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The JCT 2011 Building Sub-contracts

ISBN: 978-1-118-65560-3
288 pages
September 2015, Wiley-Blackwell
The JCT 2011 Building Sub-contracts (1118655605) cover image

Description

The majority of construction work is carried out by subcontractors. As building projects become more complex, subcontractors need to understand the implications of the agreements they sign. The JCT 2011 Building Subcontracts has been written to help the busy subcontractor deal effectively with the range of JCT 2011 subcontracts they will encounter. It covers the most commonly use 2011 subcontracts, looking at the key contract conditions, the rights and obligations of the parties and how risk is allocated. A key element of the book is the discussion of the main practical problems that arise. Accessible and practical, this book will ensure building and construction subcontractors understand these contracts and have an easy to consult reference if any questions arise. It will also be of interest to main contractors, architects, contract administrators, project managers, quantity surveyors, contracts consultants and construction lawyers.
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Table of Contents

Preface xiii

1 Background and Introduction 1

1.1 The Joint Contracts Tribunal (JCT) 1

1.2 Sub-contracting 1

1.3 The formation of contracts and sub-contracts 2

1.4 Standard forms of contract and sub-contract 6

1.5 The JCT Sub-contracts dealt with within the chapters of this book 7

1.6 The JCT Sub-contracts not dealt with in the chapters of this book 10

2 The Sub-contract Agreement 17

2.1 Introduction 17

2.2 The structure of the sub-contract agreement 19

2.3 The recitals 20

2.4 The articles 22

2.5 The sub-contract particulars 23

2.6 Attestation forms 35

2.7 Schedule of information 37

2.8 Supplementary particulars 38

2.9 Equivalent sub-contract provisions 38

3 Definitions and Interpretations 44

3.1 Introduction 44

3.2 Definitions 44

3.3 Interpretation 45

3.4 Reckoning periods of days 46

3.5 Contracts (Rights of Third Parties) Act 1999 46

3.6 Giving of service of notices and other documents 46

3.7 Effect of the final payment notice (or the default payment notice) 47

3.8 Applicable law 49

3.9 Equivalent sub-contract provisions 49

4 Sub-contractors’ General Obligations 51

4.1 Introduction 51

4.2 General obligations 53

4.3 Sub-contractor’s design 59

4.4 Materials, goods and workmanship 71

4.5 Compliance with main contract and indemnity 75

4.6 Errors, discrepancies and divergences 76

4.7 Equivalent sub-contract provisions 80

5 Time 85

5.1 Introduction 85

5.2 Time and the adjustment to the period for completion 86

5.3 Practical completion and lateness 96

5.4 Equivalent sub-contract provisions 98

6 Defects, Design Documents and Warranties 102

6.1 Introduction 102

6.2 Defects 103

6.3 Sub-contractor’s design documents 107

6.4 Collateral warranties 108

6.5 Equivalent sub-contract provisions 113

7 Control of the Sub-contract Works 114

7.1 Introduction 114

7.2 Assignment and sub-letting 116

7.3 Person-in-charge 118

7.4 Access provided by the sub-contractor 119

7.5 Opening up the works and remedial measures 119

7.6 Attendance and site conduct 123

7.7 Health and safety and CDM 129

7.8 The CDM Regulations (i.e. the Construction (Design and Management) Regulations 2015) 135

7.9 Suspension of the main contract by the contractor 142

7.10 Benefits under the main contract 146

7.11 Certificates/statements or notices under the main contract 146

7.12 Equivalent sub-contract provisions 147

8 Payment 150

8.1 Introduction 150

8.2 The amount due in respect of interim payments 151

8.3 Unfixed materials 152

8.4 The amount due in respect of the final payment 153

8.5 Retention 156

8.6 Payment due dates and final dates for payment for interim payments 159

8.7 Payment Notices and Pay Less Notices for interim payments 160

8.8 The payment due date and the final date for payment for the final payment 162

8.9 Payment Notices and Pay Less Notices in respect of the final payment 162

8.10 VAT (Value Added Tax) 164

8.11 Construction Industry Scheme (CIS) 164

8.12 Interest 164

8.13 Sub-contractor’s right of suspension 165

8.14 Fluctuations 166

8.15 Equivalent sub-contract provisions 167

9 Loss and Expense 171

9.1 Introduction 171

9.2 Can common law damages claims be excluded by the contract? 173

9.3 Are claims for extensions of time and loss and/or expense linked? 173

9.4 What are the grounds/requirements for loss and expense? 174

9.5 What are Relevant Sub-contract Matters? 174

9.6 Can the contractor recover direct loss and/or expense from the sub-contractor? 176

9.7 In pursuing a loss and expense claim, what does a sub-contractor need to prove? 177

9.8 What needs to be proved in a loss and expense claim document? 179

9.9 What is a global claim? 180

9.10 Common heads of a loss and expense claim 182

9.11 Prolongation costs 183

9.12 Disruption claims 186

9.13 Winter working 187

9.14 Head office overheads and profit 187

9.15 Loss of profit 190

9.16 Increased costs 190

9.17 Cost of claim preparation 191

9.18 Interest and finance charges 191

9.19 Acceleration 192

9.20 Common law damages 193

9.21 Equivalent sub-contract provisions 196

10 Variations 197

10.1 Introduction 197

10.2 What is a variation? 198

10.3 How is a variation instructed? 198

10.4 Can a variation vitiate a contract? 199

10.5 Must a sub-contractor comply with all variation directions issued? 200

10.6 Must a sub-contractor comply with all variation directions issued that may injuriously affect the efficacy of the sub-contractor’s design? 200

