Insurance Option C is often unsuitable for Works in Existing Structures (note ‘Existing Structures’ is now a defined term) if the Employer is unable to insure the Existing Structures himself (e.g. where the Employer is a tenant in a property insured by the landlord).
JCT have now recognised the need for flexibility in how Existing Structures are insured by allowing a ‘C.1 Replacement Schedule’ to be incorporated into the Contract in place of paragraph C.1 of Insurance Option C. This allows the parties to set out their own bespoke insurance arrangements. The Design and Build Contract Guide 2016 gives examples of possible alternative arrangements, such as asking the Contractor to bear the risk of damage to the Existing Structures under his public liability insurance or arranging for the Employer to take out special structures insurance.
It will be crucial for C.1 Replacement Schedules to describe the alternative insurance arrangements in proper detail to avoid gaps in insurance coverage. Employers should take specialist insurance advice and work with Contractors to find a solution.
Consolidation of insurance provisions
The provisions relating to evidence of insurance, failure to insure and loss of or damage to the Works have been moved from Insurance Options A, B and C into clauses 6.7.2, 6.12, 6.13 and 6.14. This has made the Insurance Options much shorter and simpler and avoids unnecessary repetition.
Public Contracts Regulations 2015
The Contract now complies with regulation 73(1) of the Public Contracts Regulations 2015 (the ‘PC Regulations’), which requires a contracting authority to be able to terminate a public contract in certain circumstances. As a result, where the Employer is a Local or Public Authority (as newly defined in clause 1.1), it has three new rights of termination:
- under clause 8.6 where the Contractor should have been excluded from the procurement procedure due to corruption or similar offence;
- under clause 8.11.3 where the Contract has been subject to a substantial modification which requires a new procurement procedure; and
- under clause 8.11.3 where the European Court of Justice has decided that the Contract should not have been awarded due to a serious infringement of the PC Regulations.
There are also two new Supplemental Provisions. Supplemental Provision 11 relates to the Freedom of Information Act 2000. Supplemental Provision 12 requires the Contractor to ensure his sub-contracts contain certain provisions in order to comply with the PC Regulations.
Net contribution clause
The Third Party Rights in Schedule 5 now include a net contribution clause because the JCT believe there are circumstances where the Employer’s consultants could be jointly liable with the Contractor for design defects. However, in many cases the Contract is amended to give the Contractor total design responsibility, so a net contribution clause will not be appropriate in those circumstances and will need to be deleted (if the Employer chooses to use the JCT Third Party Rights schedules).
Where the Rights Particulars require sub-contractor third party rights and/or collateral warranties to be provided, clause 3.4 requires sub-contracts to contain additional provisions in order to give effect to the third party rights and warranties.
Clause 2.38 now permits the Employer’s licence to use the Contractor’s Design Documents to be assigned to the owner of the Works or any part of them and sub-licensed to any owner or tenant of the Works or any part of them.
Giving of consent or approval
New clause 1.10 provides that where the consent or approval of either party is expressly required under the Contract, such consent or approval must not be unreasonably delayed or withheld, except in the case of consent to assignment under clause 7.1. Employers will need to consider whether there are any other provisions of the Contract in relation to which they would like to withhold consent or approval at their discretion and make appropriate amendments to clause 1.10 to stop the exercise of discretion being overridden by the duty not to act unreasonably.
Clause 3.2 has been re-named ‘Site Manager’ so that the Contractor is required to appoint a full-time Site Manager rather than a person-in-charge. The obligation to appoint a Site Manager was previously a Supplemental Provision. The new clause is similar to the old clause, but now requires the Employer to approve the identity of the Site Manager and any replacement.
Blue Sky ADR Ltd
18 January 2017