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Standard Building Contract


Guide 2011

MEMBERS
British Property Federation Limited
Contractors Legal Grp Limited
Local Government Association
National Specialist Contractors Council Limited
Royal Institute of British Architects
The Royal Institution of Chartered Surveyors
Scottish Building Contract Committee Limited
All parties must rely exclusively upon their own skill and
judgment or upon those of their advisers when using this
document and neither Thomson Reuters (Professional) UK
Limited nor its associated companies assume any liability to
any user or any third party in connection with such use.

Standard Building Contract


Guide 2011

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SBC/G 2011

TT

IN G T HE

YEARS OF SETTING

THE STANDARD

80
YEARS OF SETTING

THE STANDARD

2011

SWEET & MAXWELL

STANDARD BUILDING CONTRACT

Standard Building Contract Guide (SBC/G)

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This Guide is intended to provide a general introduction to the contract and is not a substitute for professional
advice.

Published September 2011 by Sweet & Maxwell, 100 Avenue Road, London NW3 3PF
part of Thomson Reuters (Professional) UK Limited
(Registered in England and Wales, Company No 1679046.
Registered Office and address for service:
Aldgate House, 33 Aldgate High Street, London EC3N 1DL)
The 2011 Edition is intended for use following the implementation of the Local Democracy, Economic
Development and Construction Act 2009 on 1 October 2011.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in
any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except in accordance
with the provisions of the Copyright, Designs and Patents Act 1988, without the prior written permission of the
publisher. Thomson Reuters and the Thomson Reuters Logo are trademarks of Thomson Reuters. Sweet &
Maxwell is a registered trademark of Thomson Reuters (Professional) UK Limited.
The Joint Contracts Tribunal Limited 2011
www.jctcontracts.com

Contents
Introduction

Page 1

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General
2011 edition changes
Format and Risk Allocation
Content of the Guide

Articles of Agreement

Recitals

Articles

Contract Particulars

Attestation

Conditions

Section 1 Definitions and Interpretation

Definitions (clause 11)


Interpretation (clauses 12 to 111)
Section 2 Carrying out the Works

Contractors obligations (clauses 21 to 23 and Supplemental Provisions 1, 4 and 5)


Possession (clauses 24 to 27)
Supply of Documents, Setting Out etc. (clauses 28 to 212 and Schedule 1 (Contractors Design
Submission Procedure)
Errors, Discrepancies and Divergences (clauses 213 to 218)
Contractors Design Work and Liability (clauses 219 and 220 and Supplemental Provision 3)
Fees, Royalties and Patent Rights (clauses 221 to 223)
Unfixed Materials and Goods (clauses 224 and 225)
Adjustment of Completion Date (clauses 226 to 229 and Schedule 2)
Practical Completion, Lateness and Liquidated Damages (clauses 230 to 232)
Partial Possession by Employer (clauses 233 to 237)
Defects (clauses 238 and 239)
Contractors Design Documents (clauses 240 and 241)
Section 3 Control of the Works

10

Access and Representatives (clauses 31 to 36)


Sub-Contracting (clauses 37 to 39)
Architect/Contract Administrators instructions (clause 310 to 322 and Schedule 4)
CDM Regulations (clauses 323 and 324 and Supplemental Provision 2)
Section 4 Payment (and Schedule 6 Forms of Bonds)

11

Contract Sum and Adjustments (clauses 41 to 45)


Payments, Certificates and Notices (clauses 46 to 415)
Gross Valuation (clauses 416 and 417)
Retention (clauses 418 to 420)
Fluctuations (clauses 421 and 422 and Schedule 7)
Loss and Expense (clauses 423 to 426)

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SBC/G 2011

Page i

Section 5 Variations

14

General (clauses 51 to 55 and Schedule 2)


The Valuation Rules (clauses 56 to 510)
Section 6 Injury, Damage and Insurance (and Schedule 3 Insurance Options)

14

Injury and property damage indemnity and insurance (clauses 61 to 66)


Works insurance (clauses 67 to 611 and Schedule 3)
CDP Professional Indemnity insurance (clauses 612 and 613)
Joint Fire Code (clauses 614 to 617)
Section 7 Assignment, Third Party Rights and Collateral Warranties (and Schedule 5
Third Party Rights)

