Earlier this year the JCT released a suite of subcontract forms that essentially replace DOM/1. We explain the differences and some potential pitfalls.
The 1964 Banwell report, forerunner to the Latham and Egan reports, recommended that the JCT should publish a standard form of domestic subcontract. It has taken 40 years, but it has happened. In January, a suite of subcontract forms was released by the JCT and the Construction Confederation will now phase out its standard form, DOM/1.

The new form is DOM/1 in a new guise and with a few additions. Many clauses are identical, albeit in a different order. Nevertheless, the restructuring and additions are important, and generally should be welcomed.

The concept of separate books for Agreement and Conditions is retained, but the issue of a guide is new.

The clauses in the Conditions are arranged in topic groups. For example, Section 4: Payment deals with all payment matters, including valuation of variations, loss and expense, fluctuations, as well as the mechanics of payment.

The new Agreement form comprises Articles, Particular Conditions, Schedule of Information, Annexures and an information annex related to Formula Adjustment for fluctuations.

There are some new features. Article one allows for the use of an electronic data interchange agreement to set the status of e-mails, similar to the main contract. Also similar is the option of a Priced Activity Schedule for short cut interim valuations by proportioning lump sums.

The Particular Conditions provide for a description of the state of subcontract work to be achieved for it to be 'fully, finally and properly incorporated' before practical completion, thus triggering transfer of risk to the main contractor. Also new is the requirement for a bond when the subcontractor is paid for materials off site.

The Conditions are grouped in nine sections, plus two codes of practice and three annexes. Individual clauses are generally identical to DOM/1 with some exceptions.

A new clause (1.15) provides for the contractor to supply any further information needed to enable the subcontractor to do their work. The obligation is similar to that of the contractor under the main contract. A similar clause requires the subcontractor to provide working drawings.

The contractor must tell the subcontractor when the information is needed if they think they do not already know. This clause is not limited to design subcontractors and its impact is awaited with interest.

One of the features of the new subcontract is the drive for the parties to exchange information. One example is clause 1.20, which requires the contractor to supply dates of main contract certificates. Subcontractors must surely applaud this provision.

The restructuring and additions are important and should be welcomed

In section two, there are new Relevant Events for obtaining extensions of time. Late information, where the architect misses dates on an Information Release Schedule under the main contract, is now a separate event. Other new events are the suspension of main contract works and hindrance by the employer.

There is no Sectional Complement supplement and the JCT intends to publish this as an entire alternative contract.

In section three there are three main new provisions. First, the subcontractor must provide a competent person in charge on site.

The second is provision for the contractor to suspend subcontract works if the main contract works are suspended due to late payment. The third addition is the requirement for the subcontractor to introduce an 'interest on late payment clause'. It is in the subcontractor's interests to insert such a clause, as without it, after November 2002, any payee will be entitled to statutory interest at a higher rate than that in the contract.

In the quest for great openness, section four, payment, requires that the subbie be allowed to be present when measurements are taken. This new clause should remind subcontractors that under this form it is the contractor who values the work. There is no equivalent of the Contractor's Price Statement.

The payment clause contains some important changes. First, the subcontractor may submit their own interim valuation. This legitimises common practice but the contractor does not appear to have any obligation to take the application into account.

The second change is the payment period. The 17 day period under DOM/1 is now 21 days. The good news for subbies is that the period starts from the date when the relevant certificate under the main contract ought to be issued.

The third change concerns final payment and retention release. Release now depends upon the date when the main contract defects liability period ends, rather than the issue of a defects completion certificate. Thus subcontract retentions can be released before the main release, provided that there are no defects remaining for the subcontractors to correct. The final balance of payment may be later and is still tied to the issue of the main contract final certificate. In line with the JCT amendment in January 2001, there is an option for the parties to use a retention bond in lieu of retentions held.

Determination is similar to DOM/1 except that there is a requirement on the contractor to notify the subbie immediately. If not, the contractor is in breach and the subcontractor may recover damages if they suffer loss as a result of not knowing soon enough.