JCT Design and Build 2024 – what’s changed?

Introduction

The much-awaited JCT Design and Build 2024 (along with the Design and Build Sub-Contract and Guidance Notes) was published on 17 April 2024. Other contracts in the suite are yet to be updated, and it expected that these will be published over the forthcoming months, along with a new JCT Target Cost Contract.

The updates follow some key themes: implementing the lessons learnt from Covid, modernising the contract; responding to updates in legislation and aligning the contract more with principles set out in the Government’s Construction Playbook around sustainability, collaboration and early dispute resolution. This article lists the changes in more detail.

Electronic notices

• General notices and communications - Clause 1.7.3 has been amended so that any notices, communications or documents (other than those required under clause 1.7.4) can be sent by email to the recipient’s email address (as stated in the Contract Particulars)
• Clause 1.7.4 notices - There is the option to include clause 1.7.4.2 within the Contract Particulars, to permit notices required under clause 1.7.4 to be given via email to the addressed identified in the Contract Particulars (rather than Signed For 1st class, Special Delivery Guaranteed post or by hand)

Contractor’s design liability

• No fitness for purpose obligation for design – this clarification has been added at clause 2.17.1.2
• No cap on liability under the Defective Premises Act 1972 – previously clauses 2.17.2 and 2.17.4 applied to the provision of a dwelling, but this has been extended to also include any work in connection with a dwelling to reflect the changes introduced by the Building Safety Act 2022

Relevant Events and Relevant Matters

• Asbestos, contaminated material and unexploded ordnances – there are new grounds for the Contractor gaining an extension of time (2.26.4) and loss and expense (4.21.3) for the discovery of asbestos and contaminated material or unexploded ordnances, except to the extent that it has already been identified in the Contract Documents and/or where any material has been brought to the site by the Contractor or the Contractor’s Person
• Epidemics – this is a Relevant Event (clause 2.26.7). It can also take effect as a Relevant Matter if clause 4.21.6 is selected within the Contract Particulars
• Changes in law, the exercise of statutory power by the government or its devolved administrations and local authorities, and the publication of any guidance from those bodies or the Construction Leadership Council (CLC), which affects the execution of the Works this is a Relevant Event (clause 2.26.8). It can also take effect as a Relevant Matter if clause 4.21.7 is selected within the Contract Particulars
• Reinstatement work under Insurance Option A - shall now be treated as a Change (clause 6.13.5) for the purpose of claiming an extension of time under clause 2.26.1.
• Shortened period for the Employer to notify the Contractor on whether an extension of time will be granted in respect of a Relevant Event, from 12 weeks to 8 weeks from receipt of the Contractor’s notice (clause 2.25)
• The Employer has 14 days to request additional information from the date of receiving notice from the Contractor of a delay (clause 2.24.4). Previously the Employer was entitled to request “at any time”

Dutyholder regime

• Obligations under the Building Regulations - clause 3.16 (dealing with the CDM Regulations 2015) has been amended to list the requirements the Contractor must fulfil when acting as the Contractor, Principal Contractor and/or Principal Designer under Part 2A of  the Building Regulations 2010
• The role(s) of Principal Contractor and Principal Designer under the Building Regulations have been added to Articles 6 and 7, with the Contractor as the default choice

Termination provisions

• Provisions to reflect the Corporate Insolvency and Governance Act 2020 (CIGA)
  The definition of Insolvency at clause 8.1 has been extended to refer to a moratorium and compromises/arrangements conducted under Part 26A of the Companies Act 2006, to reflect the changes introduced by CIGA 2020
• New definition of “Termination Payment” 
  The “Termination Payment” refers to the amounts assessed as due and payable by either the Employer or the Contractor pursuant to the grounds for termination. This is essentially a change in terminology, as the process for preparing the termination account remains essentially the same as JCT DB 2016
• New formal mechanism for paying the Termination Payment 
  Clause 8.13 sets out a process for payment of the Termination Payment which mirrors the process for interim and final payments
• New rights to terminate for epidemics, changes in law etc.
  Either party may terminate in response to epidemics, changes in law, the exercise of statutory power and the publication of guidance by government, local authorities or the CLC, which affects the execution of the Works (clause 8.11)
• Liquidated damages post-termination 
  The Contractor’s liability for liquidated damages ceases upon termination (clause 2.29.5), however this is “without prejudice to and not in substitution for” the Employer’s other rights and remedies so that the ability to claim general damages has been preserved
• Public Contracts Regulations 2015 (PC Regs) 
  Clause 8.11 has been amended to remove references to the Employer’s right to terminate where the grounds described in the PC Regs, reg 73(1)(c) apply, as this regulation has been revoked. The Employer remains entitled to terminate where the grounds set out in PC Regs 73(1)(a) apply
• Sub-contractor(s) upon termination 
  A new provision has been added at clause 3.4.1 so that if the Contractor’s employment under the main contract is terminated, the employment of any sub-contractor(s) will not terminate if third party rights or collateral warranties have been given to an Employer or Funder (with step in rights). The sub-contractor has the ability to suspend performance of its obligations until a written notice from the Employer or Funder is received, whereupon it will accept instructions from the Employer or Funder to the exclusion of the Contractor. If no such notice is served “after the last date on which such written notice may be served”, the Subcontractor may terminate

