JCT Design & Build Contract 2024 released: A summary guide for Employers and Contractors

Our previous article in this series provided an early indication of what changes we expected to see in the Joint Contract Tribunal’s (JCT) 2024 suite of standard form contracts. The JCT Design & Build Contract 2024 (D&B Contract) has now been released, with the rest of the suite to be launched later in the year. In this article, we explore the 2024 amendments to the D&B Contract and the associated implications for Employers and Contractors.

General overview

By way of executive summary, the D&B Contract changes are very much ‘evolutionary’ rather than ‘revolutionary’. The bulk of the previous 2016 edition’s drafting and structure remains unaltered, with the changes largely focussed on key updates necessitated by legislation and current drafting practice in the market. 

It follows that the overall risk profile of the D&B Contract is also largely unchanged, meaning that we are likely to see JCT users, and particularly Employers, putting forward the same kinds of amendments that we have become familiar with. It is worth noting in particular on this point that the new D&B Contract still provides that:

1. The Contractor is not responsible for the adequacy of the design contained in the Employer’s Requirements. Employers seeking ‘one stop shop’ rights of recovery against their appointed design and build Contractor will therefore need to continue incorporating somewhat extensive amendments, to facilitate a single point of design responsibility and associated novation requirements.
2. The Employer’s licence to copy and use the Contractor’s Design Documents remains subject to all sums due to the Contractor having been paid. Whilst this might seem reasonable at a glance, it is broadly considered to be an off-market position and one that is also likely to be unpalatable to third party funders. The Contractor has other rights and remedies available to it for non-payment, such as the right to suspend works on giving seven days’ written notice. An extra right to revoke the Employer’s copyright licence is generally viewed as being too onerous, given the very serious ramifications for the wider project if the Employer and interested third parties suddenly find themselves legally unable to make any use of the designs of a core project team member and its supply chain.   

So, what has changed?

Relevant Events and Relevant Matters

There are new ‘Relevant Events’ (i.e. events entitling the Contractor to an extension of time award) and ‘Relevant Matters’ (i.e. events entitling the Contractor to payment of loss and expense) for the following issues:

1. The discovery of asbestos, contaminated material or unexploded ordnance, except to the extent that the presence of asbestos or contaminated material is identified in the Contract Documents or any such material has been brought onto the site by the Contractor.
   
   This new drafting raises potential issues for both parties which may necessitate amendments to the standard form. At first blush, the wording appears more problematic for an Employer – and indeed amendments will be needed on this front if the intention is to transfer a greater degree of site condition risk to the Contractor. However, Contractors too should carefully consider whether the text goes far enough to protect their interests on any given project. The Relevant Event and Relevant Matter will not be triggered where and to the extent that “the presence of asbestos or contaminated material is identified in the Contract Documents”. The requirement for the mere “presence” of the material to be “identified” in the technical schedules is hardly a high bar, and such identification might not necessarily mean that the Contractor has agreed to assume the full time and cost risk of dealing with such material. 
    
2. Epidemics
   
   An epidemic first occurring after the Base Date, or first occurring before the Base Date but the effects of which change after the Base Date, which affects execution of the Works by limiting labour or preventing or delaying the Contractor from securing necessary goods, materials or services.
   
   
3. The passing of new or amended law, or the publication of guidance, occurring after the Base Date which “affects the execution of the Works”.
   
   Interestingly, the wording here goes significantly further than the existing ‘change of law’ wording at clause 2.15 of the D&B Contract, which historically has only permitted the Contractor time and cost relief if a post-Base Date change of law “necessitates an alteration or modification to the Works”. This is generally understood as being limited to legal updates which necessitate a change to the actual specification for the Works (e.g. a new fire safety law requiring an alteration to the cladding specification for a project). The new Relevant Event and Relevant Matter, on the other hand, simply require the new law or guidance to affect the execution of the Works. This could potentially cover, for example, post-Base Date changes to employment law which increase the Contractor’s labour costs. 

Items (2) and (3) above are optional for the purposes of the Relevant Matter clause, with the parties able to specify in the Contract Particulars whether the Contractor will ultimately benefit from them.

