Sub-Contracting under the JCT 2005 Forms

421 Pages·2008·3.172 MB·English

by  Peter Barnes, Matthew Davies(auth.)

Sub-contracting under
the JCT 2005 Forms
Sub-Contracting under the JCT 2005 Forms Peter Barnes and Matthew Davies
© 2008 Blackwell Publishing Ltd. ISBN: 978-1-405-17788-7
To our wives, Carol and Karen, and our families, with our grateful thanks for
all of the help and support given to us whilst writing this book, without which
help and support we would not have been able to do so.
Sub-contracting under
the JCT 2005 Forms
Peter Barnes
and
Matthew Davies
A John Wiley & Sons, Ltd., Publication
This edition fi rst published 2008
© 2008 by Blackwell Publishing Ltd
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Library of Congress Cataloging-in-Publication Data
Barnes, Peter, 1954–
Sub-contracting under the JCT 2005 forms/Peter Barnes and Matthew Davies.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-4051-7788-7 (hardback: alk. paper) 1. Construction contracts–England.
2. Construction industry – Sub-contracting–England. I. Davies, Matthew. II. Title.
KD1641.B376 2008
343.42′078624–dc22
2008017934
A catalogue record for this book is available from the British Library.
Set in 9.5/11.5 pt Palatino by SNP Best-set Typesetter Ltd., Hong Kong
Printed in Great Britain by TJ International Ltd, Padstow, Cornwall
1 2008
Contents
Preface vii
Abbreviations ix
1 Background and Introduction 1
The purpose and use of JCT sub-contracts 1
Sub-contracting generally 8
Contract formation 8
2 The Sub-contract Agreement 22
The recitals 27
The articles 33
The sub-contract particulars 36
Summary of interim and fi nal payment provisions 56
Attestation forms 56
Schedule of information 59
Supplementary particulars (containing information needed for
formula adjustment) 63
3 Defi nitions and Interpretations 64
Defi nitions 64
Interpretation 65
4 Sub-contractors’ General Obligations 71
Sub-contractor’s design 81
Materials, goods and workmanship 108
Compliance with main contract and indemnity 115
Errors, discrepancies and divergences 118
5 Time 127
Time and the adjustment to the period for completion 127
Practical completion and lateness 144
6 Defects, Design Documents and Warranties 151
Defects 151
Sub-contractor’s design documents 157
Collateral warranties 161
7 Control of the Sub-contract Works 167
Assignment and sub-letting 167
Person-in-charge 172
v
vi Contents
Access provided by the sub-contractor 172
Opening up the works and remedial measures 174
Attendance and site conduct 181
Health and safety and CDM 190
The CDM Regulations (i.e. the Construction (Design and Management)
Regulations 2007) 197
Suspension of main contract by contractor 207
Certifi cates/statements or notices under the main contract 214
8 Payment 217
Payment generally 217
Retention and retention bonds 247
Counterclaim, set-off and abatement 256
Interest 259
Sub-contractor’s right of suspension 263
Fluctuations 266
9 Loss and Expense 268
What is loss and expense? 268
Common law damages claims (in respect of a breach of contract) 294
Liquidated damages 297
10 Variations 298
11 Injury, Damage and Insurance 323
12 Termination of Sub-contract 340
13 Settlement of Disputes 367
Mediation 369
Adjudication 372
Arbitration 388
Litigation 398
Table of Cases 403
Table of Statutes and Regulations 408
Subject Index 410
Preface
The construction industry is almost entirely dependent upon sub-contractors, and
on nearly all construction projects a vast majority of the work is carried out by
sub-contractors.
Despite this, traditionally, the contract terms relating to sub-contractors have not
been given the same consideration as the contract terms in the employer/main
contractor relationship. Possibly because of this, there is a clear shortage of books
that deal with contract law in the context of sub-contracts.
However, the modern construction industry is fully aware of the importance
of sub-contractors, and understands that sub-contract terms must be given as
much consideration as any other terms. Often the obligations and liabilities of sub-
contractors are a vital part of the overall contractual chain leading from the
employer/purchaser passing though the contractor and passing down to the sub-
contractors and the sub-subcontractors.
It is clear that the JCT recognises the importance of sub-contract terms, and, in
its 2005 suite of contracts and sub-contracts, it has published a large range of sub-
contract forms to be used with many of the current standard forms.
One of the co-authors of this book (Peter Barnes) has already written a book on
the JCT 05 Standard Building Sub-contract, and this latest book now deals with all
of the other JCT 05 sub-contracts that have been published up to the date of pub-
lication of this book.
The ‘other’ JCT 05 sub-contracts dealt with within this book are:
(cid:129) the Design and Build Sub-contract (Revision 1, 2007);
(cid:129) the Major Project Sub-contract (Revision 1, 2007);
(cid:129) the Intermediate Sub-contract (Revision 1, 2007);
(cid:129) the Intermediate Sub-contract with sub-contractor’s design (Revision 1, 2007);
(cid:129) the Intermediate Named Sub-contract (Revision 1, 2007);
(cid:129) the Minor Works Sub-contract with sub-contractor’s design;
(cid:129) the Short Form of Sub-contract (Revision 1, 2007); and
