For short works contracts, there’s a new sheriff in town called RIBA - plain talking, bold and ambitious. But is it going to be able to outgun the competition?
RIBA has resumed publishing building contracts and is pitting its new Concise Building Contract (CBC) and Domestic Building Contract (DBC) against the JCT’s two Minor Works Building Contract variants (MWBC) and Home Owner Contracts (HOCs). This may appear to conflict with its role as a JCT member and co-founder. In truth, it’s had little involvement with the JCT’s building contract suite for a while.
More standard forms, you might say, to throw on the pile. Regardless, competition and fresh thinking drive progress. Only the NEC and CIOB have offered credible alternatives recently to the best-selling MWBC. For homeowner works, options are starker still. Short contracts mean softer learning curves, critical in an industry often resistant to change. Even so, RIBA must deliver compelling reasons to switch.
The CBC starts strongly. A capacity to stipulate sectional completion, a programme, advanced and milestone payments, third party rights and collateral warranties are enterprising developments for a small works agreement. Parties can even use a risk register.
Without the JCT’s baggage of maintaining consistency, RIBA can focus on plain language. Intellectual property is dealt with in 43 words, adjudication in 29
If the contractor fails to apply for loss and expense in time, it loses the right to claim. If it does not submit the effect of a variation on the completion date or price within the required period, it is not entitled to more time or money. When contractor design is mandated, this is to be performed with professional skill, care and diligence and professional indemnity insurance maintained (fitness for purpose can be specified instead, which will undoubtedly excite insurers). Works must be carried out regularly, diligently and in a good and workmanlike manner. The contractor remains liable for any subcontracting.
This is bold, ambitious stuff but perhaps not much different to an MWBC incorporating typical amendments. The conditions permit partial possession and for the employer to terminate the contractor’s employment for material or persistent breach. The contractor may determine for material breach or non-payment. Practical completion is defined.
As with the NEC, the parties must give early warning of events affecting the price or progress of the works and endeavour to resolve it. The contractor’s non-compliance can be taken into consideration in establishing whether it should receive more time or money. This may have fared better as an option. In context, the administrative load created may cause more harm than good.
The CBC tackles several of the MWBC’s bugbears and does so, remarkably, all within 30 pages. Without the JCT’s baggage of maintaining consistency, RIBA can focus on plain language. Intellectual property is dealt with in 43 words, adjudication in 29.
Brevity needs to be balanced with clarity and some lawyers may feel the CBC occasionally gets it wrong
Even so, something had to give. There is no fluctuations provision (less important here). And though it’s meant that the CBC is far more accessible than the MWBC, vigorous pruning has not been without incident. An explicit reference to the Construction (Design and Management) Regulations would not have gone amiss. The parties must meet to resolve a dispute before issuing proceedings; however, the wording fails to make it obvious that this step does not catch adjudication (a breach of the 1996 Act). The contract is assignable by the employer but an additional reference to “burdens” inadvertently hints at novation.
Brevity needs to be balanced with clarity and some lawyers may feel the CBC occasionally gets it wrong. Likewise, it’s a misstep that the employer must follow the architect/contract administrator’s advice as to whether to seek liquidated damages for late completion. The only prerequisite should be a failure to complete on time. (Nothing prevents the employer being named as the architect/contract administrator.)
The CBC and the DBC are so similar that I’d query why two agreements were necessary. On the other hand, separate forms make marketing easier. Naturally, the DBC marks a steep upgrade on the HOCs, which are suited only to basic projects.
RIBA offers both agreements in print and online without subscription. Using the digital service was a breeze. They are user-friendly documents and will appeal to those who regard construction contracts as inscrutable. Coupled with their attempts to address market demands, this means that one of its members now presents the JCT with a fearsome rival.
Francis Ho is head of construction at Olswang