10.7 What happens if a sub-contractor does not comply with a direction issued? 201

10.8 How should variations be valued? 201

10.9 How should variations that relate to a sub-contractor’s design work be valued? 201

10.10 What is the procedure to be followed in respect of a schedule 2 quotation? 202

10.11 What are the valuation rules? 205

10.12 Equivalent sub-contract provisions 210

11 Injury, Damage and Insurance 214

11.1 Introduction 214

11.2 Sub-contractor’s liability for personal injury or death 215

11.3 The sub-contractor’s liability for injury or damage to property 216

11.4 The sub-contractor’s liability for loss or damage to the sub-contract works 217

11.5 What Specified Perils insurance cover, in respect of loss or damage to works and site materials, does the sub-contractor obtain under the joint names all risks policies? 218

11.6 What is the sub-contractor’s liability for damage to the sub-contract works? 218

11.7 What are the employer’s options where terrorism cover is not available? 220

11.8 Is the contractor responsible for damage caused to the sub-contractor’s plant, etc.? 221

11.9 Is the sub-contractor required to take out professional indemnity insurance? 221

11.10 When and how does the Joint Fire Code apply? 222

11.11 Equivalent sub-contract provisions 223

12 Termination of Sub-contract 226

12.1 Introduction 226

12.2 How can a contract come to an end? 227

12.3 What can cause a sub-contract to be terminated? 228

12.4 What is a breach of contract? 228

12.5 Will any breach of contract enable one to terminate the sub-contract? 228

12.6 What is a repudiatory breach at common law? 229

12.7 Why have termination provisions in the contract if the sub-contract can be terminated at common law? 229

12.8 What is the effect of a sub-contract being terminated at common law? 230

12.9 Are the effects of a sub-contract being terminated under common law or by contractual provisions the same? 230

12.10 Where can the contractual termination provisions be located in the Sub-contract? 231

12.11 Are the party’s common law termination rights preserved under the Sub-contract? 231

12.12 What reasons give the contractor a right to terminate the sub-contractor’s employment under the JCT Sub-contract Conditions? 231

12.13 What is deemed to be default by the sub-contractor under clause 7.4.1 of SBCSub/D/C? 231

12.14 What happens when a sub-contractor commits a specified default noted at clause 7.4.1 of SBCSub/D/C? 232

12.15 Must all notices either by the Contractor or the Sub-contractor referred to under Section 7 ‘Termination’ of the sub-contract conditions be given in accordance with clause 1.7.4? 233

12.16 What does insolvency of the sub-contractor mean? 233

12.17 What happens when the sub-contractor becomes insolvent? 234

12.18 What does corruption entail? 235

12.19 What are the consequences of the contractor terminating the sub-contractor’s employment? 235

12.20 What reasons give the sub-contractor the right to terminate his or her employment under the JCT subcontract conditions? 237

12.21 What is deemed to be default by the contractor under clause 7.8.1 of SBCSub/D/C? 237

12.22 What happens when a contractor commits a specified default noted under clause 7.8.1 of SBCSub/D/C? 238

12.23 What does insolvency of the contractor mean? 239

12.24 What happens when the contractor becomes insolvent? 239

12.25 What are the consequences of the sub-contractor terminating his or her own employment? 240

12.26 If a sub-contractor’s employment is terminated for any reason, can it subsequently be reinstated? 242

12.27 Equivalent sub-contract provisions 242

13 Settlement of Disputes 245

13.1 Introduction 245

13.2 Mediation 245

13.3 Adjudication 247

13.4 Arbitration 253

13.5 Litigation 260

13.6 Equivalent Sub?]contract provisions 263

Table of Cases 265

Table of Statutes and Regulations 269

Index 271

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Author Information

Peter Barnes MSc, FCIOB, FCIArb, MRICS is a Chartered Arbitrator, Registered Adjudicator, Accredited Mediator and Chartered Conservationist, and has been actively involved in the Construction Industry for over 40 years. Since moving into consultancy he has been appointed to act as Arbitrator, Adjudicator, Mediator, and as Expert Witness in respect of both Liability and Quantum issues. Peter is a member of the Consultants’ College for the JCT Council and sits on the JCT Council.
Matthew Davies BSC (Hons), LLB (Hons), LPC is dual qualified as a Chartered Quantity Surveyor and Solicitor, with over 20 years of experience in the construction industry. He specialises in providing legal, commercial and contractual management, construction claims and dispute resolution services to the construction industry, including representing organisations in adjudication and other dispute forums. He also drafts and reviews contracts, sub-contracts and collateral warranties, and advises on a variety of contentious and non-contentious construction matters.

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