There’s nothing to be afraid of

JCT2005, the suite of JCT contracts launched in May of that year, represented a comprehensive review and update of the JCT98 contracts. It aimed at making them more user friendly without changing the risk profile (where changes to the risk were made, they were not of major significance). Why, therefore, are many construction clients and their consultants still doggedly specifying JCT98 contracts?

Even now, the construction team at Wedlake Bell often encounters great reluctance to move away from JCT98 forms, not only from developers but also from consultants, contractors and funders. When I ask what they have against the 2005 forms, I am met with a number of (not very convincing) reasons, but it seems to boil down to lack of familiarity. I was even told recently by a project manager at one of the top five QS practices that it was because they had not yet got round to updating their standard preliminaries and tender documents.

Obviously people know their way around the 1998 forms and may find it difficult to find the time or inclination to get to know the new ones. However those who have read or used them are pleasantly surprised. They look different – the layout and the clause numbering have changed, but most of the clauses we all know and love (or hate) are still there. One change is that they are helpfully grouped under subject sections so that all clauses relating to, for example, payment are in one place, and time for completion in another. Moreover some of the verbiage and clauses that most people never read, such as the extensive VAT provisions, have disappeared.

Importantly. the contracts now incorporate clauses that were commonly added by way of amendment, such as the requirement to provide collateral warranties and professional indemnity insurance in the design forms.

Further the old appendix is now at the front of each contract as the contract particulars, and brings together all the project-specific information, which makes it easier to complete.

By contrast, the JCT98 contracts have not been updated to incorporate recent changes in the law and legislation, in particular the CDM and CIS regulations, and those 1998 contracts will be withdrawn from publication this year by JCT.

JCT98 will become more and more obsolete as time goes on and, dare I say, dangerous to use, as it is not up to date in many respects

An amendment to the JCT2005 forms has already been issued for the CDM regulations (Amendment 1 [2005], which also deals with CIS amendments in the Minor Works Form). CIS amendments to all the other contracts in the suite will be included in the reprints of the 2005 contracts.

Some contract administrators may have a stockpile of old JCT98 contracts or may be copying old versions (in breach of copyright), but those forms will become more and more obsolete as time goes on and, dare I say, increasingly dangerous to use. Those advising on procurement may be doing their clients a disservice by continuing to specify the 1998 contract forms.

I am also seeing little evidence at the moment that the new JCT forms, such as the excellent Major Project Contract (MPC) and the Intermediate Form with Design are being embraced. Again I suspect that this is because of lack of familiarity with them. Both have filled previous gaps in the JCT suite.

The MPC is a less prescriptive and therefore more flexible contract, specifically designed for larger and more complex projects (typically in excess of £10m). The intermediate form now has a design portion, which means that it can be used to give the contractor design responsibility for discrete parts of the works. Previously this contract was only suitable for use when the contractor (as opposed to a named subcontractor) had no design obligations, so it is now usable for intermediate projects.

I know that we work in a conservative industry but we should take the plunge now and start using the 2005 forms.