As previously published in Construction News, Spring 2006
The JCT Design and Build Contract 2005 replaces the Standard Form of Building Contract With Contractor’s Design 1998 Edition.
Like the other JCT 05 Contracts, it is a significant reformatting exercise.
However, the changes are more than cosmetic and organisational. Some of the defining characteristics of the old With Contractor’s Design Contract (as interpreted by the courts) have been fundamentally changed.
From its beginning in 1981, the With Contractor’s Design form was seen as conferring single point responsibility on the contractor. The contractor not only took responsibility for the build but also for the design as well. The courts gave this view of the contract massive support in the case of Henry Boot v Co-op [2003 84 Con LR 164]. In that case the court decided that the contractor’s obligation to complete the design started by the employer or his team required the contractor to take responsibility for that initial design and ratify it. The contractor’s responsibility was not limited to completing the design but extended to overall responsibility for prior design work.
At a stroke the Design and Build 05 Contract changes all that. 2.11 states that (subject to clause 2.15 - which relates to divergences from statutory requirements), the contractor shall not be responsible for the contents of the Employer’s Requirements or for verifying the adequacy of any design contained within them. So a contractor is no longer responsible for early design errors before he became involved. With that one change the whole concept of single point responsibility may collapse like a house of cards.
The payment provisions of the With Contractor’s Design form of contract were widely interpreted to be favourable to the contractor. Clause 30.3 was interpreted to mean that the contractor drove the payment process by applying for payment and if the employer failed to put in place either or both of the 5 days payer’s notice and/or the notice of withholding, then what the contractor applied for became his entitlement under the contract. There was some ambiguity within clause 30.3 but certainly many adjudicators read the contract in that way.
The payment regime is found at section 4 of the Design and Build 05 Contract at 4.7 to 4.10. It is still for the contractor to apply for payment but if the employer fails to put in his 5 days payer’s notice the amount due to the contractor is not the amount stated in the contractor’s application but the objective gross valuation of the works assessed under the contract at clause 4.8.
Therefore, no longer can a contractor go to an adjudicator and insist on being paid the value of his application. Instead the adjudicator will have to decide what is the proper gross valuation under 4.8.
Although the With Contractor’s Design form of contract was regarded as innovative in allowing the contractor to develop the design after the contract had been made, the mechanisms of the contract for dealing with design detail in relation to a developing design were considered to be weak. The relationship between clause 5.3 and 8.1 was seen as the fault line. Goods were required to be of the standards described in the Employer’s Requirements or if not described there, in the Contractor’s Proposals, “or specifications referred to in clause 5.3”. 5.3 merely required the contractor to provide the employer free of charge with specifications and details which the contractor prepared or used. In an effort to cure this weakness the Design and Build 05 Contract introduces at Schedule 1 a design submission procedure under which documents are submitted for review and the employer marks them A, B or C status as appropriate. The contractor is not entitled to proceed with the design and is not entitled to payment unless given A or B status.
These revisions to three core characteristics of the contract are clearly highly significant.
We can only watch wait and learn how they change the politics and the operation of the contract.
