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Prettys Solicitors Ipswich
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Amending JCT contracts

February 2019 - Issue 114

Making amendments to a JCT contract is commonplace however recent case law has highlighted the need for careful drafting to avoid unintended (and potentially expensive) consequences. In the case of Balfour Beatty Regional Construction Ltd v Grove Developments Ltd [2016] EWCA Civ 990, the parties agreed to an amended JCT (D&B 2011) and selected Alternative A (stage payments), the parties agreed payments were to be made on 23 dates up to completion. 

The works were subsequently delayed past the completion date and a dispute arose over when Balfour Beatty was entitled to submit further interim payments beyond the 23 set out in the agreed contract. At first instance it was held that Balfour Beatty was not entitled to submit any further payments beyond the 23 set out in the contract as the parties had agreed to 23 payment dates and there was no scope to submit more. Balfour Beatty subsequently appealed and its appeal was dismissed. Therefore this highlights the importance of careful drafting as what may at first appear a structured way to arrange payment has subsequently meant that when a delay occurred, given there was no provision for this, the courts were not willing to add words to the contract.

Brexit

When contemplating the amendments a JCT contract may require another topical to consider is of course whether provisions or clauses need to be added in respect of Brexit. Brexit continues to provide a large degree of uncertainty given the government is  yet to agree on a deal and therefore businesses do not yet have guidance on the impact Brexit changes may have on a construction contract. There are a number of construction industry specific aspects that may be affected by Brexit, supply of labour being a significant consideration should immigration and visa rules change and affect the ability of the workforce to fulfil their obligations under the contract. Import duties is another concern that could prove influential should import duties be introduced and neither party is likely to be in a position to want to take on the risk of picking up import duties should they be introduced on EU goods and so it may be that the parties seek to mitigate the risk by agreeing a contingency in the agreed budget for the potential costs. Another potential Brexit option would be for the parties to agree on a wording for a right to renegotiate/ terminate or introduce another form of “change of law” clause.

We explored briefly some of the drafting impacts of Brexit in our recent Business Academy Brexit Forum (see above) and will be providing further insights in next month’s edition of “Construct” so watch out for our article entitled “Does your contract need “Brexit-proofing”? How do we do that then?”

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