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JCT moves towards hard-nosed definition of contract rights

legal matters

It's not often you hear the word 'philosophy' in the same breath as the words 'construction contract', but the response to the JCT's new Major Projects Form (MPF) has these notions inextricably entwined.

Hitherto there have been two different philosophies towards amending the JCT standard forms of construction contract. On the one hand you have the cautious approach, founded on the twin beliefs that a lot of clever people spent a very long time puzzling over the wording, clause by clause, so as to ensure the result is as cohesive and polished as a wooden jigsaw puzzle and that by changing a simple 'and' to an 'or' you could unravel all their good work and reduce it to a meaningless jumble on the metaphorical floor.

The more adventurous approach is based on the notion that the standard forms are the product of negotiations between rival industry interests and that the end result is the ultimate compromise. As such the forms are an ideal starting point from which to branch out and ensure your contract really says what you want it to say.

There is also more than a hint that the JCT standard forms favour the contractor. As a consequence, smaller projects, where the budget is on the tight side, the contract drafting somewhat 'under lawyered' and where the contractor may be the more experienced party, tend to end up with an unamended version of the JCT form. More sizeable projects, for sophisticated employers who have hefty legal contingents, often end up with more amendments to the contract than there was contract in the first place.

The JCT, which has realised that the traditional design-and-build forms may not cater for the needs of the bigger boys, have recently brought out the Major Projects Form (MPF) in an attempt to plug the gap.

The MPF does not define what a 'major project' is, but works on a similar basis to some Knightsbridge jewellers: if you have to ask the price, you can't afford it. As the guidance notes point out, MPF is not a contract for beginners - if you have to wonder what a major project is, this is probably not the form for you. To demonstrate its no-nonsense approach, the MPF is much shorter than its predecessor - JCT 98 With Contractors Design - having jettisoned some of the more convoluted provisions about VAT, nominated subcontractors and, importantly, insurance.

It is a very grown-up step to leave the parties to make their own insurance arrangements, but the JCT has been grappling for some time with the courts'decision in CRS v Taylor Young Partnership (2002), in which the House of Lords held that the design consultants, who did not have the benefit of the joint names insurance policy, could not claim a contribution against the contractors for fire losses. Project-specific insurance was widely recognised as the only mechanism by which both contractors and designers could be covered for such losses.

Now the JCT has left it to the protagonists to go out and buy it.

Furthermore, in an attempt to shake off the JCT's contractor-friendly image, the MPF transfers much of the construction risk on to the contractor.

Extensions of time, for example, are not available on the traditional grounds of weather conditions, industrial disputes and non-availability of labour and materials. Instead, the only grounds on which the contractor can obtain an extension are acts of prevention or breaches by the employer.

Employers' design requirements are set out in their 'requirements' documents. Although the contractor is not responsible for the adequacy of any design contained in the requirements, the contractor does warrant that the design will satisfy any performance specification and can separately give the employer a duty of care warranty in respect of the design.

With the MPF, the JCT has sought to respond to the perceived needs of the more experienced employer. The philosophy of this new standard form of construction contract shies away from current trends of partnering and collaboration and towards a clear and hard-nosed definition of the parties' rights and responsibilities.There you go again - 'philosophy' and 'construction contract' in the same breath.

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