Assessing the impact of key changes in the 2024 edition of the JCT DB Contract

Eight years after the last re-vamp, in April 2024 the JCT published its long-anticipated JCT 2024 Design and Build contract.

In the intervening period, building safety and sustainability have become increasingly important, and the world has had to manage with effects of a global pandemic.

Below is a list of important changes made to the latest release of the JCT DB Contract.

This article explores some of the more significant changes found, each evaluated by an impact score out of 100. The scoring prioritises changes that substantially affect contract administration, risk management and overall project outcomes.

A higher score illustrates a greater likelihood that the change will influence how parties manage the contract and possibly interact with each other.

Limitations to Contractor’s Design Liability

Clause 2.17.1 in the 2024 contract clarifies that a contractor’s design liability is limited to a duty of reasonable skill and care expected of a qualified and experienced architect. Clause 2.17.1.2 further limits the liability by expressly not extending the contractor’s duty to a “fit for purpose” obligation. In contrast, the 2016 edition matched the standard of care expected to that of an architect or other appropriate professional designer.

IMPACT SCORE 95/100

Professional indemnity insurers commonly exclude fitness for purpose obligations from their scope of cover. Consequently, this change by the JCT may merely bring the contract in line with the market. The comparison to a qualified architect brings with it a higher standard of design than expected under the 2016 version.

Epidemics

A new Relevant Event (terminology traditionally used by JCT for the contractor’s entitlement to extensions of time) has been introduced at clause 2.26.7 dealing specifically with epidemics. A new Relevant Matter (terminology traditionally used by JCT for the contractor’s entitlement to loss and expense) has been introduced at clause 4.21.6 dealing specifically with epidemics.

IMPACT SCORE 93/100

It is perhaps unsurprising to find this inclusion following the impact of COVID-19 on the industry when the availability of labour and materials became rapidly limited.

Changes in Law

A new Relevant Event has been introduced at clause 2.26.8 dealing specifically with changes in law. A new Relevant Matter has been introduced at clause 4.21.7 dealing specifically with changes in law.

IMPACT SCORE 92/100

COVID-19 brought with it rapid changes in law which had a vast impact on the industry. These clauses would cover a wide range of situations including the passing of laws and the publication of guidance by the UK government, local public authority, devolved administration, or in the case of guidance by the Construction Leadership Council.

Collaborative working

Previously optional in the 2016 edition, a new mandatory Article 3 requires parties to work in a co-operative and collaborative manner. Clause 2.1.5 encourages the contractor to suggest economically viable amendments which may result in environmental benefits. This wording was previously found in the 2016 edition as an optional Supplemental Provision 8.

IMPACT SCORE: 90/100

Compelling collaborative working has the possibility to significantly shift how projects are managed and delivered, with the potential to reduce adversarial practices. However, with little guidance or clarification as to how to bring this about in practice means its real impact may take some time to see. Clause 2.1.5 brings with it more emphasis on sustainability, but has the caveat that it shall not extend the contractor’s design obligations.

Liquidated Damages

Clause 2.29.5 allows liquidated damages to be charged between the completion date and the date of termination of the contract. It also clarifies that liquidated damages may not be claimed for the period after termination. This brings the standard contract in line with the UK Supreme Court’s guidance in Triple Point Technology Inc v PTT Public Company Ltd [2021] UKSC 29.

IMPACT SCORE 90/100

This clarification on liquidated damages aligns the contract with recent case law on commercial contracts. But it is important to bear in mind the Supreme Court’s guidance that liquidated damages are still to be considered on a case-by-case basis.

Termination Payments

Clause 8.7 introduces a new term “Termination Payment”, which is a reference to the balancing payment after a contractor’s termination for default. Clause 8.7.5 sets the due date for the Termination Payment as two months after making good of defects in the works. Clause 8.13 provides the final date for payment is 14 days later.

IMPACT SCORE 80/100

Whist these amendments do not significantly change the time when a balancing payment is made after termination, they do solidify a definite due date for the payment and so make clear that the process is compliant with the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act).