(cid:129) the Sub-subcontract (Revision 1, 2007).
Given the wide range of this book, some matters dealt with in considerable detail
in the JCT 05 Standard Building Sub-contract book mentioned above have, by
necessity, been dealt with more superfi cially in this book. Therefore, in that regard,
this book may be considered as being complementary to that earlier book and the
reader is therefore encouraged to refer to that earlier book when a more detailed
analysis of legal or contractual matters that are common to all of the JCT 05 sub-
contract forms is required.
It is expected that this book will principally be used by sub-contractors and main
contractors. However, it will also be of particular interest to other construction
professionals and lawyers who need to have an understanding of the contractual
vii
viii Preface
relationship and the allocation of risk between main contractors and sub-
contractors under the JCT sub-contract forms.
Both of the authors of this book have had wide and direct experience in contrac-
tor/sub-contractor relationships, and have also had extensive experience in avoid-
ing and resolving disputes in those relationships. Consequently, between us, we
have encountered nearly every type of problem that can occur in a contractor/sub-
contractor relationship, and we have attempted to interweave some of that knowl-
edge and experience into the text of this book.
This book obviously cannot take into consideration amendments to the standard
sub-contract forms that may be made by main contractors. However, it is consid-
ered that this book will provide a very useful guide as to the allocation of risk
between the parties that exists in the unamended form, and also will help both
contractors and sub-contractors to understand the possible effects that amend-
ments made to the text of the standard sub-contracts will have on the parties’
respective rights and obligations.
Peter Barnes and Matthew Davies
March 2008
Abbreviations
ADR Alternative Dispute Resolution
CIMAR Construction Industry Model Arbitration Rules
CIS Construction Industry Scheme
CPR Civil Procedure Rules
CSCS Construction Skills Certifi cation Scheme
DBSub Design and Build Sub-contract
DBSub/A Design and Build Sub-contract agreement
DBSub/C Design and Build Sub-contract conditions
HGCRA 1996 Housing Grants, Construction and Regeneration Act 1996
ICSub Intermediate Sub-contract
ICSub/A Intermediate Sub-contract agreement
ICSub/C Intermediate Sub-contract conditions
ICSub/D Intermediate Sub-contract with sub-contractor’s design
ICSub/D/A Intermediate Sub-contract with sub-contractor’s design
agreement
ICSub/D/C Intermediate Sub-contract with sub-contractor’s design
conditions
ICSub/NAM Intermediate Named Sub-contract
ICSub/NAM/A Intermediate Named Sub-contract agreement
ICSub/NAM/C Intermediate Named Sub-contract conditions
ICSub/NAM/E Intermediate Named Sub-contractor/employer agreement
ICSub/NAM/IT Intermediate Named Sub-contract invitation to tender
ICSub/NAM/T Intermediate Named Sub-contract tender
JCT The Joint Contracts Tribunal
MPSub Major Project Sub-contract
MWSub/D Minor Works Sub-contract with sub-contractor’s design
SCDP Sub-contractor Designed Portion
SCWa/F Sub-contractor Collateral Warranty for a Funder
SCWa/P&T Sub-contractor Collateral Warranty for a Purchaser or Tenant
ShortSub Short Form of Sub-contract
SubSub Sub-subcontract
ix
Chapter 1
Background and Introduction
The purpose and use of JCT sub-contracts
The Joint Contracts Tribunal (JCT) was established in 1931 and for 75 years has
produced standard forms of contracts, guidance notes and other standard docu-
mentation for use in the construction industry. In 1998, the JCT became incorpo-
rated as a company limited by guarantee and commenced operation as such in
May 1998.
Currently, JCT forms require the agreement of eight constituent bodies before
they are issued by the JCT. Those bodies are:
(cid:129) The Association of Consulting Engineers
(cid:129) The British Property Federation
(cid:129) The Construction Confederation
(cid:129) The Local Government Association
(cid:129) The National Specialist Contractors Council
(cid:129) The Royal Institute of British Architects
(cid:129) The Royal Institution of Chartered Surveyors
(cid:129) The Scottish Building Contract Committee Limited
The above listed bodies are intended to be reasonably representative of the
interests across the construction industry, namely, the employers, the consultants,
the contractors and the sub-contractors; and the JCT forms are naturally a refl ection
of these competing interests.
In 2005, the JCT authorised the publication of an entirely new suite of contracts
and sub-contracts, etc.
Amongst the sub-contracts that have been issued are the following sub-contracts
which are the subject matter of this book:
(cid:129) Design and Build Sub-contract
(cid:129) Major Project Sub-contract
(cid:129) Intermediate Sub-contract
(cid:129) Intermediate Sub-contract with sub-contractor’s design
(cid:129) Intermediate Named Sub-contract
(cid:129) Minor Works Sub-contract with sub-contractor’s design
(cid:129) Short Form of Sub-contract
(cid:129) Sub-subcontract
1
Sub-Contracting under the JCT 2005 Forms Peter Barnes and Matthew Davies
© 2008 Blackwell Publishing Ltd. ISBN: 978-1-405-17788-7