The JCT Standard Building Contract 2011

David Chappell BA(Hons Arch), MA(Arch), MA(Law), PhD, RIBA has 50 years of experience in the construction industry. David has worked as an architect in the public and private sectors, as a contracts administrator, as a lecturer in construction law and contracts procedure and as a construction contracts consultant. He was Professor of Architectural Practice and Management Research at The Queen’s University of Belfast and Visiting Professor of Practice Management and Law at the University of Central England in Birmingham. The author of many books for the construction industry, he is Director of David Chappell Consultancy Limited, is a specialist advisor to the RIBA and RSUA and regularly acts as an adjudicator.

Preface xiv Abbreviations used in the text xvi

Notes before reading xvii

Part I Preliminaries 1

1 Introduction 1

1.1 What is a contract? 1

1.2 Purpose of building contracts 4

1.3 Types of construction contracts 4

1.4 Characteristics of a standard form 7

1.5 Commonly used contracts 9

1.6 Important background to SBC 11

1.7 SBC and variants 11

2 Basic matters 13

2.1 Works 13

2.2 Drawings 13

2.3 Specification 14

2.4 Schedules 15

2.5 Bills of quantities 15

2.6 The Standard Method of Measurement 16

2.7 Privity of contract and the Third Party Act 17

2.8 Third party rights and collateral warranties 18

2.9 Base Date 19

2.10 Common problems 20

3 About the contract documents 23

3.1 What constitutes the contract? 23

3.2 What are articles and recitals? 24

3.3 How to complete the contract form 25

3.4 Priority of documents 29

3.5 Errors, discrepancies and divergences 30

3.6 Custody and copies 34

3.7 Limits to use 35

3.8 Reckoning days 35

3.9 Certificates, notices and other communications 36

3.10 Applicable law 37

3.11 Common problems 37

4 Related matters 40

4.1 The Housing Grants, Construction and Regeneration Act 1996 as amended 40

4.2 Entire contracts 42

4.3 Express and implied terms 43

4.4 Limitation periods 44

4.5 Letters of intent 46

4.6 Quantum meruit 47

4.7 Limited companies 48

4.8 Bonds 49

4.9 Common problems 51

Part Ii Participants 53

5 The architect’s powers and duties 53

5.1 What the architect can do or must do 53

5.2 Specific requirements under the JCT contract 54

5.3 Powers 54

5.4 The architect’s design role under SBC 54

5.5 The architect as agent for the employer 61

5.6 No power to direct contractor 62

5.7 Issue of certificates 63

5.8 The issue of instructions 66

5.9 Instructions in detail 70

5.10 Issue of information 70

5.11 Duties under the contract 73

5.12 General duties 77

5.13 Does the architect have any duty to the contractor? 79

5.14 Common problems 79

6 The contractor’s powers and duties 82

6.1 What the contractor can do or must do 82

6.2 Person-in-charge 82

6.3 Access to the Works and premises 82

6.4 Carrying out the Works 96

6.5 Levels and setting out 98

6.6 Workmanship and materials 98

6.7 Contractor’s master programme and other documents 100

6.8 Statutory obligations 103

6.9 Antiquities 104

6.10 Drawings, details and information 104

6.11 Compliance with architect’s instructions 106

6.12 Suspension of performance 107

6.13 Does the contractor have a duty to warn of design defects? 108

6.14 Common problems 108

7 The employer’s powers and duties 110

7.1 What the employer can or must do 110

7.2 Express and implied powers and duties 110

7.3 General powers 115

7.4 General duties 122

7.5 Common problems 123

8 Consultants 125

8.1 General points 125

8.2 Quantity surveyors 126

8.3 Employer’s representative/project manager 128

8.4 Structural engineers, mechanical engineers and others 129

8.5 Common problems 129

9 The clerk of works 131

9.1 Method of appointment 131

9.2 Duties 131

9.3 Snagging lists 132

9.4 Defacing materials 132

9.5 Common problems 133

10 Sub-contractors and suppliers 134

10.1 General 134

10.2 Assignment 135

10.3 Sub-contracting 136

10.4 Listed sub-contractors 138

10.5 Named specialists 139

10.6 Common problems 140

11 Statutory authorities 143

11.1 Work not forming part of the contract 143

11.2 Statutory authorities in contract 143

11.3 The CDM Regulations 2007 145