Part 2A of Building Regulations 2010

A new Article 7 has been introduced which allows for the appointment of a Principal Designer and Principal Contractor for the purposes of Building Regulations (Article 6 remains to provide for the appointment of a Principal Designer and Principal Contractor for the purposes of the CDM, as it did in the 2016 iteration). Clause 3.16, which covers CDM, now includes specific provisions to comply with Part 2A of the Building Regulations which were inserted in 2023. Contractors have their obligations extended to cover regulations 11F, 11J, 11K and 11L of Part 2A of the Building Regulations (and also 11N if they also act as Principal Contractor).

IMPACT SCORE 70/100

In the wake of the Grenfell Tower tragedy, the Building Safety Act 2022 was brought in to improve the risk, design and safety management throughout the lifecycle of a project. Pertinent to this contract is the dutyholder regime which places legal responsibilities concerning building safety risks on those who engage in the design and construction process (and those who commission the works). These roles under BSA 2022 align with, but are distinct from, the CDM dutyholder roles.

Asbestos, Contaminated Material or Unexploded Ordnance

Newly introduced clause 3.15.3 now covers the discovery of asbestos, contaminated material or unexploded ordnance on site. Just as fossils, antiquities and other objects of interest or value (clause 3.15.1) finding these materials can now trigger a Relevant Event (clause 2.26.4) or a Relevant Matter (optional in clause 4.21.3 if the corresponding section of the contract particulars has been completed) unless the asbestos or contaminated material had previously been identified in the Contract Documents or brought to site by the Contractor.

IMPACT SCORE 60/100

Other ground condition risk remains with the Contractor. So, whilst this is a shift in favour of the contractor, much risk remains. The risks should be mitigated prior to project start with accurate survey information.

Settlement of Disputes

The contract introduces a new level of pre-emptive dispute resolution by encouraging, in clause 9.1, parties to notify each other of any matter that appears likely to give rise to a dispute or difference. This clause was previously a supplemental provision in 2016.

IMPACT SCORE 55/100

This clause now appears prior to mediation (now clause 9.2), adjudication (now clause 9.3) and arbitration (now clause 9.4), underlining its importance in early dispute resolution. Moving the clause to the main body has the potential to greater induce the parties to seek to negotiate and settle disputes early and informally.

Modernisation of Communication

There is now provision to send notices by email, if specified in clause 1.7.4.2 and in the Contract Particulars.

IMPACT SCORE 50/100

This formalises practices already widespread in the industry, though it may be hard to believe that communication by email is a modern phenomenon. By expressing and clarifying an already normal practice, this may greatly reduce the potential for disputes over the validity of notices. This may be an all or nothing action as there doesn’t appear to be any mechanism to specify which notices should be issued by email and which by post.

Sub-limits allowed for Professional Indemnity Insurance

The Contract Particulars relating to clause 6.15 now allow for several sub-limits and exclusions within the overall level of Professional Indemnity Insurance cover.

IMPACT SCORE 50/100

Gender-Neutral Language

Throughout the contract “he” or “him” has been replaced by “it”.

IMPACT SCORE 15/100

Taken at face value, there may be little impact from the document removing gendered pronouns to replace them with the neutral word “it”. However, there may be some care required if “it” were to be interpreted in some clauses as being an impersonal pronoun, as this may change the potential meaning of that clause.

The purpose of this prioritised list is to share our perspective of which clauses are likely to have the most impact in individual contracts and within the industry overall.

We appreciate that others will have different experiences and may therefore have a different perspective. Either way, hopefully, this will assist your understanding of the changes.

How to get in touch

Berwick Law is a specialist construction law firm. We have an intimate understanding of the issues our clients face, and this enables us to guide those organisations to establish realistic objectives and then devise a strategy to help them achieve those objectives.

To find out more about how we can help you, contact our Director Warren Berwick on 0121 663 0287 or email warren.berwick@berwick-law.com or our Solicitor-Advocate, Dominic Patching on 0121 663 0287, or email dominic.patching@berwick-law.com.

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As with all our blogs, these are intended to share general information. If you have any specific contractual issues, you should take specific legal advice.