It's time to spring clean your Supply Chain Contracts

27 April 2017


It's that time of the year when we all start thinking about the big spring clean, but now is also a good time to spruce up your supply chain contracts.

If you utilise the Joint Contracts Tribunal (JCT) suite, taking time now to update your downstream contracts to reflect the new 2016 contracts will ensure that they are ready for use on projects being procured under the new suite.

One of the significant changes in the 2016 contracts is the revision and simplification of the payment procedure. We previously provided practical tips on aspects of these new provisions. It is crucial to make sure this is dealt with properly in your supply chain contracts, so that the more restrictive payment regime of the Scheme for Construction Contracts 1996 (as amended) does not apply downstream.

Other changes to be aware of are:

  • Incorporation of provisions relating to the Construction (Design and Management) Regulations 2015 (CDM), which previously needed to be included by way of the JCT 2011 Amendment 1;
  • The ability to specify that the sub-contractor maintains product liability insurance;
  • Addition of provisions around Building Information Modelling (BIM), which was previously only dealt with in the JCT Public Sector Supplement;
  • The inclusion of provisions enabling the use of third party rights as well as collateral warranties
  • Streamlining of amounts to be taken into account when determining gross valuations and calculating the final contract sum;
  • Changes to the process and basis for claiming direct loss and expense;
  • The right for sub-contractors to claim direct loss and/expense on termination due to any employer negligence or default, not just where the negligence or default causes a specified peril to occur; and
  • The incorporation of the JCT Public Sector Supplement.

Even if you use bespoke or other standard forms of construction and engineering contracts for your supply contracts, they still may need updating to reflect recent changes in legislation around:

There are also imminent PAYE changes (currently only affects public bodies) that could be of relevance. You may even want to tackle drafting contracts around Brexit, which may be relevant where you use framework contracts or long term supply agreements.

Whilst you're in the process of updating, you may want to take the opportunity to spring clean your 'to do' list by considering what changes you might want to make to reflect market experience or lessons learned (good or bad) from previous projects.

And once you are done and dusted with your spring clean, your contracts will be in tip top shape for the summer, just in time for the publication of NEC4 in June!

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