JCT Intermediate Building Contract 2011 - what's new?

The definition of insolvency, which, where it occurs to a party to the contract remains an event that entitles the other party to terminate, has been tidied up (clause 8). The changes are in drafting style rather than substance, and include specific statutory references to the various forms of insolvency that the Insolvency Act 1986 provides for.

One new noteworthy clause of the IBC deals with the effect of the contractor’s insolvency after the contract is terminated for his default. Where the contract is terminated in those circumstances, and where the contractor has become insolvent after the last date on which a pay less notice could have been given in respect of a sum that had fallen due under the contract, the new edition provides that the employer need not pay any such sum (clause 8.7.3). The effect of this clause is that the contractor’s insolvency will automatically entitle the employer to withhold payments; its purpose is to permit the quantification of the employer’s losses before further payments are made to an insolvent party that is in breach.