Jeff Brown’s article on JCT 2005 and third-party rights (27 October, page 54) refers to a glaring omission.

At risk of appearing rude, I suspect the glaring omission is his and not that of the JCT draftsman – that is, me!

Among the points apparently overlooked are that:

  • Third-party rights and collateral warranties extend to general contractual compliance, not merely to design matters
  • Professional indemnity insurance is relevant only where a contractor or subcontractor has a design responsibility – many do not, so the provision cannot be “mandatory” in the sense he appears to argue
  • The JCT PI insurance obligation is mandatory if the contract states that PI insurance is required and the contract particulars provide the required details (amount, type of cover and so on). This is all within a single document that will in any event be supplied to the beneficiary
  • The position is the same for both third-party rights and collateral warranties, so that if details are not given, the collateral warranty alternative would also be deficient
  • To suggest that exercise of the third-party vesting right limits amendment of the contract is also wrong. The right to amend is expressly preserved, with a minor protective exception for the terms of the rights themselves
  • To say that if no agreement is reached between the employer and the contractor no contractual third-party rights will exist appears to ignore two facts:
a) that not many warranties would have a substratum in those circumstances

b) that in an externally funded development, there wouldn’t be much of a building to worry about.

Alastair Robertson, JCT