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National Construction Contracts and Law Survey 2013

National Construction Contracts and Law Survey 2013

 

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Contracts and Law

JCT 2011 contracts

by Stuart Doran
NBS Technical Author

The 2011 editions of the JCT contracts reflect amendments to the Housing Grants, Construction and Regeneration (HGCR) Act 1996 by Part 8 of the Local Democracy, Economic Development and Construction (LDEDC) Act 2009. This new Act has been introduced to encourage the resolution of disputes by adjudication and to enable better management of cash flow. Within the JCT 2011 contracts payment terms and conditions have been amended but, because the contracts refer to The Scheme for Construction Contracts (England and Wales) Regulations, adjudication has not required any changes.

All contracts, except Minor Works (MW) and Minor Works with Contractor's Design (MWCD), now incorporate:

  • Terrorism cover provisions included in JCT's 2009 update
  • The appointment of a principal contractor to comply with the Site Waste Management Plans Regulations 2008.
Payment provision in JCT 2011 contracts

Minor Works (MW) and Minor Works with Contractor's Design (MWD)
The Contract Administrator is responsible for both valuations and issuing certificates. The due dates are:

  • Up to practical completion, at intervals of 4 weeks calculated from the date for commencement of the Works
  • 7 days after the date of practical completion
  • Every two months after practical completion until the expiry of the rectification period.

Interim certificates (payment notice) must be issued by the CA within 5 days of the due date. If an interim certificate is not issued or is issued late, the Contractor may give a payment notice (default payment notice) to the CA stating the sum due on the due date and the basis on which that sum has been calculated.

Payment is to be made by the Employer to the Contractor following the strict timetable in the contract:

  • The final date for payment of the certificated sum is 14 days from the due date
  • If a default payment notice is served the date for payment is delayed by the same number of days after expiry of the 5 day period
  • Should the Employer wish to pay less than the sum stated in the certificate, a notice (pay less notice) must be issued to the Contractor not later than five days before the final date for payment stating the basis on which the sum has been calculated.

Intermediate Contract (IC) and Intermediate Contract with Contractor's Design (ICD)
The Contract Administrator (CA) is responsible for issuing certificates. Valuations are done by the CA unless undertaken by the QS upon request of the CA. The Contractor has the right to submit an interim application to the Quantity Surveyor at least 7 days before the due date stating the sum due on the due date and the basis on which that sum has been calculated.

The due dates are:

  • Up to practical completion, the monthly dates stated in the Contract Particulars
  • Within 14 days after the date of practical completion
  • On the specified dates every two months after practical completion until the expiry of the rectification period or issue of the certificate of making good.

Interim certificates (payment notice) must be issued by the CA within 5 days of the due date.

If an interim certificate is not issued or is issued late, the Contractor's interim application if made becomes an interim payment notice (default payment notice) or any time after the 5 day period the Contractor may give an interim payment notice (default payment notice) to the QS stating the sum due on the due date and the basis on which that sum has been calculated.

Payment is to be made by the Employer to the Contractor following the strict timetable in the contract:

  • The final date for payment of the certificated sum is 14 days from the due date
  • If a default payment notice is served the date for payment is delayed by the same number of days after expiry of the 5 day period
  • Should the Employer wish to pay less than the sum stated in the certificate, a notice (pay less notice) must be issued to the Contractor not later than 5 days before the final date for payment stating the basis on which the sum has been calculated.

Standard Contract with quantities (SBC/Q) without quantities (SBC/XQ) and with approximate quantities (SBC/AQ)
The Contract Administrator is responsible for issuing certificates. Valuations are made by the Quantity Surveyor when the Contract Administrator requires them for ascertaining the amount due in an interim certificate; except when Fluctuations Option C applies, where it is required before the issue of each certificate. The Contractor has the right to submit an interim application to the Quantity Surveyor at least 7 days before the due date stating the sum due on the due date and the basis on which that sum has been calculated.

The due dates are:

  • Up to practical completion, the monthly dates stated in the Contract Particulars
  • Within one month after the date of practical completion
  • On the specified dates every two months after practical completion until the expiry of the rectification period or issue of the certificate of making good.

Interim certificates (payment notice) must be issued by the CA within 5 days of the due date.

If an interim certificate is not issued or is issued late, the Contractor's interim application, if made, becomes an interim payment notice (default payment notice) or any time after the 5 day period the Contractor may give an interim payment notice (default payment notice) to the QS stating the sum due on the due date and the basis on which that sum has been calculated.

Payment is to be made by the Employer to the Contractor following the strict timetable in the contract:

  • The final date for payment of the certificated sum is 14 days from the due date
  • If a default payment notice is served the date for payment is delayed by the same number of days after expiry of the 5 day period
  • Should the Employer wish to pay less than the sum stated in the certificate, a notice (pay less notice) must be issued to the Contractor not later than 5 days before the final date for payment stating the basis on which the sum has been calculated.

Design and Build Contract (DB)
As there is no independent certifier, the Contractor is required to make applications for interim payments, either at the completion of stages (Alternative A) or at regular intervals (Alternative B). The selected method is stated in the contract particulars.

The due dates are:

  • Alternative A - at the completion of stages specified in the Contract Particulars up to application for the last stage and thereafter the same date at intervals of 2 months or, if later in each case, the date of receipt of the Contractor's interim application.
  • Alternative B - up to practical completion, the monthly dates stated in the Contract Particulars and thereafter the same date at intervals of 2 months or, if later in each case, the date of receipt of the Contractor's interim application.

Following the Contractor's application for payment the Employer must follow the strict timetable for the notice and payment procedure:

  • The final date for payment of an interim payment is 14 days from the due
  • Not more than 5 days after the due date the Employer must give notice (payment notice) to the Contractor stating the sum due on the due date and the basis on which that sum has been calculated. If the payment notice is not issued the amount due, subject to any payless notice, is the sum stated as due
  • Should the Employer intend to pay less than the sum stated in the interim application or payment notice, a notice (pay less notice) must be issued to the Contractor not later than 5 days before the final date for payment, stating the sum due on the due date and the basis on which that sum has been calculated.
Related NBS information:

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September 2011

 

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