JCT SBC/Q 2016: Obligations Of Employers And Contractors In Construction Contracts

Primary obligations imposed by JCT SBC/Q 2016 on employers and contractors

Discuss about the Construction Law for Irn Construction PLC.

The JCT suit 2016 imposes an obligation of the both the employer and the contractor to comply with their legal duties. In the given scenario the contractor is Irn Construction PLC and the employer is U-turn investments. According to the facts of the given situation revised construction drawings have been provided by the architect of the employer and subsequently because of such actions the contractor was not able to proceed with the construction project. This is because the foundation of the project had been laid by the contractor in accordance to the original document. The new drawing requires a completely new foundation and along with other discrepancies the contractor are expected to delay the work by a total of 25 weeks.  The limitations in relation to the progress of work are likely to trigger delay in the project and in addition would also result in the increase in the overall cost.

It is a primary obligation of an employer under the JCT 2016 to provide the possession of the site to the contractor. In addition under the JCT 2016 the employer also has the duty to deploy appropriate administration in relation to the site along with providing necessary and relevant information and giving appropriate instructions. On the other hand the duty with the JCT 2016 imposes on the primary contractor include the responsibility of proceed with the work in accordance to the terms of the construction contract and also to deploy due skill and diligence with respect to the quality of work in the same way which a builder having ordinary competence would have done. In case any of the parties to the construction contract are not able to comply with the obligations imposed by the JCT 2016 it would lead to the breach of contract. The common law rules as provided by the case of Addis v Gramophone[1] would be applicable if the breach of contract has been done by any of the parties and the aggrieved party would be entitled to remedies in form of compensation and damages. Damages are only provided to the aggrieved party for the loss arising out of contractual breach and to an extent which would restore the position of the party it would have been if the contract was not violated. It had been provided through the JCT 2016 that in case an act or omission committed on the part of the employer hampers the ability of the contractor to be able to complete the construction project on time, the contractor would be entitled to additional cost and time in relation the project from the employer.

Impact of breach of obligations on the progress of work

It is the duty of the contractor once they have been provided by the possession of the work site by the employers to appropriately initiate the construction project on time and to complete the project through continuously deploying skill and diligence[2]. In addition a duty has been imposed on the employer assist the contractor in completing the work and if it is found that the acts of the employer was committed in a manner which made in impossible or difficult for the contractor to continue with the progress of the work, than time being the essence of the contract cannot be relied upon by the employer in legal proceedings against the contractor. For instance where additional work or any contractual alternations have been initiated by the employer than it cannot be claimed by the employer that the contractor should complete the work in the originally provided time scale.

According to the facts of the given situation where there has been alternation in the terms of the original contract by the employer it is the duty of the contractor to evaluate whether such alteration caused by the employer would be constituted as a significant situation leading to the not completion of work in time long with incurring additional cost. In addition the contractor also have the responsibility of analyzing whether such alterations by the employer is a fundamental change (alternation in the actual nature of the original contract which makes it a totally new contract) to the contract and thus make it impossible for the contractor to carry on with the work. In the given situation it has been provided that the contractor wants to carry on with the altered work with the expectations that the employer would be providing them the necessary benefits in relation to the additional cost incurred and delay cause to the project according to the provisions of the JCT. however for the purpose of safeguarding its position it is the duty of the contractor to abide by the provisions of the contract. The clause 2.28 of the JCT provides extension of time to the contractor to deal with an alternation which may be considered as a “relevant event”[3].

In the given situation it is the duty of the contractor to provide a notice with respect to the time and variation issues so that they cannot be time barred. It is the duty of the contractor to provide a notice with respect to each delay to the employer. It is the duty of the contractor to provide notice in situation where not only the contractor has knowledge that the work would be delayed but when in situation where the wok is likely to be delayed as per clause 2.27.1 of the JCT[4]. The contractor has the duty to provide notice Forthwith which have been defined as without any delay in time[5] and as soon as it is reasonable to do[6]. The notice has to incorporate information about why it is considered by the contractor that a relevant event would be constituted by the discrepancies between contractual documents and the revised construction design. The likely impact of the event leading to the change in time and cost must also be a part of the notice. The material circumstances and the causes of delay must both be stated in the notice. Thing such as the proposed order of work, progress and any other thing which may affect the work must be considered as material circumstances. In case such notice is not provided by the contractor it can be argued by the employer that the contractor under the clause 2.28.6.1 did not utilize best judgment to prevent the delay[7].

Duty of contractor to evaluate alterations by employer

It is the obligation of the contractor under clause 2.27.2 of the JCT according to which he has to provide details about the consequences of the every relevant event. It is the duty of the contractor to study every relevant event individually[8]. It is also the duty if the contract in case no other relevant event has taken place to inform the architects about the cost and time required completing the work after analyzing all the relevant events. Adequate data has to be supplied to the architect by the contractor so that they can come to a conclusion.

