Construction Contracts

One very important change is that the nomination for sub-contractors has been discarded. This will mean that the whole project will be the sole responsibility of the contractor. Hence, it will not matter if certain segments of the undertaking are passed on to other outside parties or agencies. Also, there will be minimal arguments to expect in the interpretation of the contract because the new JCT2005 is written in plain simple English and the major parts are segregated from one another in sections. Actually, the vital components and characteristics of the contents are retained except that the presentation has become less complicated or complex. Furthermore, certain terminologies have to be renamed to suit the real spirit intended by the parties. If there is a mutual agreement to have an overseer for the works, the title is now called Architect/Contract Administrator instead of just an Architect. Extension of Time is now termed Adjustment to the Completion Date. In case of a decision to suspend payment, the notice of withholding can only be done by the employer or the client. It can no longer be a part of the job of the Architect/Contract Administrator. …
In case of dispute, the covenanted remedy is now litigation instead of arbitration. As a matter of course, however, the parties are still free to resort to arbitration if they opt to thresh out their differences through the more expedient and convenient alternative method of patching up things. Still, there is a provision recommending for mediation in case of controversies. In the event that one party becomes insolvent, the other has to serve the appropriate notice of termination. Electronic mailing is now allowed as a medium of service of notices and other items for correspondence. The provision for the employer’s own design team is still the same in JCT2005. However, a design option for the contractor is also provided for. On insurance pre-requisites, the contractor has become obliged to put up a professional indemnity insurance, an agreement feature not included in the 1998 version. The right of the employer to liquidated damages reduction is set forth in the adjustment of the time for completion while the terms for relevant events are made more burdensome to the contractor who is to shoulder consequential costs brought about by materials and labour shortages resultant of industrial unrests like strikes. In such cases and similar instances, the Architect/Contract Administrator is under obligation to explain any adjustment to the completion date.
In order to eradicate confusions regarding notices in the payment aspect of the covenant, the contractor under JCT2005 has the right to be paid according to the sum due considering the progress of performance even if he stated another amount in his application to collect and the employer withholds a certain portion.