant Events to apply (albeit perhaps with amendments to limit their scope), but not the optional Relevant Matters.

Termination:  If the relevant events/matters described above cause the works (or substantially the whole of the uncompleted works) to be suspended for a longer period than that identified in the Contract Particulars (the default period being two months), this is potentially grounds for termination by either party.  It is safe to assume that, had this provision been included in the JCT 2016 suite, the consequences of the Covid-19 pandemic would have been much harder for developers and their funders to manage.

Other changes have been made which impact on the parties’ rights to terminate, including the extension of the definition of insolvency. Changes have also been made to the provisions relating to payment on termination, reflecting the not so recent Construction Act notice requirements.

Limitation of the Contractor’s design liability: clause 2.17 has been comprehensively redrafted to make it clear that the Contractor has no greater duty in relation to design (to the extent permitted by the Statutory Requirements) than to exercise reasonable skill and care.   To drive the point home, there is an express exclusion of any obligation that the Contractor’s design must be fit for purpose.  While this was undoubtedly the intention behind the 2016 edition, employers and their advisory teams will no doubt look to close the gap between ‘reasonable skill and care’ and fitness for purpose without losing the benefit of the Contractor’s PI insurance which will not cover unqualified fitness for purpose liability.

Extension of time and liquidated damages:  Detailed changes have been made to the liquidated damages regime (reflecting recent case-law) and the timescales which apply to the extension of time procedure. 

Other changes: Provisions relating to collaborative working, sustainable development and environmental considerations, and the notification and negotiation of disputes have now been elevated into the core Articles and Conditions.  These were previously optional supplemental provisions so these changes represent an evolution of the JCT form rather than being radical changes.  

Various other detailed changes have been made and we recommend that users of the form purchase the tracked change versions published by the JCT to accompany the new forms which shows the changes in redline.

Template schedules of amendments need to be updated to address the changes in the JCT DB 2024 forms.

At Lawrence Stephens, our Construction & Development Finance team can advise on how best to navigate and use this new suite of contracts. 

Please contact Tom Pemberton if you have any questions regarding your project or the JCT forms.