In the UK, the Joint Contracts Tribunal has developed a suite of standard JCT contracts widely used in the construction industry to help facilitate the contractual process between clients, contractors and other parties involved in the construction process.
House renovation and construction projects involve a significant investment of money, resources and time, which makes it crucial to have a clear and well-defined contract in place to ensure that all parties involved are on the same page.
This article will cover what a JCT contract is, what they cover, how to obtain them and what types are available.
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- What Is A JCT Contract?
- Benefits Of The Contract
- Flaws Of The Contract
- When Would You Need A JCT Contract?
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What Is A JCT Contract?
A JCT contract is a standard form of Contract used in the United Kingdom’s construction industry. JCT stands for Joint Contracts Tribunal, a body of representatives from various professional organisations within the construction industry in 1931.
The JCT Standard Building Contract is a legally binding agreement between an employer and contractor that sets out the responsibilities and obligations during a construction project.
The Law of England applies to JCT, the UK’s leading producer of standard form building contacts.
What Does The Contract Include?
A JCT Contract is a comprehensive agreement that sets out the terms and conditions for a construction project. The specific content of the contract will depend on the type of Contract being used, as several variations are available.
The contracts can cover various issues, including payment, design, responsibilities, completion dates and dispute resolution procedures.
A typical JCT construction contract will include the following:
- Parties Involved – A JCT contract will identify the parties involved in the project, including the employer, contractor and any other parties.
- Scope of work – The Contract will outline the scope of work that needs to be carried out, including the project’s design, construction, and completion.
- Payment – The Contract will specify the payment arrangements for the project, including the amount to be paid, the timing of payments and any penalties for late payments.
- Completion Date – The Contract will specify the date the project must be completed and any penalties that may be imposed for delays.
- Design Responsibilities – The Contract will set out the responsibilities of the parties for the design of the project, including any approvals required and any changes that may be necessary.
- Insurance – The specification of any insurance requirements for the project, including any liability insurance.
- Dispute Resolution – The Contract will include provisions for resolving disputes that may arise during the project, including mediation and arbitration.
- Termination – The Contract will outline the prospects under which the JCT may be terminated and the mechanisms that must be followed in the event of termination.
The Contract is composed of families of standard forms, guidance and other documents which are suitable for the majority of construction projects and procurement methods.
The Contract may contain provisions relating to collateral warranties, such as a requirement for the contractor to provide collateral warranties to third parties.
Why Is A JCT A Standard Form Contract?
The JCT Contract is a standard form because it saves time, minimises transaction costs, fairly allocates risk, offers comprehensive risk management, defined benchmark provisions and inclusivity of all parties involved.
Where Can You Get A JCT Contract?
JCT Contracts are used widely across the construction industry within the UK and can be sourced via the Joint Contracts Tribunal website for purchase in print and digital formats.
The website also provides guidance on which Contract is more suitable for your project.
Alternatively, if you are a member of the Royal Institute of British Architects (RIBA) or the Chartered Institute of Building (CIOB), you can source the Contract as part of your membership.
Some solicitors and legal advisors will also be able to provide you with further guidance on which JCT contract will suit your project and can draft and review contracts on behalf of their clients.
What Different Types Of JCT Contracts Are There?
The JCT suite of contracts includes a range of standard contracts that cover various procurement methods and project types in the construction industry:
- JCT Standard Building Contract.
- JCT Design And Build Contract.
- JCT Construction Management Contract.
- JCT Management Building Contract.
- JCT Minor Works Building Contract.
- JCT Framework Agreement.
Benefits Of The Contract
JCT Contracts aren’t just great for setting out a legal agreement between employers and contractors; they also:
Provide Standardisation And Protection
A JCT Contract can cater for most construction issues, allowing any common problems that the builders and contractors encounter to be built into the contract template, which offers reassurance to all sides of a risk management baseline.
Equitable Allocation Of Risk
A JCT Contract is in a standard format which allows all parties to be typically familiar with the risks of a project and how they are distributed across each side. A standard building contract ensures these risks are split equally across all parties, making the terms less favourable for one side than the other.
A JCT Contract will contain provisions on how to deal with disputes within a construction project. The requirements will nominate an arbitrator or adjudicator who will make decisions as to the accountability of the parties.
The Contract allows all parties to avoid costly and drawn-out court proceedings.
JCT Contracts are used as a means of protecting employers against poor contractors. The employer can be comfortable knowing that the Contract covers most eventualities.
The contracts are designed in a way that the provisions of the agreement are comprehensive and cover most of the dangers surrounding the construction industry.
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Flaws Of The Contract
Although the building Contracts follow a standard format, there are still some risks associated:
Lack Of Flexibility
When JCT Contracts have been produced, they are tough to amend if requirements change. Due to the nature of the standard formatting, any amendments could lead to project delays as changes increase unfamiliarity.
Any requirements within a JCT Contract must be accurate. If the conditions are poorly assembled, then it could result in the contractor’s work not satisfying the expectations. This would mean the Contract does not protect the employer if the contractor lowers the specification.
JCT Contracts can be costly in both time and money – the time frame and cost of the project will rise when there are disagreements which result in negotiations over the terms and conditions of the Contract.
When Would You Need A JCT Contract?
A JCT Contract is typically used in a large-scale construction project. However, it can also be used within a house renovation project, depending on the cover you wish to have.
If you plan on building a new property for residential or commercial use, you will likely need the Contract to define the responsibilities and obligations of all parties involved.
Similarly, if you want to renovate or refurbish an existing property, a JCT contract can help you establish the scope of the work, the responsibilities of the parties involved and the timeline for completion.
When hiring a contractor, the Contract can help protect your interests and ensure the project is completed to your satisfaction and quality.
What’s The Difference Between A JCT & Schedule Of Works?
A JCT Contract and a Schedule Of Works are commonly used in the construction industry. However, they do differ significantly.
A Schedule of Works is simply a document that outlines the work to be carried out, while a the Contract is a legally binding agreement between the parties involved.
The Contract is legally enforceable, meaning that if one party breaches the terms of the Contract, the other party may have legal recourse.
A JCT contract will cover all aspects of a construction project in a very descriptive manner, including the responsibilities, payment terms and dispute resolution mechanisms, but a schedule of works will focus solely on the work to be carried out, including materials and methods.
What’s The Difference Between A JCT & NEC Contract?
The NEC, or New Engineering Contract, is a set of contracts developed by the Institution of Civil Engineers (ICE) and used for engineering projects. At the same time, the JCT is predominantly used for construction projects.
The Joint Contracts Tribunal is a standard form contract, whereas the NEC contract is based on a more collaborative and flexible approach.
The NEC Contract will allocate a project’s risk to the party best suited to deal with it, whereas the JCT will typically split the risk equally.
The NEC Contract encourages a collaborative approach to any disputes, with responsibilities on the parties to manage any conflicts without needing mediation.
The JCT Contract places a higher emphasis on contract administration, with a range of detailed provisions for managing the Contract, while the NEC places more responsibility on the parties to address the Contract themselves.
Do You Need A JCT Contract For Your Build?
To determine if you need a JCT Contract for your build, you should seek the guidance of a conveyancer or construction consultant.
The general rule of thumb is that large construction projects like building a house from scratch or renovating a large property will need the Contract. This way, you will be able to protect yourself from poor-quality workmanship.
The Contract may not be necessary if you are renovating your bedroom or living room or carrying out minor works, and instead, you may be better off just creating a schedule of work to outline the design and build process.