17

Section 8 Termination

18

General (clauses 81 to 83)


Termination by the Employer (clauses 84 to 88)
Termination by the Contractor (clauses 89 and 810)
Termination by either Party (clause 811)
Consequences of Termination under clauses 89 to 811, etc. (clause 812)

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Section 9 Settlement of Disputes

20

General (and Supplemental Provision 6)


Mediation (clause 91) and ADR
Adjudication (clause 92)
Arbitration (clauses 93 to 98) and litigation (Article 9)

Appendix A SBC 2011 changes

22

Appendix B SBC User Checklist

23

Appendix C Related Publications

29

Page ii SBC/G 2011

The Joint Contracts Tribunal Limited 2011

Introduction

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General
1

This edition of the Guide to the Standard Building Contract has been issued in conjunction with the 2011 edition of
the Contract (SBC 2011).

The Standard Building Contract continues to be published in three versions: With Quantities (Q), Without Quantities
(XQ) and With Approximate Quantities (AQ). Each continues to include the provisions designed to meet the needs
of both the Private and Local Authority sectors.

The Contract is primarily appropriate for larger works where most of the works have already been designed and/or
detailed by or on behalf of the Employer, where detailed contract provisions are required and where the Employer
is to provide the Contractor with drawings and with bills of quantities (Q and AQ) or a specification or work
schedules (XQ) to define the required quantity and quality of the work.

Each version requires the appointment of an Architect/Contract Administrator and Quantity Surveyor to administer
the contract; each allows both for Contractors design of discrete part(s) of the works (Contractors Designed
Portion) and for the works to be carried out in sections.
2011 edition changes

The principal purpose of the 2011 edition is to reflect the coming into force of amendments to the Housing Grants,
Construction and Regeneration Act 1996 (the Construction Act) made by the Local Democracy, Economic
Development and Construction Act 2009, insofar as they relate to payment terms and payment-related notices.
(The amendments relating to adjudication do not require any changes in the Contract.)

The amendments relating to payment include a time limit for the issue of payment certificates and, where such
certificates are not issued on time, give status to payment applications (or payment notices) by the Contractor
unless subsequently countered by a withholding (or, as now, a pay less) notice given by the Employer. They also
give a statutory right to costs and expenses arising from exercise by Contractors of their existing right of
suspension for non-payment; in view of the difference in statutory terminology, this is now dealt with separately
from loss and expense.

The amendments necessitate extensive, if localised, changes in what is now the Payments, Certificates and
Notices sub-section of section 4 (Payment) and, in section 8 (Termination), some minor changes in the definition of
insolvency and terminal payment rules. As a result of the status accorded to Contractors payment
applications/payment notices, three provisions of SBC 2005 Revision 2, which were inserted as a counter to failure
or delay in the issue of payment certificates, are now redundant.

Together with minor consequential amendments, SBC 2011 also:

incorporates the revised Terrorism Cover provisions included in JCTs December 2009 Update;

extends the Article 6 provision for appointment of the principal contractor under CDM Regulations to cover that
function under the Site Waste Management Plans Regulations 2008 also; and

in the case of finds of antiquities, brings the provision on extensions of time into line with that for loss and
expense.

Format and Risk Allocation


9

The general SBC 2011 format remains substantially unchanged from that of SBC 2005. Other than changes in the
Payments, Certificates and Notices sub-section, the amendments and deletions referred to result only in the
renumbering of the last clause in section 1 (Applicable Law) and of the later clauses of section 6 relating to
Terrorism Cover, PI Insurance and Joint Fire Code.

10

The amendments to the Construction Act may in certain cases prove to have unexpected effects but, in JCTs view,
the resultant changes incorporated in SBC 2011 should not have any material effect on the existing balance or
allocation of risk between the Parties. In the case of the Terrorism Cover changes, the sole intended effect is to
avoid an unfair risk for Contractors that might have ensued from the extension of certain insurers exclusions of
liability not being matched by buy-back cover available under the Pool Re scheme.

The Joint Contracts Tribunal Limited 2011

SBC/G 2011

Page 1

Content of the Guide


11

This Guide reviews the provisions of SBC 2011 sequentially, starting with the Articles of Agreement, followed by
the Conditions. The Schedules, including the Supplemental Provisions (Schedule 8), are discussed in the context
of the Conditions to which they most closely relate. That commentary is followed by:
Appendix A SBC 2011 changes
Appendix B SBC User Checklist
Appendix C Related JCT Publications.

