Legal issues with JCT contracts

Numerous statutes apply to construction contracts. Some of the most important are:

Unfair Contract Terms Act 1977

Section 3 suggests that amendments to a standard form may result in the terms becoming an employer's 'written standard terms of business' with the result that unfair terms may be excluded by the courts.

Supply of Goods and Services Act 1982

This will imply certain terms into most commercial contracts. A construction contract will be most likely treated as a contract for services.

Housing Grants, Construction and Regeneration Act 1996

Implies 2 important procedures into certain defined construction contracts (which will cover most general building and civil engineering works):

• the right to adjudication at any time; and
• certain minimum requirements on payment terms.

Note that this Act was amended with the Local Democracy, Economic Development and Construction Act 2009 which was effective for contracts created after 1 October 2011.

Local Democracy, Economic Development and Construction Act 2009 (Construction Act 2011)

This provides:

• a revised definition of insolvency within section 6 Termination;
• revised payment guidance including pay less notices for reduced payment; and
• pay when certified clauses have been outlawed. It is no longer permitted to make payment conditional on performance of obligations under another contract.

Contracts (Rights of Third Parties) Act 1999

Allows third parties to have the benefit of a contract. Normally requires an express term in the contract. This Act is rarely used in practice in construction. The 2016 JCT revision inserts an option to use third-party rights.

Construction (Design and Management) Regulations 2015

Imposes certain safety requirements and procedures on most construction projects.