Contractor’s responsibilities for asbestos etc.

In relation to asbestos, contaminated material and unexploded ordnances on site, the Contractor must under clause 3.15:

• use its best endeavours to not disturb the material and to cease work if it would endanger health and safety and/or life or property, or if carrying out the works would prevent or impede the disposal or removal of such material; and
• report the discovery and the steps being taken to the Employer

The Employer has the right to issue instructions which could include requiring the Contractor to permit third parties to investigate, dispose of or remove the material or item.

Greater alignment with the Construction Playbook

In order to future proof the contract and make it align with the government’s strategy of making construction contracts less adversarial, the following provisions have become mandatory:

Collaborative working

A new provision has been added (Article 3) requiring the parties to “work with each other and with other project team members in a co-operative and collaborative manner, in good faith and in a spirit of trust and respect.”

Sustainable development and environmental considerations

• New clause 2.1.5 encourages the Contractor to suggest economically viable amendments to the works, which if instructed as a Change may result in an improvement in environmental performance and sustainability. The Contractor has no obligation to make the same suggestions regarding design
• New clause 2.2.2 requires the Contractor to provide all information the Employer reasonably requests regarding the environmental impact of the supply and use of materials and goods

Notification and negotiation of disputes

• New clause 9.1 requires that each party must promptly notify the other of any matter that is likely to give rise to a dispute. The parties’ senior executives must meet in good faith to try to resolve the matter. This is without prejudice to the parties’ ability to adjudicate at any time under the Construction Act and is not a condition precedent to commencement of any other legal proceedings

Previously these requirements were optional Supplemental Provisions, but now apply to all projects.

Miscellaneous

• Gender neutral language has been adopted throughout, with parties being referred to as “it” rather than “he”/”him”
• JCT Construction Industry Model Rules 2024 are to be used for all arbitrations under the contract (clause 9.4)
• Fluctuations Option A is no longer set out in Schedule 7. It is now available via the JCT website and needs to be incorporated as a separate document
• PI insurance sub-limits have been added to clause 6.15 of the Contract Particulars to allow more specific detail, rather than the general sub-limits for pollution and contamination. This is in response to new categories becoming increasingly common, for example sub-limits for cladding and fire safety
• New definition of “Statutory Providers” has been used to replace and widen the previous definition of “Statutory Undertakers”, to refer to “any person executing work in pursuance of its statutory obligations”
• Variation – a new clause 5.4.5 has been added so that an allowance shall be made for any percentage or lump sum adjustments in the Contract Sum Analysis
• Electronic signatures – the attestation notes acknowledge the possibility of executing the contract electronically

Conclusion

• the provisions relating to asbestos, contaminated materials and unexploded ordnances dilute the well-established position that the Contractor takes responsibility for ground conditions post contract. As the Relevant Matter for this event is optional, it is interesting to see how this develops and whether this will become increasingly market standard
• the ability to claim an extension of time, and also potentially additional money, for updates to law, and changes to guidance issued by the Government, local authorities and the CLC that affect the works, extends the Employer’s risk beyond changes to Statutory Requirements after the Base Date. There is also potential for this provision to be interpreted widely, giving rise to disputes

• JCT have not made provision for the new Gateway Regime for Higher-Risk Buildings under the Building Safety Act 2022. The 2024 updates were anticipated with interest on how JCT would manage the inherent risks in complying with this new regulatory regime.  However, in the absence of an agreed market position it appears that  parties will have to continue to broker these arrangements for themselves
• although the 2024 edition adopts a mandatory position on sustainable development and environmental considerations (whereas previously these had been optional Supplemental Provisions), there is perhaps a missed opportunity to address market appetite for ESG matters, in particular regarding climate change