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12

Page 2

Appendix B is a straightforward listing, by reference to relevant provisions of the Articles of Agreement, of the
information and the decisions on options that are required to complete the SBC 2011 contract form; Appendix C
lists the other JCT documents that form part of the SBC 2011 suite or that can readily be used in conjunction with
the Contract.

SBC/G 2011

The Joint Contracts Tribunal Limited 2011

Articles of Agreement
13

SBC 2011 retains the SBC 2005 format, comprising the Recitals, Articles and Contract Particulars, followed by
Attestation clauses. Part 1 of the Contract Particulars sets out the general particulars required for both the Articles
and the Conditions; Part 2 contains the entries relating to Third Party Rights and Collateral Warranties.

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Recitals
14

The Recitals require insertion of a brief description of the Works, identifiers of the Contract Drawings or of their
listing and a brief description of the Contractors Designed Portion (if applicable).

15

Deletions are to be made if a priced Activity Schedule (Q and XQ versions only) or an Information Release
Schedule is not provided or if the Works are not divided into Sections.

16

The JCT would again stress the need for proper identification of drawings intended to form the Contract Drawings
and, where there is a Contractors Designed Portion, the documents that are to comprise the Employers
Requirements and Contractors Proposals respectively. It would also stress the need to check for consistency
between them. Last minute changes are often inevitable but the constituent documents need to be checked before
execution. The fact that identifiers are not always changed to reflect the change in a drawing or document
reinforces the desirability of initialling or signing the relevant documents for identification purposes.

Articles
17

The Articles remain substantially the same as those in the 2005 edition, with Articles 1 and 2 summarising the
primary obligations under the Contract, Articles 3 to 6 dealing with relevant contractual and statutory appointments
and Articles 7 to 9 with dispute resolution.

18

The sole change has been the extension of the Article 6 appointment of Principal Contractor to cover not only the
appointment under CDM Regulations but also the appointment under the Site Waste Management Plans
Regulations 2008. The latter regulations apply where the estimated project cost is greater than 300,000.

19

In terms of Article 7 (Adjudication) and clause 92 of the Conditions, care needs to be taken when SBC 2011 is
used for a contract to be let by a residential occupier within the meaning of section 106 of the Construction Act (i.e.
a contract which principally relates to operations on a dwelling which one or more of the parties to the contract
occupies, or intends to occupy, as his or her residence). Part 2 of that Act does not apply to contracts with
residential occupiers, so that the Architect/Contract Administrator may be under a professional duty to advise
clients accordingly, in particular with respect to adjudication and the question as to whether that Article and clause
should be deleted.

20

Article 8 (Arbitration) applies only if the Contract Particulars specifically state that it and clauses 93 to 98 apply. If
they do not apply (and subject to either Partys right to refer any dispute to adjudication or subsequently to agree to
arbitration) final resolution of disputes will, if necessary, be a matter for the courts.

Contract Particulars
21

Part 1 (General) and Part 2 (Third Party Rights and Collateral Warranties) both remain substantially in their SBC
2005 (Revision 2) form, with only minor adjustments, all in Part 1.
Part 1

22

In relation to the Eighth Recital entries for the Supplemental Provisions, these provisions are generally intended to
be disapplied only where there is a Framework Agreement or other contract documentation that covers the same
ground. More detailed coverage of such issues is commonplace but is often quite properly contained in the
Preliminaries rather than the contract conditions.

23

To reflect amendments to the Construction Act, the clause 491 entry now specifies the due dates for interim
payments; the requirement and period for issue of Interim Certificates remain linked to those dates.

The Joint Contracts Tribunal Limited 2011

SBC/G 2011

Page 3

24

There is an additional entry for clause 610 and Schedule 3 in relation to the revised Terrorism Cover provisions.
Pool Re Cover is the default requirement and the entry is primarily for the very limited number of cases where open
market cover is selected in lieu. However, should occasion arise where there are particular requirements in relation
to Pool Re Cover over and above those in clause 610, the entry may also be used to record or refer to them.

