Choosing JCT MW 2016

How do you choose a contract as the right one for your project? There is rarely only one contract which would work be right for your project. The final choice may depends as much on these factors as something more prosaic like personal preference and familiarity:

The recommendation of which standard form of building contract should be used for a particular project will usually come down to the consultant’s personal preference and his previous experience. Such a subjective basis for choice seems to me to be entirely reasonable: if, as a contract administrator, a professional person likes and understands the way a particular standard form works, then, unless there is a very good reason why he should not use it in a particular instance, it seems to me be to everybody’s advantage if he recommends that form for use on his projects.

Is it appropriate?

The court was being asked to consider whether JCT MW 98 (soon JCT MW 2016) was appropriate for a specific project. It took into account these factors:

1. the advantage to the employer as the contract did not include a right for the contractor to claim loss and expense when delayed (unlike the rest of the JCT suite)
2. the comparative brevity and clarity of its terms (giving it ‘a major advantage over a number of other rather more prolix [JCT] standards forms…’)
3. the Guidance Notes from JCT (at the time, these stated a particular value of works for which each form was suitable – this reference to contract value has since been deleted)
4. whether the standard form was frequently used for similar projects.

What’s changed?

On 24 June 2016, JCT issued their newest edition of the JCT MW contracts – one of their most popular products. The changes to this contract are not major – they are a tidy up and twiddle round the edges. The most important changes are those to the payment provisions as they now include monthly payments throughout construction and defects periods, an interim valuation date and a contractor application for payment (clauses 4.3, 4.4) with revised payment and pay less notice provisions (clauses 4.5 and 4.6).

The changes encompass:

• reference to the 2015 CDM Regulations (sixth recital) and associated terminology changes (eg article 4)
• clauses to make the contract more easily used by public sector bodies eg reference to the Public Contracts Regulations (termination rights under clauses 6.6 and 6.10, supplemental provisions 7 and 8)
• a new over-arching clause on consents and approvals not being unreasonably delayed or withheld (clause 1.7)
• a discretionary right to liquidated damages (‘the Employer may require the Contractor to pay pay‘, clause 2.9.1 – previously ‘the Contractor shall pay to the Employer‘)
• practical completion to be dependent on providing as built drawings and documents as well as the CDM paperwork (clause 2.10)
• clarifying that an instruction NOT to make good defects permits the Employer to make ‘an appropriate deduction from the Contract Sum‘ (clause 2.11)
• ensuring that subcontracting design is covered by the requirement for consent (clause 3.3.1)
• revised definition of a variation (clause 3.6.1)
• new mutual obligations to pay interest on late payments (clause 4.6.1, previously JCT MWD only referred to the Employer)
• new drafting covering liability for existing structures and a right to terminate (clauses 5.2 and 5.7; see also clause 5.4B)
• changes to deal with insurance for works on a multi-let property (clause 5.4C)
• provisions relating to insurance claims (clause 5.6)
• revised definition of insolvency (clause 6.1).

There have also been minor changes to simplify the wording but phrases such as ‘the Contractor shall thereupon notify‘ (clause 2.8) remain a thorn in JCT’s drafting. Parties deserve clarity and the lack of time limits in JCT procedures creates flexibility but also confusion.

There are no changes to deal with the use of Building Information Modelling.

The improvements are not enough to make this contract really simple to read, understand and use (56 pages of booklet) but will avoid some of the changes lawyers currently insist on making to its text.

Clauses references are from JCT MWD 2016