The duty of the architect to develop an opinion in relation to the time extension does not initiate until and unless the notice as discussed above in relation to the estimation of the delay has been provided by the contractor according to the provisions of clause 2.28.1 of the JCT[9]. it is the duty of the architect to form an opinion in relation to two important matters, firstly, whether the causes notified by the contractor constitute a relevant event and secondly whether the relevant event is likely to delay the work beyond the prescribed deadline. A decision has to be made by the architecture in response to the claim of the contractor as soon as reasonably possible.  Each relevant event caused by the employer has to be apportioned specific time by the architect. It is the duty of the architect to address and solve the problem based on the terms of the contract in an amicable manner.

In addition, it is the duty of the architects of the employer to notify the contractors whether an extension have been provided or not according to the provisions of clause 2.28.2 of the JCT. the architect is prohibited from not informing the contractor if an extension has not been given to them after consideration[10]. The notification in relation to the non approval of the deadline extension has to be provided to the contractor by the architect in writing. It is upon the discretion of the architect to decide that whether the circumstances lead to a relevant event or not or whether such events would lead to a delay in work.  An extension with respect to time has to be provided by the architecture under clause 2.28.3 of the JCT. while making an extension and fixing a new date of completion two things have to be stated by the architect firstly the amount of time which has been extended and secondly the deduction in time which arises out of every relevant omission[11].

Duty of contractor to provide timely notices

The court who have the right to determine in the basis of both expressed and implied terms of the contract that how the matter should be proceeded if there is a failure on the part of the architect to do so. The court may not only make a specific action or an injunction order or an order to entitle the aggrieved party of damages incurred by them.

It is the right of the contractor to complete the work in a reasonable time in case alterations have been made by the employer with respect to the original contract which makes it difficult for the contractor to complete the work[12]. The instruction of the architect in relation to discrepancies among the contractual documents as well as any default, prevention or impediments in form of an act or an omission on the part of the employer are included in the relevant events through which rights are conferred on the contractor to extend the time scale as provided by provision 2.29.2.1 of the JCT[13]. In case application has been made in writing by the contractor to the architects it is the duty of the architect to provide such information to the contractor within a reasonable period of time according to clause 2.12.2 of the JCT. the implied right in relation to the variation of work with respect to construction projects have been provided to neither the employer nor the contractor. Provisions have been invariably provided by the JCT SBC/Q 2016 which gives the right to the employer to alter work subjected to the provided instructions along with making the contractor to carry on with the work or stop the work according to the instructions[14]. The nature of the terms of the contract would be used to determine whether the variation would result out of instructions provided by the employer. As per clause 3.10 of the JCT SBC/Q 2016 it is the duty of the contractor to act in accordance with all the directors provided to them by the architect and an order to make a variation can be provided by the architect under clause 3.14.1 of the JCT[15].

According to the case of McAlpine Humberoak Ltd. v. McDermott International Inc with respect to a construction contract variation by the employer cannot be made if it is related to a fundamental change in the contract and excluding large quantities of work and employer another contractor to carry on with such work. The situation would lead to the beach of the contract[16].

A detailed mechanism of valuation is set out by the JCT SBC/Q 2016 which enables employers to pay for varied works under clause 5.2. It is an amount which both the contractor and employer agree. The provisions for estimating the amount of time to be extended are provided in clauses 5.6-5.10 of the JCT. clauses 5.6 to 5.10 of the JCT provide the “variation rules” which make provisions among other things in circumstances where substitute or additional work can be measured.

In case there is such a significant change in the parameter of the contract that its basic terms are no longer applicable it results in a fundamental change which is not in accordance to the primary intent of the contracting parties[17]. Such actions are indentified by laws as a violation of contractual terms and subsequently result in damages. The damages are based on the principles discussed above in the case of Addis v Gramphone, where the aggrieved parties’ initial position is intended to be restored as if it did not enter unto a contract. The dispute can also be solved through the use of Alternative Dispute Resolution Methods such as Negotiation, Arbitration, Conciliation and Mediation.

Adriaanse, Mr John. Construction contract law. Palgrave Macmillan, 2016.

Aragona Constr. Co. v. United States, 165 Ct. Cl. 382 (1964) and C. Norman Peterson Co. v. Container Corp. of Am., 218 Cal. Rptr. 592 (Ct. App. 1985)

Brook, Martin. Estimating and tendering for construction work. Taylor & Francis, 2016.

London Borough of Hillingdon v Cutler [1967] 2 All ER 361.

London Borough of Hounslow v. Twickenham Garden Developments Ltd. (1970) 3 All E.R. 326

McAlpine Humberoak Ltd. v. McDermott International Inc. (No. 2) (1992) 58 B.L.R. 61 and Commissioner for Main Roads v. Reed & Stuart Pty. Ltd. (1980) 12 B.L.R. 55.

Roberts v Brett (1865) 11 HLC 337

Ter Haar, Roger, Marshall Levine, and Anna Laney. Construction insurance and UK construction contracts. CRC Press, 2016.

Trollope & Colls Ltd. v. North West Metropolitan Regional Hospital Board [1973] 2 All E.R. 260 and Peak Construction (Liverpool) Ltd. v. McKinney Foundations Ltd. (1970) 1 B.L.R. 111.

Williams v. Fitzmaurice (1858) 3 H. & N. 844