25

In relation to Professional Indemnity insurance and the entries for clause 612, relevant where there is a
Contractors Designed Portion, the entries relating to asbestos and fungal mould have been deleted. Cover for
those items is limited and not readily available to main contractors in their own right. If such cover is required for
any consultants appointed by, or whose appointments are to be novated to, the Contractor, the point may
appropriately be covered in the Employers Requirements.

26

Similarly, asbestos removal work can only be undertaken by certified specialists; they should have access to the
insurance schemes specifically set up for their industry and the arrangements with respect to such cover should be
checked by the Parties respective insurance advisers.

27

The entry for a required amount of cover for pollution and contamination claims remains but, if such cover is
required, that must be expressly stated.

28

In relation to the clause 921 entry relating to Adjudicator nominating bodies, it will be seen that there are two
minor changes. The first reflects the replacement of the Construction Confederation as a member of the JCT by its
successor, Contractors Legal Grp Limited, whose nominating body trades as constructionadjudicators.com; the
second merely reflects the change of name of the National Specialist Contractors Council nominating body to the
Association of Independent Construction Adjudicators. The latter remains associated with the National Specialist
Contractors Council.

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Part 2
29

To avoid subsequent disputes and delays, it is important that full details of the requirements for Third Party Rights
and Collateral Warranties be given to prospective contractors and sub-contractors in the tender process and
properly incorporated in the Contract. Wherever practicable the details should be included in the Contract
Particulars themselves; the Standard Building Sub-Contracts are predicated upon these (Main) Contract Particulars
being made available in substantially completed form for sub-contract tendering purposes and it is also clearly
sensible to reduce the number of tender documents involved.

30

If Employers consider it easier to use separate, standard documentation for the third party rights or warranty
requirements, or if in hard copy cases the inclusion of those details is physically impractical, an appropriate entry
can nevertheless be made in the Tables at (A) and (E) stating that the required particulars are set out in the
separate, identified document.

31

In completing the Part 2 Particulars, it should be noted that certain sub-contractor details required for (E) are linked
to details given at (B) and (C) and that the Table in (E) requires an entry indicating the types of warranty that are
required from each specified sub-contractor. Further comments on the requirements are made below in the context
of section 7.

Attestation
General
32

The attestation provisions remain in the standard JCT layout introduced in 2008. This retains separate forms for
execution under hand and execution as a deed. Different attestation provisions are still required under the law of
Scotland (for which the Scottish Building Contract Committee Limited issues Scottish contract forms); other
attestation clauses may also be needed in the case of certain housing associations, partnerships and possibly, as
discussed below, foreign companies.
Execution under hand or as a deed

33

The primary factor governing the decision to execute the Contract under hand or as a deed is whether the limitation
period for instituting proceedings in contract is to be 6 years, as in the case of execution under hand, or 12 years,
where the Contract is executed as a deed. The mode of execution of the Contract will also determine the mode of
execution of collateral warranties (clause 74) and (for both third party rights and collateral warranties) the limitation
period that applies to them.
Foreign companies

34

Page 4

Many foreign companies involved in development and construction now themselves carry on business in the UK,
rather than operating here through UK subsidiaries.

SBC/G 2011

The Joint Contracts Tribunal Limited 2011

35

Under existing Companies legislation, a foreign company can execute deeds either:

by affixing its common seal or any manner of execution permitted under the laws of its place of incorporation;
or

by expressing the document to be executed by the company under the signature of persons authorised to sign
on its behalf in accordance with its domestic law.

Many foreign companies do not have a seal and the authority of relevant signatories needs to be checked. If there
is any doubt, professional advice should be obtained.

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36

To avoid complications in the service of claims or notices outside the jurisdiction, consideration should also be
given to inserting an obligation on the foreign company for the duration of the Contract to maintain an agent for
service within England and Wales or within Scotland or Northern Ireland, where appropriate.

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SBC/G 2011

Page 5

Conditions
Section 1 Definitions and Interpretation
Definitions (clause 11)
37

Clause 11 contains few changes from SBC 2005. Four of the five additional defined terms (Interim Application,
Interim Payment Notice, Final Payment Notice and Pay Less Notice) follow from the changes in section 4 that
reflect the amendment of the Construction Act; the fifth (SWMP Regulations) follows from the extension of Article 6
referred to above. The term Pay Less Notice reflects the phrase in the amended section 111 (notice ... to pay less
than the notified sum), presumably adopted to avoid further debate on the distinction between deductions and
withholding to which the Construction Act gave rise in its original form.

