CPD

Question 1

In your go to webinar you talk about defining repudiation and termination under a JCT D&B contract? What are these?

Answer 1

Termination under a JCT contract is the ending of a contract. It can be done by the employer, the contractor or mutual consent by both parties.

Repudiation of a contract is when one party renounces their obligations under a contract, either expressly or by conduct.

Question 2

What are listed items under JCT?

Answer 2

Listed items under a JCT contract are the goods, plants and materials to be purchased. These can be paid for off-site provided certain conditions are met, i.e. vesting agreement, set aside from other materials and clearly marked, a surety bond if necessary.

Question 3

What are the implications of listed items under JCT contracts?

Answer 3

Listed items are important as the contractor will be entitled to payment for these while they are stored offsite (i.e. prior to incorporation into the works) provided that certain conditions have been met.

Question 4

What conditions have to be met for listed items for them to be paid in an interim payment?

Answer 4

• the listed item is in accordance with the contract
• proof that they are vested in the contractor and covered by an insurance policy covering them against loss or damage caused by specified perils until they are delivered to site
• at the place of storage listed items are clearly and visibly marked as belonging to the employer and set aside from other materials
• and (v) if required, the contractor must provide a bond from an approved surety (in a form provided by JCT) which enables the employer to recover the amount it has paid to the contractor if he is unable to obtain the relevant goods.

Question 5

What are the key changes to JCT in the 2024 updates?

Answer 5

• Specific clause promoting collaborative working.
• Specific clause to encourage contractors to suggest economically viable amendments to project works to improve environmental performance and sustainability.
• Specific clause introducing requirement to notify each other of matters that are likely to give rise to a dispute so they can meet for negotiations.
• The contracts have been updated to comply with the Building Safety Act 2022.

Question 6

What are the consequences of a contractor becoming insolvent under a JCT contract?

Answer 6

In the event that the contractor becomes insolvent, the employer may at any time, by notice to the contractor, terminate its employment.

Under JCT forms of contract, the contractor’s obligation to carry out the works is automatically suspended.

As with the automatic suspension of the work, the employer’s obligation to pay the contractor is automatically suspended until the agreement and issue of a final account. This payment obligation comes into force regardless of whether the employer issues a notice of termination.

Question 7

How can an employer terminate a contract under JCT D&B?

Answer 7

An employer can terminate a contract if:

• The contractor defaults (i.e. suspends work unreasonably) and does not correct within 14 days of receiving a default notice.
• The contractor becomes insolvent.
• Contractor commits an offence under the Bribery Act 2010.

Question 8

What are the consequences of an employer terminating a JCT D&B contract?

Answer 8

• The employer may take possession of the site, and use all temp buildings, tools, plant and equipment and pay someone else to complete the works.
• Stop paying the contractor except for payments due.
• Issue a final account to the contractor within 3 months of completing the works and receiving a making good of defects.

Question 9

What is the consequence of a contractor becoming insolvent under a JCT D&B contract?

Answer 9

An employer can terminate the contractor’s employment.

The employer can then stop payment and take possession of the site, including using any plant, materials or equipment.

Question 10

How does the overall payment process works under JCT D&B 16?

Answer 10

Payments under JCT D&B can be either stage payments which are detailed in the contract, or interim payments which are assessed based upon the works done on site and the pricing document.

The payment process starts with the:
INTERIM VALUATION DATE -> 7 days later -> DUE DATE -> 14 days later -> FINAL DAY FOR PAYMENT.

Question 11

Give me 3 examples of X clauses within a NEC4 contract and how they work?

Answer 11

X4 - Ultimate Holding Company Guarantee (essentially a parent company guarantee to uphold the contract if the subsidiary company defaults)

X11 - Termination by Client (allows client to terminate at will, providing a strcutred payment process to the contractor to ensure they are paid for all works done to date).

Question 12

What building.com articles have you read recently?

Answer 12

The improvement of the BSR from July, shifting from being under the HSE to the Ministry of Housing, Communities and Local Government (MHCLG).

This has seen changes like communicating during application stage, engaging private registered building control inspectors, issuing provisional approvals with conditions similar to planning.