11.4 Common problems 147

Part Iii Work in Progress 149

12 Insurance 149

12.1 Why insurance? 149

12.2 Types of insurance in the contract 149

12.3 What is an indemnity? 150

12.4 Injury to persons and property 151

12.5 Things that are the liability of the employer 152

12.6 Insurance terms 153

12.7 Insurance of the Works: alternatives 154

12.8 A new building where the contractor is required to insure 155

12.9 A new building where the employer insures 156

12.10 Alterations or extensions to an existing building 157

12.11 Benefits for sub-contractors 158

12.12 The Joint Fire Code 158

12.13 Terrorism cover 159

12.14 Common problems 159

13 Possession of the site 161

13.1 General 161

13.2 Date of possession 162

13.3 Common problems 163

14 Extension of time 165

14.1 Basics 165

14.2 Extension of time 166

14.3 Grounds 168

14.4 Procedure 177

14.5 Important conditions 186

14.6 Common problems 188

15 Liquidated damages 190

15.1 What are liquidated damages? 190

15.2 Procedure 191

15.3 Common problems 193

16 Financial claims 195

16.1 Loss and expense claims 195

16.2 Procedure 196

16.3 Effect on regular progress 200

16.4 The architect’s opinion 201

16.5 Ascertainment 202

16.6 Reimbursement under other contract provisions 203

16.7 Relevant matters forming the basis of a claim 203

16.8 Certification of direct loss and/or expense 207

16.9 Contractor’s other rights and remedies 208

16.10 Common problems 208

17 Architect’s instructions 210

17.1 Purpose 210

17.2 Scope 210

17.3 Common problems 216

18 Variations 219

18.1 What is a variation? 219

18.2 Does extra work always involve payment? 221

18.3 Valuation 222

18.4 Treatment of approximate quantities, defined and undefined provisional sums 227

18.5 If the conditions for carrying out other work are altered 228

18.6 Valuation of obligations and restrictions 229

18.7 Schedule 2 quotations 229

18.8 Acceleration 231

18.9 Daywork 232

18.10 Valuation of contractor’s designed portion 233

18.11 Common problems 233

19 Payment 235

19.1 The Contract Sum 235

19.2 Valuation 237

19.3 Method and timing 239

19.4 Payment procedure 240

19.5 Retention 243

19.6 Final payment 245

19.7 The effect of certificates 248

19.8 Off-site materials 250

19.9 Fluctuations 251

19.10 Common problems 252

20 Contractor’s design 254

20.1 Contractor’s Designed Portion (CDP) 254

20.2 Documents 254

20.3 The contractor’s obligations 255

20.4 Liability 258

20.5 Variations 259

20.6 Insurance 260

20.7 Common problems 261

Part Iv Closing Stages 263

21 Practical completion 263

21.1 Definition 263

21.2 What the contract says 263

21.3 Consequences 265

21.4 Partial possession and sectional completion 265

21.5 Common problems 267

22 Defects liability 269

22.1 During construction 269

22.2 Rectification period 271

22.3 Definition 271

22.4 Defects, shrinkages or other faults 271

22.5 Frost 272

22.6 Procedure 272

22.7 Common problems 275

23 Termination 276

23.1 General points 276

23.2 Termination by the employer 278

23.3 Grounds: contractor’s defaults 279

23.4 Grounds: insolvency of contractor 282

23.5 Grounds: corruption 283

23.6 Grounds: neutral causes 283

23.7 Grounds: insurance risks and terrorism cover 284

23.8 Consequences of termination for contractor’s default or insolvency 285

23.9 Consequences of termination for neutral causes or insurance risks 288

23.10 Termination by the contractor 288

23.11 Grounds: employer’s defaults 288

23.12 Grounds: insolvency of employer 292

23.13 Grounds: neutral causes 293

23.14 Grounds: insurance risks and terrorism cover 293

23.15 Consequences of termination for employer’s default, neutral causes or insolvency of the employer, etc. 293

23.16 Consequences of termination for insurance risks 294

23.17 Suspension of the Works by the contractor 295

23.18 Common problems 295

Part V Intractable Problems 297

24 Dispute resolution procedures 297

24.1 General 297

24.2 Adjudication 301

24.3 Arbitration 310

24.4 Legal proceedings (litigation) 317

24.5 Mediation 317

24.6 Common problems 317

Notes and references 319

Table of cases 330

Subject index 339

Clause number index to text 346