28 Sep Modifying a JCT Contract Without Experience or Legal Understanding: What Are the Risks?
Throughout this article, I will explain the risks associated with modifying a Joint Contracts Tribunal (JCT) form.
The Joint Contracts Tribunal (JCT) forms of standard contracts are the most widely used form of standard contracts in the UK. They have been drafted by those with extensive knowledge and experience. JTC forms are designed to meet a specific procurement route and to strike a balance between the parties when it comes to the allocation of risk.
Generally, these forms are not meant to be amended. However, where such amendments are deemed necessary, parties should seek assistance from those with in-depth legal understanding or experience in dealing with JCT contracts.
Any incorrect or careless amendments can lead to the nature of the contract being altered from its intended purpose. Incorrect amendments may also create inconsistency and incoherence in the contract which in turn will inevitably lead to disputes and potentially costly litigation.
Various construction disputes have arisen due to ill-advised amendments made to JCT contracts.
An example of this is in the Grove Developments Ltd v Balfour Beatty Regional Construction Ltd  EWHC 168 (TCC). Both parties departed from a JCT contract by agreeing on a schedule of periodic payment dates.
The fact that the agreement did not provide for interim payments covering all of the work under the contract was no reason to import the relevant provisions of the Housing Grants, Construction and Regeneration Act 1996. The court held that the developer was entitled to a declaration that the building contractor had no contractual right to make or be paid in respect of any additional claims for interim payments.
Another example of a dispute arising out of the uncertainty created by an amendment to a JCT contract can be found in the case of Bennett (Construction) Ltd v CIMC MBS Ltd (formerly Verbus Systems Ltd)  EWCA Civ 1515.
Both parties amended the JCT standard form by replacing the standard valuation payments with five milestone payments, three of which referred to the necessity of a “sign-off”. The contract did not provide any guidance regarding the definition of the term “sign off” or how it was to be interpreted. This inevitably led to a dispute between the parties on its interpretation. More specifically on whether signing off was to be taken literally or if the delivery of the items in accordance with the contract would suffice. The court ultimately determined that an actual sign-off was not required. But, it was noted that had the amendments to the JCT contract been drafted with greater clarity, the need for costly litigation could have been avoided.
In this day and age, there is an increasing demand for building projects. This means that the need for amendments to standard forms of contract is understandable. However, as proven by recent case law, amendments to JCT contracts carry the risk of creating uncertainty and costly litigation.
It is imperative that before any amendments are made, assistance is sought from an individual with experience and/or legal understanding. This could save parties a significant amount of time, money and resources.
At Mercantile Barristers, we advise on all standard forms of contracts, including JCT forms. Our comprehensive and effective construction and engineering contract drafting and advisory service apply to all stages of a project’s life cycle, from initial feasibility through to completion, disposal or occupation.
So, if you require guidance or believe that you could be headed towards costly litigation, we can help.
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