JCT & SBCC have issued the 2011 Editions of the standard building contracts. As has been the case since the 2005 editions, the SBCC forms only make the changes necessary to bring them in line with Scots law and terminology. They do not change the risk profile or make other substantive amendments.
The principal purpose of the new editions is to make the contracts comply with the amendments to the 1996 Act made by the 2009 Act. It is important to note that the 2011 Editions of the JCT and SBCC contracts comply with the 2009 Act. This means they are only suitable for use for contracts after the 2009 Act comes into force. Until then, contracts need to comply with the 2006 Act, so the 2011 Editions of the standard forms will not be suitable for them.
Key changes in the 2011 Editions are:
Payment provisions - section 4 - new mechanism for payments including new defined terms: Interim Application, Interim Payment Notice, Final Payment Notice and Pay Less Notice. For outline of new procedures see below.
Insurance - section 6 - revisals to Terrorism Cover provisions to reflect insurance available in the market.
Arbitration (in SBCC forms in Scotland only) - section 9 - revised to take account of the Arbitration (Scotland) Act 2010. Default position is still court so, as before, parties would require to opt in to Arbitration.
Some clause numbering changes - this is one to watch out for if preparing or checking a Schedule of Amendments. Note particularly revised numbering of Relevant Events in clause 2.29 and Relevant Matters in clause 4.24.
New clauses (4.14.2 & .3) to deal with Contractor's right to be paid costs and expenses related to suspension and replacing the Relevant Matter providing for loss and expense to be paid for periods of suspension.
Insolvency - section 8 - new provisions as to when parties of various types become Insolvent.
Bribery Act 2010 - commission by the Contractor of an offence under this Act, which came into force on 1 July 2011, is a new ground for termination.
Termination - section 8 - revision to consequences of termination in terms of no payment becoming payable on insolvency of the Contractor whether or not there is a Pay Less Notice.
New Payment Procedures:
- Due dates for interim payments are to be monthly up to Practical Completion and bi-monthly thereafter.
- Interim Certificates are to be issued within 5 days after the due date.
- Contractor can issue Interim Applications not less than 7 days before the due date.
- If a Certificate is not issued, then either the Interim Application becomes the Interim Payment Notice or, if there was no Interim Application, the Contractor can issue an Interim Payment Notice.
- Final date for payment is 14 days from the due date.
- Sum payable is that stated as due in Interim Certificate or, where there is none, the sum stated in the Interim Payment Notice (subject to Pay Less Notice).
- Where there is an Interim Payment Notice issued by the Contractor due to failure to issue an Interim Certificate, the final date for payment is 14 days from the date of the Interim Payment Notice.
- If the Employer intends to pay less than the sum in the Interim Certificate or Interim Payment Notice, a Pay Less Notice is required no later than 5 days before the final date for payment.
- Pay Less Notice can be issued by the Employer or on their behalf by the Architect, QS, Employer's representative or other person notified by Employer as being authorised to do so.
- Final Certificate - no change to timing of issue. Due date is date of issue of Final Certificate or, if later than the 2 months allowed, the last day of the 2 months. Final date for payment is 28 days thereafter. Pay Less Notice required no later than 5 days before final date for payment.
- If no Final Certificate is issued, the Contractor may issue a Final Payment Notice and that shall set the amount of the final payment (subject to any Pay Less Notice). In that case, the final date for payment is 28 days from the date of the Final Payment Notice.