Standard form contracts: JCT

What is the Joint Contracts Tribunal?

The Joint Contracts Tribunal (JCT) is made up of seven member organisations who collectively represent a wide range of interests in the building and construction sectors. JCT produces standard forms of contract, guidance notes and other standard documentation for use in these sectors. JCT's intention is that the contracts developed and published by it represent a balanced allocation of risk between the contracting parties.

The JCT suite of contracts

The most recent version of the JCT suite is the 2016 version, although a 2023 version of the suite is expected to be published sometime this year. Contracts from previous versions of the JCT suite are still in use (2011, 2005, 1998 etc.) but care should be taken when using them on 'new' projects as some of the provisions do not comply with the current law - the updates made to each new JCT suite seek to capture changes in legislation that have occurred between the versions.

The suite includes different forms of standard contract, intended for use on projects of varying scales, values and complexity (e.g. minor works, intermediate works, design and build projects), as well as standard forms of sub-contract that are designed to dovetail with the main forms. 

The most commonly used main contracts in the current JCT suite are:

• JCT Design & Build Contract 2016 (DB);
• JCT Intermediate Building Contract 2016 (IC);
• JCT Intermediate Building Contract with Contractor’s Design 2016 (ICD);
• JCT Standard Building Contract with Quantities 2016 (SBC/Q);
• JCT Standard Building Contract with Approximate Quantities 2016 (SBC/AQ);
• JCT Standard Building Contract without Quantities 2016 (SBC/XQ);
• JCT Minor Works Building Contract 2016 (MW); and
• JCT Minor Works Building Contract with Contractor’s Design 2016 (MWD).

The wider suite of documents includes construction management and management contracting forms with associated trade/works contractor forms, along with a framework agreement.

The JCT suite also provides specific sub-contracts tailored for use with its “Design & Build”, “Intermediate” and “Standard” forms – as well as a short form sub-contract and sub-sub-contracts that can be used across the JCT main contract family.

In addition, JCT publishes guidance notes, practice notes and supporting documents to complement the main contract suite, including template collateral warranties. JCT was also one of the first standard forms to embrace third party rights as an option for use, instead of collateral warranties.

Although each project should always be considered on its own merit and individual peculiarities, JCT produces a useful flowchart (1-page / 28KB PDF) and accompanying guide (47-page / 563KB PDF) to assist potential users in picking an appropriate form of contract.

Structure of a JCT contract

JCT contracts generally follow the same structure for continuity and ease of use:

1. Articles of Agreement, comprising:
• an agreement setting out the party details;
• recitals, setting out important context as to the nature/type of works being procured and what documents are included in the contract (e.g. specification and pricing documentation); and
• articles, setting out certain factual information in relation to the works, including the contract price and the identity of, for example, the Employer’s Agent for the works.
2. Contract Particulars: this is a “fill the blanks” section that sets out some project-specific factual elements that need to be completed properly for the contract to work as intended (e.g. the completion date, date of possession, defects rectification period, liquidated/delay damages details etc. must be inserted).
3. Conditions: the core terms and conditions of the contract.
4. Schedules: these cover some of the more commonly used “add-ons” to a construction contract such as different insurance options, a design submission procedure, fluctuation provisions and template forms of bonds.

Conditions: main provisions

The conditions / contract terms in JCT contracts cover nine main areas.

These are:

• definitions and interpretation;
• carrying out the works, which also covers things such as the completion and defects rectification requirements;
• control of the works;
• payment (by reference to an interim payment and final account procedure based on the requirements of the 1996 Housing Grants, Construction and Regeneration (as amended) Act);
• changes;
• injury, damage and insurance;
• assignment, performance bonds and guarantees, third party rights and collateral warranties;
• termination; and
• settlement of disputes.

Payment provisions in JCT contracts are flexible. They allow an employer to agree to make upfront and advance payments to contractors (usually accompanied by a form of payment security, such as a bond) as well as pay the contractor for off-site materials and goods, subject to security being provided over them if required.

Interim payments are usually made as the works progress and one of two different pricing valuations can be selected: “Alternative A”, covering completed stages and variations; and “Alternative B”, covering works in progress together with site materials.

Like other standard forms, JCT contracts envisage retention being applied to interim sums paid to the contractor by reference to a pre-agreed percentage of the contract sum (specified in the “Contract Particulars” section) up until practical completion of the works. This retained amount then halves at practical completion, with the remaining half being retained until the final account process. Retention is intended to act as an incentive to the contractor to deal with defects which come to light after the works have been completed, although it is worth noting that “cash” retentions are currently subject to ongoing consultation across the building and construction industry.

JCT contracts provide for a fixed completion date - or multiple sectional completion dates - and assume that liquidated damages will be agreed upfront to reflect the employer’s losses if the contractor does not complete the works by the agreed dates. Completion date can be adjusted where, in broad terms, the contractor is delayed in completing the works due to the occurrence of a finite list of “Relevant Events” stated in the contract - broadly, matters that are beyond the contractor’s control, as well as variations to the works.

JCT Design & Build Contract 2016 (DB)

The DB contract is a popular form in the JCT suite. It tends to be used for large, complex construction projects such as large scale commercial/mixed-used developments, sports stadia, shopping centres and office blocks. It is used by both the public and private sector.

The DB contract is a "lump sum" contract, where the price for the works is agreed upfront by reference to the agreed scope of the works and is only adjustable by reference to a number of predefined circumstances that allow a contractor entitlement to additional payment or loss and expense ("Relevant Matters" - covering variations to thr works as well as, when compared to the list of "Relevant Events", a shorter, finite list of delay events that, in broad terms, are beyond the contractor's control.

Under the DB contract, the contractor will have “single point design responsibility” for the works. This means that the contractor will:

• design the works based on (or be required to adopt as its own the designs in) the “Employer’s Requirements” provided to it by the employer (i.e. what the employer wants in terms of construction);
• produce the “Contractor’s Proposals” (setting out how it will achieve the employer's requirements); and
• carry out the works (as described in these documents) for the agreed lump sum.

In this context, “single point design responsibility” means being liable for the entirety of the design and construction of the works, irrespective of whether the employer has provided elements of the design.

JCT Standard Building Contract (SBC)

Sometimes described as a “traditional” contract, a contractor may not necessarily be involved in any aspect of the design under an SBC.

The works will typically be described by reference to drawings and bills of quantities prepared by or on behalf of the employer and given to the contractor. Bills of quantities are effectively lists of the items which will be needed for construction (including a description of the item and the quantity required) and on which payment is based.

JCT publishes three forms of SBC:

• SBC/Q: as with the DB, this is a lump sum contract.Here, the employer provides the contractor with bills of quantities to define the quantity and quality of the work (which is used to calculate the lump sum).
• SBC/XQ: again, this is a lump sum contract.The SBC-XQ is distinguished from the SBC-Q in that, here, the employer provides the contractor with a specification or work schedules to adequately define the scope and quality of the work but no bills of quantity, so the contractor prices by reference to its assessment of the cost of the works based on this information).
• SBC/AQ: this is a measurement contract. Here, the employer provides drawings and approximate bills of quantities, with the contractor being required to tender a sum which is an estimate of the likely price of the works. This initial estimate is then updated once the works are completed to reflect a final sum by reference to the remeasurement and valuation of all work undertaken. The price for the works can go up or down to reflect the actual cost of delivering them. The price will also change to reflect the impact of “Relevant Matters” as above.