JCT Design and Build Contract 2024 – What’s Changed?

Here is a rundown of the Top 5 areas of change:

1. Fitness for purpose

The Supreme Court’s decision in MT Højgaard A/S v E.On back in 2017 focused contractors’ attention on the dangers of obligations lurking deep within Employer’s Requirements documents. But negotiating amendments to protect against that can often be met with resistance from employers. The new 2024 edition goes some way to helping alleviate this problem by the inclusion of a new fitness for purpose exclusion in clause 2.17.1.2, akin to the NEC4 position which many contractors sought to reflect in amendments to the JCT. This new clause confirms that (subject to any statutory requirements) a contractor owes no greater liability in respect of its design than to exercise the required level of skill and care, and contains a clear statement that there is no requirement that any design is fit for its purpose. This is a realistic amendment that reflects the realities of professional indemnity insurance coverage (which generally excludes fitness for purpose warranties).

2. Extensions of time

There are a quite a few amendments which have been made to the extension of time provisions which will be welcomed by contractors. After the pandemic in 2020, the negotiation of extensions of time for Covid-19 became commonplace. The JCT has done away with any mystery around whether or not Covid-19 is an extension of time ground, and epidemics are now expressly a “Relevant Event” (although as has always been the case, the Relevant Event must be the cause of the delay and making that direct causal link may not always be as easy as it might first appear). But the widening of the statutory powers ground to include compliance with any guidance published by the Construction Leadership Council after the Base Date is a clear recognition that, if there is another Covid-19 outbreak (or, not to tempt fate, a whole new epidemic!), adhering to new Standard Operating Procedures would be captured by the Relevant Event provisions.

Moving away from epidemics, there is also some good news on the ground risk front. The JCT D&B previously only dealt expressly with ground condition risk in the context of the discovery of antiquities. This has now been extended to also include the discovery of asbestos, contaminated material and unexploded ordinances (although that still does not address the full gambit of below ground condition risk such as buried services or other unforeseen obstructions). This comes with a note of caution though, as if the employer can demonstrate that the risk of asbestos or contaminated material had been identified in the Contract Documents then the risk will remain with the contractor. So contractors must ensure they go through all Contract Documents with a fine tooth comb and in particular keep an eye out for the inclusion of any ground investigation reports, where even small references to asbestos or contamination could result in a contractor assuming risks they have not allowed for in their price and programme.

There are also some positive changes to the process for claiming extensions of time. Decisions on extension of time claims must now be given within eight weeks rather than the previous twelve. In addition, if the employer requires further information to substantiate an extension of time claim they must now request that within 14 days of receipt of the claim (there was no such time limit under the 2016 edition). But contractors are likely to find that employers will use the tightening of these timeframes to argue for the inclusion of NEC style time bars on the contractor claiming a delay.

3. Liquidated damages for delay

There are some additional clarifications which have been added to the liquidated damages clause to address Triple Point Technology Inc v PTT Public Company Ltd [2021]. The drafting now makes it clearthat liquidated damages will be payable up until either the works are completed or (if earlier) the contract itself is terminated, removing the potential interpretation that the LADs continue to accrue even after the building contract has been terminated. However contractors should be alive to the fact that whilst this brings closure to the obligation to pay liquidated damages for a delay, employers will still be able to argue contractors are liable for general damages beyond a termination. An amendment to the drafting in clause 2.29.5.2 would be needed to completely close off any ongoing liability for delay.

4. Building Safety Act 2022

One of the key areas we were all keen to see was how the JCT were going to deal with the Building Safety Act 2022. The answer to that is largely as expected in that they have not done much more than include Articles to set out who the principal designer and principal contractor will be for the purposes of the duty holder regime (in the same way as they have articles for the equivalent CDM roles) and then otherwise rely on the general obligation for the Contractor to comply with legislation. Both contractors and employers should look to ensure there is absolute clarity around who will be responsible for giving notices and obtaining consents, and also the extent to which Building Control Authority delays are accounted for in the construction programme (particularly if clause 2.26.14 (the Relevant Event for delays in statutory approvals and permissions) has been ‘tinkered with’). Employer friendly schedules of amendments often make the contractor responsible for obtaining all consents required for the Works, which in a post Building Safety Act 2022 world could lead to contractors inheriting duties (in a contractual if not statutory sense) which they might have assumed sat with an employer.

The JCT have produced a separate note on their approach to BSA compliance. In particular they acknowledge that they have made no special provisions where the contract is being used in relation to higher risk building work. So where the JCT D&B is being used for HRB works, everyone will be in ‘no man’s land’ and special provisions will need to be free-drafted into the Employer’s Requirements and/or schedules of amendments.

5. A couple of little ‘wins’

There is now space in the contract particulars to set out specific exclusions from the required professional indemnity insurance, rather than assuming the only sub-limits which apply are in relation to pollution and contamination. Most PI policies now contain specific fire related exclusions which contractors are keen to ensure are recorded as being permitted carve outs from their PI obligations, and this small change to the contract particulars enables that more easily to be reflected. The previous drafting which qualified the contractor’s PI obligation to the extent that insurance continued to be available at reasonable rates has also now been extended to refer not just to reasonable rates but also “terms”. This is a common tweak seen in schedules of amendments and reflects the fact that the terms of PI policies are becoming stricter.

And finally, the JCT have opened the door (albeit only very slightly!) to the idea of an overall cap on the contractor’s liability. They have not gone so far as to include this as a standard or even optional clause, but an easily missed footnote to clause 2.1 directs the parties to the JCT Design and Build Guide which contains suggested amendments for the inclusion of an overall liability cap. We expect parties will want to prepare their own drafting (in particular as the JCT’s suggested wording contains some exclusions from the cap which contractors may prefer to resist) but the footnote at least prompts the discussion and recognises that most contractors would in the current climate expect to limit their overall risk exposure.

Conclusions

The 2024 edition of the JCT Design and Build contract should put contractors on slightly firmer ground when entering into negotiations with employers, as it puts on the table a number of key amendments routinely sought by contractors when pushing back against employer friendly schedules of amendments.

Bethan Ellis-Jones has been a construction solicitor for 15 years, working for high profile contractors, developers and funders on projects in the UK and around the world. She is currently a Legal Director in Browne Jacobson’s construction team, and lives on a smallholding in rural South Wales with her family (and other animals!).

Gavin Hoccom is a Partner in Browne Jacobson’s construction team. Based in the Cardiff office, Gavin specialises in construction dispute avoidance and resolution, and supports construction product manufacturers, Tier 1 and SME contractors, and private and public sector employers with the assessment and management of the risks arising from the new regulatory regime introduced by the Building Safety Act.