Standard Form Contracts

JCT Contracts

Produced by the Joint Contracts Tribunal (JCT) with the help of employers, contractors, subcontractors and consultants, these are the most common form of standard form construction contract in the UK.

There is more than one JCT contract. Really, the JCT contract is a suite of contracts, arranged into families. In each family, you will find main contracts and subcontracts that are designed to work together.

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These include the:

  • JCT Standard Building Contract
  • JCT Design and Build Contract
  • JCT Intermediate Build Contract
  • JCT Minor Works Contract
  • JCT Management Contract
  • JCT Prime Cost Building Contract
  • JCT Major Project Construction Contract
  • JCT Framework Agreement
  • JCT Measured Term Contract
  • JCT Repair and Maintenance Contract
  • JCT Pre-Construction Services Agreement

There are subcontract versions of most of these.

What’s In A JCT Contract?

It’s important to note that different JCT contracts won’t deal with all issues in exactly the same way. That’s why it’s essential to take advice on the actual legal effect of particular clauses – especially if amendments have been made to the standard form.

Broadly, however, the main parts of a JCT contract are:

  • Articles of Agreement – these set out the details of the parties, important context about the works, and what documents are included in the contract.
  • Contract Particulars – in this section the parties set out key project-specific details, such as the completion date, the defects rectification period and any provisions about liquidated or delay damages.
  • Conditions – this is where you find the core terms and conditions governing the contract.
  • Schedules – documents, such as technical specifications and the programme of works, can be added to the contract by the parties.

NEC Contracts

The NEC is something of a misnomer. What’s known as the New Engineering Contract is no longer a new kid on the block, having been first introduced by the Institute of Civil Engineers nearly 35 years ago, back in 1991.

Like JCT contracts, the NEC is a suite of contracts. The newest family of contracts, NEC4, includes:

  • Engineering and Construction Contract
  • Professional Service Contract
  • Term Service Contract
  • Facilities Management Contract
  • Supply Contract
  • Framework Contract
  • Dispute Resolution Services Contract
  • Design, Build and Operate Contract
  • Alliance Contract

There are “Short” form and “Subcontract” versions of most of these.

The NEC family of contracts was designed to be used in different jurisdictions and for several types of work (not just construction contracts). Indeed, one of the hallmarks of the NEC is its flexibility.

Core Clauses

The NEC4 Engineering and Construction Contract has several core clauses. These are arranged in nine main sections:

  • General
  • Contractor’s main responsibilities
  • Time
  • Quality management
  • Payment
  • Compensation events
  • Title
  • Liabilities and insurance
  • Termination

What Are ‘Compensation Events’?

The NEC does not use the term ‘claim’. Instead, it uses the more positive terminology ‘compensation event’. These are events that allow a contractor or subcontractor to be compensated for risks that it did not price for.

A compensation event is the mechanism by which the parties deal with variations, extensions of time, and loss and expense claims.

Early Warning Notices

Early warning notices are the NEC’s tool for proactive risk management. They were founded on the principle that it is better and far cheaper to deal with risk – wherever it arises and whatever the cause – as soon as it first crops up.

The aim of early warning notices are to allow the parties to identify potential issues and take steps to mitigate them.

Early warning notices can be issued by any party. Indeed, there is an obligation on all parties to issue an early warning notice as soon as they become aware of “any matter” that could affect the total of the prices, delay completion or a key date, or impair the performance of the works in use.

Altion Law are specialists in advising and representing parties on commercial construction contracts, claims and disputes.

For a confidential and free discussion, call us today on 01908 414990. Alternatively, email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.