25 June 2024

This is the first in a series of articles we are producing on how the changes introduced by the 2024 JCT (Joint Contracts Tribunal) contracts will impact the practical administration of the JCT contractual mechanisms and the resolution of disputes going forward.

In this article, we look specifically at changes to claims for extensions of time, loss & expense and liquidated damages in the 2024 Design and Build (D&B) contract.

1. Claims for extensions of time and loss & expense

New potential grounds of claim for Contractors

As before, the contract adopts the ‘Relevant Event’ and ‘Relevant Matter’ terminology for the Contractor’s entitlement to an extension of time and loss & expense respectively. In the latest 2024 D&B contract, new Relevant Events and Relevant Matters have been added, potentially giving the Contractor additional grounds for claiming relief.

A Relevant Event and/or Relevant Matter may now arise in the following circumstances:

a) Dealing with the discovery of unknown ‘asbestos’, ‘contaminated material’ or ‘unexploded ordinance’ on the site, save where brought onto site by the Contractor (clause 2.26.4 and clause 4.21.3).

These scenarios are not defined in the contract so the relief available could be quite broad (for instance, ‘contaminated materials’ could be broadly interpreted). However, a Contractor will not be entitled to relief if the material has been identified in the Contract Documents.

b) Epidemics, which affect execution of the Works by (i) limiting the availability or use of ‘necessary’ labour / service providers or (ii) preventing or delaying the Contractor securing ‘necessary’ goods or materials (clause 2.26.7 and clause 4.21.6).

This addition is a direct response to difficulties experienced during the Covid-19 pandemic and it will be welcome to bring some clarity as to how the contract responds if such circumstances arise. The changes expressly capture both (i) new epidemics occurring after the Base Date and (ii) known epidemics whose effects change after the Base Date. There is therefore still scope for Covid-19 to be captured under this provision to the extent the effects of the epidemic change, albeit there could be arguments around what sort of changes this includes.

c) Changes in law or ‘guidance’ after the Base Date which affect execution of the Works (clause 2.26.8 and clause 4.21.7).

The broadening of this ground (which previously only referred to changes to statute and statutory instrument) again appears to be a response to the issues experienced during the Covid-19 pandemic, where new legislation and guidance on how to manage the impacts of the pandemic were regularly published. Arguably, the updated wording goes too far the other way, opening the door to claims for additional time and cost in respect of a potentially broad array of non-legally binding guidance and the parties will need to be alive to this.

Note that B and C above are automatically Relevant Events but are only Relevant Matters (entitling additional loss & expense) if selected in the Contract Particulars. The default position is otherwise that the relief will be limited to ‘time but not money’ for epidemics and changes in law and guidance.

Timescales for the Employer to respond to a claim

The 2024 D&B contract has introduced a deadline of 14 days for an Employer to request more information about a Contractor’s claim for additional time (clause 2.24.4). The Employer now only has 8 weeks (rather than the previous 12 weeks) to notify of its decision on a delay claim (clause 2.25.2). This obligation supplements the existing timescales for responding to a loss & expense claim, which have not changed (see clause 4.20.4).

No doubt intended to drive efficiency and proactive resolution of claims, these changes will mean that Employers (and Employers’ Agents) will need to ensure delay claims are reviewed and assessed promptly. 

Interestingly, the updates have not taken the opportunity to clarify whether the notification and timescale provisions are ‘conditions precedent’, and therefore this will continue to be an area of debate.

2. Claims for liquidated damages (LDs)

The Employer’s claim for liquidated damages is largely as per the 2016 edition. However, the 2024 D&B contract has taken the opportunity to provide welcome clarification of what happens to the LD regime when a contract is terminated.

Essentially, under new clause 2.29.5, the Employer can claim LDs from the Completion Date (i.e the date when completion should have occurred) up to the date of termination. Following termination, its claim (for any further losses incurred to achieve practical completion with alternative contractors) is in general damages. These changes are introduced to reflect the Supreme Court’s decision in Triple Point Technology Inc v PTT Public Co Ltd [2021] UKSC 29, which confirmed that liquidated damages clauses apply up to but not after termination of a contract (unless expressly agreed otherwise) and are intended to avoid a potential gap in liability for losses post-termination.

Getting into the detail of some of the changes in the 2024 D&B contract, it is clear the changes could have a significant impact on Contractor and Employer claims. It is good to be aware of some of the nuances of these changes, to avoid any surprises in due course if things don’t go to plan. Look out for the next article in the series on the impact of further changes and please get in touch with the team if you have any questions.

This article was written by Karen Paley and Andy Sheppard.

Key contact

Richard Adams

Richard Adams Partner

  • Construction and Engineering
  • Construction Disputes
  • Energy and Utilities Disputes

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