The Joint Contracts tribunal (JCT) represents a wide variety of construction and building industry stakeholders. JCT has been around since 1931, and in that time it has produced contract and guidance note formats that are used everywhere in the business world. Thus, a conventional construction contract is often referred to as a “JCT contract.”
‘Employers’ and ‘Contractors’ regularly use JCT contracts to aid in the performance of a construction project. The terms and conditions outline everything from the responsibilities of each party to the total cost of the project and every detail in between. By doing so, everyone is clear on the goals, timeline, resources, and monetary commitments involved.
Importantly, a JCT contract spells out the roles and duties of all parties involved in the project to facilitate its completion. In this article, What Are JCT Contracts, we will delve deeper into the subject.
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What are the benefits of using a JCT contract?
Sometimes, responsibilities and duties aren’t the only things covered under JCT contracts. In fact, there are a number of benefits associated with adopting one, such as:
Contract uniformity
The development of JCT contracts throughout time has allowed them to address most of the issues that might be expected to arise during the course of a construction project. Most contractors and builders have dealt with these issues before, so rather than having to create a brand new contract from scratch, they are incorporated into the standard form template. In this way, all parties can rest easy knowing that some basic precautions have been taken.
Risk allocation that is recognisable and equitable.
Since JCT contracts are so ubiquitous, everyone involved in a project understands their respective responsibilities and the risks involved. The JCT ensures that the parties are not unfairly favoured by the terms and that the risks are distributed fairly.
Dispute Resolution
Assume for a moment that a dispute did emerge during construction. A JCT contract will have clauses that specify how to handle such disagreements. The regulations usually specify the appointment of an arbitrator or adjudicator to resolve any disputes between the parties. Hence, a JCT agreement allows the parties to avoid drawn-out and costly court actions. In the event of a disagreement, a JCT contract can serve as a useful point of reference, which is why they are often used in the construction sector.
Typical causes of dispute
These can include:
- A contractor claiming against the employer for delay or a change to the scope of works
- A professional consultant claiming against the employer for non-payment of fees
- The employer claiming against a professional consultant for shortcomings in the design or a failure to properly supervise the works
- The employer claiming against the contractor for delay or defective works
Alternative Dispute Resolution
Alternative dispute resolution, which is often shortened to ADR, is the umbrella term given to the various methods used to settle disputes that do not require court proceedings. Many businesses and individuals are eager to solve their disputes in a quick, cost-effective and confidential way, and ADR brings the opportunity to do so.
There are, however, both advantages and disadvantages to all ADR. ADR comes in many forms, and among the more commonly used methods are:
- Mediation
- Negotiation
- Neutral evaluation
- Use of ombudsmen and other regulatory bodies
- Arbitration
- Adjudication
The perceived risks common when dealing with contractors
Employers often use JCT contracts to safeguard themselves from unqualified contractors. To ease employer concerns, the contract should address common situations, such as payment for overtime or fines for poor quality work. Furthermore, the conditions of a JCT contract are comprehensive and cover the majority of risks involved with the construction industry because of the way the contract is designed.
What are the drawbacks of using a JCT contract?
Although JCT contracts are written in a standard manner, it is still important to read and understand the contents, especially if you are not familiar with their use. The following are some potential negative outcomes of this:
Lack of flexibility
After a JCT contract has been established, it might be challenging for either side to make changes to the terms of the agreement. If the standard JCT contract is modified in any way, it could cause delays in the project due to the learning curve involved.
Inaccurate requirements
The terms of a JCT contract must be precise. The contractor’s performance may fall short of the employer’s expectations if the employer fails to adequately set out its requirements. By giving the contractor “complete reign” over the design, the employer has effectively given the contractor decision-making authority under the JCT contract. Hence, the contract affords no protection to the employer if the contractor only meets the basic requirements.
Negotiations
It could be expensive and time-consuming to create a JCT contract. In the event of disagreements, the project’s schedule and budget will both increase. Negotiations break down if parties disagree on the contract’s terms and conditions.
Badly drafted contract
You run the danger of agreeing to unfavourable terms and conditions if the contract has not been properly drafted, examined, and, if necessary, updated before you sign it.
How we can help
We have a proven track-record of helping clients deal with JCT contracts. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner and support and advise you with all the negotiations. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
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Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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