Extension of time mechanism

The procedures governing extension of time awards have been amended as follows, with new timeframes for those providing Employer’s Agent services to get to grips with:

1. Under the previous 2016 edition, the Employer could “at any time” reasonably request further information regarding the Contractor’s delay notification or particulars. Now, any such request must be given not later than 14 days from receipt of the particulars, or a subsequent notification of any material change to the same. 
2. The timeframe for assessing interim extensions of time has been reduced from 12 weeks to 8 weeks, from the later of
   1. Receipt of the Contractor’s particulars (or a subsequent notification of any material change to the same)
   2. Receipt of the further information requested within the aforementioned 14 day timeframe. 

Legislative changes

As expected, recent legislation and case law is reflected in the new D&B Contract. The changes comprise the following:

1. Building Safety Act 2022 and related secondary legislation: Understandably, the JCT has taken a ‘light touch’ approach on this front, leaving users to bolster the drafting as they see fit in their Schedule of Amendments to reflect the specific requirements of their individual project. The new D&B Contract includes additional Articles to identify the Building Regulations Principal Designer and Principal Contractor, together with operative provisions on the related dutyholders and competence regime which effectively mirror the equivalent JCT drafting on the Construction (Design & Management) Regulations. The JCT has elected not to include anything further on the topic, such as warranties around the Contractor’s competence and capability to assume its dutyholder roles, or the additional requirements of the Higher Risk Building regime. 
2. Corporate Insolvency and Governance Act 2020: The termination clause has been updated to cover the two additional insolvency grounds introduced by this Act.
3. Construction Act: Additional drafting has been added to ensure that the post-termination accounting mechanics comply with the payment requirements of the Construction Act.
4. Case law: The drafting has been updated to account for the Supreme Court’s decision in the Triple Point Technology Inc v PTT Public Company case. This case clarified that liquidated damages clauses apply to the period up to termination of the contractor’s employment under a contract, but not to any period thereafter, unless there is clear wording setting out a different approach. 

Design requirements and professional indemnity insurance

In what is likely to be seen as a welcome development by the professional indemnity (PI) insurance market, the D&B Contract has been amended in the following respects to reflect current market trends in relation to insurance coverage:

1. The Contract Particulars now include an additional section for the parties to specify any type of sub-limit within the overall level of PI insurance cover. Previously, only a single sub-limit for pollution and contamination claims could be cited. There is also the option to list specific exclusions to the PI insurance policy.
2. The operative design liability wording at clause 2.17 has been amended to reflect that PI insurance policies generally do not provide cover for fitness for purpose obligations in relation to design. The revised wording provides that, to the extent permitted by Statutory Requirements, the Contractor:
   1. Shall have no greater duty than to exercise the required standard of reasonable skill and care in respect of its design work.
   2. Shall not be held to any fitness for purpose requirement in relation to design. 

Supplemental Provisions

The optional Supplemental Provisions have been slimmed down, with three of them now promoted to the mandatory sections of the Articles and Conditions. The ‘Collaborative working’, ‘Sustainable development and environmental considerations’ and ‘Notification and negotiation of disputes’ provisions will now apply in all cases, unless the parties incorporate bespoke amendments to the contrary.

Service of notices

There is now flexibility to serve notices electronically, via email addresses to be specified in the Contract Particulars. It is worth noting, however, that any email notice expressly required by the D&B Contract to be given in accordance with clause 1.7.4 is deemed received only on the next Business Day after the day on which it is sent. This approach arguably negates the main benefit of permitting email notices (namely increased speed of service), so we expect some parties to amend this wording. For example, alternative drafting could state that email notices are deemed received immediately upon transmission, provided that transmission occurs on a Business Day and during normal working hours.

Fluctuation provisions

The fluctuation provisions have been removed and now sit in an online document to increase prominence and accessibility. The JCT has separately launched a Fluctuations Hub to give guidance on this aspect of the suite.  

Statutory Providers

The term ‘Statutory Undertaker’ has been changed to ‘Statutory Provider’, with the operative definition extending slightly to any person executing work solely in pursuance of statutory obligations, as opposed to just local authorities and statutory undertakers.

We will report further on this topic as and when the other 2024 contracts are published. In the meantime, for more information please contact the construction and infrastructure team.