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Interpretation (clauses 12 to 111)


38

This sub-section of SBC 2011 contains similarly few changes from SBC 2005. Clause 145 has been extended to
reflect the increasing devolvement of legislation; clause 18 has been abbreviated; and there are very minor
deletions in clauses 192 to 194 consequent on wider changes necessary in the corresponding clause of the JCT
Design and Build Contract. The Applicable law provision has now become clause 111, consequent on the deletion
of the SBC 2005 clause 111 (Disputes or differences), the latter being redundant as a result of the new statutory
status accorded to Contractors applications/payment notices where payment certificates are not issued on time.

39

In terms of clause 19, a corollary of the strict statutory time limits for issue of Architect/Contract Administrators
payment certificates is that the Final Certificate must be issued on time if it is to have its intended effects, i.e. within
the two month period specified in clause 4151.

Section 2 Carrying out the Works


40

Section 2 remains substantially in its SBC 2005 form, dealing sequentially with various aspects of the construction
process, starting with the Contractors basic obligations with respect to the carrying out and completion of the
Works. Minor consequential changes apart, the only change in the section is the insertion in clause 229 (Relevant
Events) of a new sub-clause (4) and the renumbering of subsequent sub-clauses; the new sub-clause is intended
to make it clear that the entitlement to an extension of time in relation to a find of antiquities also relates to the
period before instructions are given, as in the case of loss and expense under clause 423.
Contractors obligations (clauses 21 to 23 and Supplemental Provisions 1, 4 and 5)

41

Clause 21 develops the Contractors principal obligation under Article 1. It requires that the Works be carried out in
a proper and workmanlike manner and in compliance not only with the Contract Documents but also with the
Construction Phase Plan and other Statutory Requirements, e.g. development control requirements, local bye-laws
and health and safety legislation generally, including CDM Regulations. The Contractor is also required to give all
notices required by the Statutory Requirements, e.g. those under building regulations, those to the local authority in
relation to the operation of the site and any required in relation to health and safety matters, including incident
reports.

42

Clause 22 sets out further specific obligations in respect of the design of the Contractors Designed Portion, i.e. to
complete the design in a manner consistent not only with the Employers Requirements and Contractors
Proposals, but also (so far as relevant) with the Contract Drawings and Contract Bills (Q and AQ versions) or
Specification/Work Schedules (XQ version) and with Architect/Contract Administrators instructions on integration
into the overall design of the Works. Clause 23 then makes provision with regard to materials, goods and
workmanship.

43

Unless disapplied, Supplemental Provision 1 in Schedule 8 makes certain provisions for collaborative working;
Supplemental Provision 4 encourages Contractors suggestions for improving environmental performance and
makes further provision for the supply of environmental impact information in relation to materials and goods
selected by the Contractor; Supplemental Provision 5 covers KPIs and their monitoring.
Possession (clauses 24 to 27)

44

Page 6

The sub-section covers the transfer to the Contractor of possession and, in effect, control of the site. This covers
the period up to practical completion, subject to:

SBC/G 2011

The Joint Contracts Tribunal Limited 2011

the Employers possible option to defer giving possession for a specified period not exceeding 6 weeks (the
Contractor being entitled to recover any loss and/or expense arising from a permitted deferral; deferral where
the option does not apply or for longer than the permitted period is a breach);

the Contractors obligation not unreasonably to refuse the Employer the right to use or occupy the site or part
of it for storage or other purposes prior to practical completion, if the Works insurers consent; and

the Contractors obligations to allow the Employer or other contractors on the latters behalf to carry out other
work on site where the requirement has been sufficiently described in the Contract Documents, and not
unreasonably to withhold or delay his consent to such work being carried out even where sufficient information
has not been given to him in advance.

(Employers use or occupation for storage or other purposes under clause 26 should be distinguished from partial
possession being retaken by the Employer under clause 233; the latter is treated as practical completion of the
part repossessed. If there is any part of the Employers land adjacent to the Works which the Contractor may
require to use on a purely temporary basis and not for the full duration of the Works or a Section, that area should
generally be excluded from the site for these purposes; its use (and any necessary insurance arrangements)
should be the subject of a separate arrangement.)

