Using the JCT Minor Works Contract

The first point is that the parties to this contract agree that the administration is undertaken by a third party. This determines that the parties have agreed that their dealings are undertaken through an architect or contract administrator. This issue can cause some inexperienced clients difficulties especially where they are of the opinion that the contract administrator or architect is expected to act solely in their interests and not as intended in a quasi-arbitral role.

The second key point is that the design and/or provision of information are to be provided by or on behalf of the employer. The purpose of this is 2-fold:

• firstly, to provide the employer with independent advice as to design quality and longevity; and
• secondly, to relieve the contractor of having to provide advice of the merits or otherwise of the methods and materials.

It is often the case that where the specifications and/or drawings require revisions and/or amendments by way of instruction or variation, this is undertaken by the contract administrator. It is anticipated, in the ordinary course of events, that the contractor may suggest or propose solutions and or ideas but parties need to be clear that any instruction is from the architect or contract administrator and that these have been checked against the contract scope of work. The danger here is that the responsibility for design passes from architect/contract administrator to contractor and the responsibilities become blurred. This is particularly important when dealing with manufacturers’ products or systems that are often not compatible with other industry products. Examples are paint systems, waterproof tanking systems, etc.

In addition, there are no provisions for named specialists and any such integration should be resisted as there are issues of payment, time, and responsibility that are not covered in this contract.

Finally, the contract anticipates that bills of quantities are not used and that drawings and specifications are to be used.

With contractor’s design

The Minor Works Building Contract with contractor’s design 2016 (MWD) is very similar in layout, however, allows for the contractor to undertake a contractor’s designed portion (CDP). This must not be confused with a design and build contract. It is intended that only a portion is to be designed by the contractor’s designer, specialist or subcontractor. The element has to be defined in the second recitals and it is anticipated that this will be limited to certain elements.

Letter of intent

It is often the case that contracts are commenced on the issue of a letter of intent. The consensus of opinion is that such a course is risky and there is a considerable amount of dispute work arising from the use of letters of intent. A letter of intent on its true meaning is merely a letter that amounts to confirmation of ‘intent’. This ‘intent’ can change as parties’ intentions do change. It is important that when a letter headed ‘letter of intent’ is received it is accepted as merely an intention. It is not a substitute for a contract. The contract should still be executed.

That said, some letters go further and authorise work to commence; where this is the case and all the terms are expressed, this is the limit of the letter and no more. The situation where both parties continue beyond the authorised work and/or payment limit. In the event of no contract materialising, the matter of payment was addressed in Serck Controls Ltd v Drake & Scull Engineering Ltd (1997) 73 ConLR 100. The sums claimed were on a ‘quantum meruit’ basis, a basis for recovery in such situations. However, the actual recovery is not strictly cost plus reasonable profit, but efficiency conduct and value to the other party are taken into consideration.

It is a risky strategy to proceed without a contract and the levels of uncertainty as to remuneration nearly always far outweigh the benefits to both parties. Finally, note that very few ‘letters of intent’ go as far as contracts with respect to matters of insurance, extensions of time, etc. and are therefore to be avoided for these very reasons.

Agreement

The agreement needs to be dated and completed fully including the parties’ company registration numbers.

Recitals

The completion of the recitals need to make clear reference to all documents and drawings including any revisions. Where parties have revised the tender by way of revised cost schedules and/or revised drawings, these and any emails need to be attached. It is good practice to record any changes as employees can leave organisations and difficulties can arise as to what was agreed. Further, it is good practice to sign all drawings and relevant documents as part of the contract formation.

Articles

The execution of the articles is straightforward, however, take care to clearly identify individuals where applicable.

Firstly, the identity of the parties needs to be clear and precise, and the introduction of the company number is as a result of parties not including their full company name or trading name or where companies trade using 2 or more similar company names.

Secondly, any post-tender supplementary agreements/amendments that are recorded in letters and/or revised schedules need to be incorporated and clearly identified. These should always detail how the contract sum was arrived at and what revisions/omissions were agreed.

Finally, where there is a departure of the architect or contract administrator as provided for by Article 3, the parties must insist on a replacement irrespective of how good their relationship is; the contract is unworkable without an architect or contract administrator. Where such a replacement is not appointed there is risk that the parties could be deemed to have amended the contract by way of conduct, which could result in uncertainty.

It is always the employer who is required to replace the architect or contract administrator with a replacement who shall continue to administer the contract. Should no appointment be made, then the employer is in breach of the contract and the contractor can accept the employer’s repudiation of the contract.

Contract particulars

The section should be completed as per the contract details and/or tender documents. If there is any departure then an explanation and or letter needs to be appended to the contract to explain how such amendment came about – this is particularly important with respect to issues of time for completion.

The contract has no provisions for sectional completion. It is often the case that parties seek to take over part of the works and/or handover parts of the works where, for example, the contract has been delayed. There are no provisions for this and such an event may impact on the contractor’s ability to complete the rest of the works, save in exceptional circumstances, and give rise to claims. The issue of liquidated and ascertained damages (right to recover) will be impacted on and this could lead to disputes.

Likewise, the provisions for defects and insurance can also become complicated.

The sixth recital allows for the parties to use this contract as part of a framework agreement. Where this is the case, it should clearly be stated to avoid any confusion, especially where parties have multiple contracts some within a framework agreement. The 2016 provisions allow for integrating supplemental provisions.

Attestation

There are 2 options and care must be taken that only 1 is completed. The principle difference is the period of limitation:

• a contract signed as 'underhand' is 6 years; and
• a contract signed as 'a deed' is 12 years.

The period for latent defects also varies accordingly.