Pass master

Sir John Egan's Accelerating Change is not just another report – it's an agenda for real and long-lasting change in the industry. Such change places partnering and teamworking arrangements at the top of the agenda, with the emphasis on risk-sharing.

My euphoria at its launch ended when Marion Rich, legal director at the British Constructional Steelwork Association, sent me a copy of the amendments made by Jarvis Construction to the DOM/2 form of subcontract – the amendments are now longer than the original contract. Obviously Jarvis was not satisfied that the drafters of DOM/2 had done a good job of passing all risk downstream. Its amendments are intended to rectify this heinous omission. Space restricts me to highlighting only the worst of them.

Jarvis persists in insisting on a main contractor discount although it is not quite clear whether this is a trade discount or a discount for prompt payment. Has Jarvis heard of Constructing the Team? Clearly not. That report recommended the outlawing of discounts, which is why they are not in DOM/2.

Jarvis' main contract is to prevail over the subcontract if there is any conflict between them. Why should this be? The main contract was not negotiated by the subcontractor. In all probability it was not provided with a copy of the main contract.

Another amendment concerns collateral warranties. A clause is to be inserted to the effect that, as a condition of payment, the subcontractor is to provide the main contractor with deeds of warranty in the form set out in the main contract "with such amendments as the contractor may reasonably require". This is subject to the subcontractor's right to make reasonable objections to such amendments. Warranties are to be in favour of – it seems – everybody, including the employer, tenants, occupiers and purchasers. In reality, there will be no scope for negotiating any warranty, especially if, in the meantime, payment is not being made. But this clause is so open-ended that, if it was ever litigated, a court is likely to construe it against the interests of Jarvis.

The subcontractor is to ensure the contractor has design details in good time for it to comment and to meet the requirements of the main contractor's programme and so on. Who was the buffoon that drafted this? How does the subcontractor know when to provide the information? There is no obligation on the main contractor to provide any schedule or programme that indicates when and what information is required from the subcontractor.

Set-off under the subcontract can include money alleged to be owed under other subcontracts. Another onerous clause

Now to payment provisions. If these are not right, there is little point reading the rest of the contract. Shock horror! Jarvis expects its subcontractors to fund it for periods of three months! This is in contrast to the monthly payments required in DOM/2. It includes a pay-when-paid provision so that if Jarvis receives payment (in respect of the subcontract works) earlier, it will pass on such payment.

Further evidence that Jarvis has never read Latham: set-off under the extant subcontract can include money alleged to be owed under other subcontracts. The abolition of this practice was recommended by Latham. Another onerous clause. If Jarvis suspends its own works for non-payment, the subcontractor must also do so without any expectation of being granted an extension of time or compensation.

Now we come to the adjudication provisions. The following decisions taken by Jarvis shall be final and binding as far as the adjudicator is concerned:

• Health and safety matters
  
• Extensions of time
  
• Termination of the subcontract
  
• Set-off or abatement.

So, what is left to go to adjudication? Very little. At first blush this does not comply with the Construction Act, but under paragraph 20a of the Scheme, adjudicators can review all decisions and certificates unless they are expressed to be final and binding. In my view, the scheme's draftsman has gone further than was intended by the act. This issue will have to be litigated.