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Supply of Documents, Setting Out etc. (clauses 28 to 212 and Schedule 1 (Contractors Design
Submission Procedure))
45

At clause 28 this sub-section covers the Contract Documents, access to them and confidentiality. Clause 29
provides for the supply of further construction information, including Contractors Design Documents, levels and
setting out dimensions, and the Contractors master programme. The Architect/Contract Administrator is
responsible for supplying information from the Employers side in accordance with the Information Release
Schedule and is also required under clause 212 to issue timely instructions to enable the progress of the Works to
be maintained.

46

The Contractor is to supply his design documents as and when necessary and in accordance with the Contractors
Design Submission Procedure set out in Schedule 1 or as otherwise stated in the Contract Documents. The
procedure can be tailored to the particular project but it is extremely important that the Contractor should not
undertake work to which his particular designs relate until he has complied fully with the procedure. If he fails to do
so, he risks not being paid for the work in question (see paragraph 6 of Schedule 1).

47

Clause 291 includes the option of requiring critical path information in the Contractors master programme
(exercisable through the appropriate Contract Particulars entry). If that information is required, it extends also to the
updates of the Contractors programme that are required after any decision on the Completion Date or any Preagreed Adjustment of it. Insofar as they merely supplement the Articles and Conditions, other information
requirements relating to the programme may be included in the Contract Documents; those requirements are a
common feature of Preliminaries.

48

Under clause 210 (Levels and setting out), the Architect/Contract Administrator has power to make an appropriate
adjustment of the Contract Sum for errors by the Contractor that are not required to be amended, but acceptance of
the defect specifically requires Employers consent. (A similar arrangement applies also in the context of clauses
238 and 3182.)
Errors, Discrepancies and Divergences (clauses 213 to 218)

49

The sub-section deals in detail with the requirements for notification of errors, discrepancies and divergences
discovered in Contract Documents and instructions, either in or between themselves or in relation to the Statutory
Requirements; it also deals with the cost of remedial action. Again the Architect/Contract Administrator is required
to give prompt instructions.

50

Subject to two exceptions, the general principle on cost is simple; it is borne by the Party responsible for the
document in question. If the Contract Bills contain undisclosed departures from SMM 7, or if there is a Contractors
Designed Portion and there are inadequacies in the Employers Requirements (or in designs contained in them)
which are not dealt with in the Contractors Proposals, the Employer is responsible for the cost of the necessary
Variation; the Contractor is responsible for errors, discrepancies and divergences in the Contractors Proposals, in
his CDP Analysis and in any other design work he carries out.

51

The two exceptions arise in relation to divergences from the Statutory Requirements. The first, under clause 217,
is that the Contractor is responsible for checking that the Employers Requirements and any instructions relating to
the Contractors Designed Portion conform to the Statutory Requirements in the same way that his own CDP
Documents must. However, by the further exception, the Employer assumes the risk of any divergences between
the Statutory Requirements and any CDP Documents, whether they are Contractors documents or Employers
documents, if the divergence arises from a change in Statutory Requirements after the Base Date and that change
necessitates an alteration in the Contractors Designed Portion.

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SBC/G 2011

Page 7

Contractors Design Work and Liability (clauses 219 and 220 and Supplemental Provision 3)
52

This sub-section follows on from clause 22 and deals with the Contractors liability in respect of his CDP design
work. Under JCT contracts, this is intended to be the same as that of any independent architect or other
professional designer directly employed by the Employer and claiming to be competent to undertake work of this
type. There is, under clause 2193, an optional provision for an overall cap on liability for loss of use, loss of profits
and other consequential loss arising from any inadequacy in the Contractors design work: this does not limit or
affect liability for direct loss, including the cost of remedial work or, where the consequences of the inadequacy are
irremediable, the resultant diminution in value of the Works.

53

Unless disapplied, Supplemental Provision 3 (Cost savings and value improvements) applies whether or not there
is a Contractors Designed Portion. It is of course generally in the pre-construction phase, rather than the
construction phase covered by SBC 2011, that the Contractor is able to make his most useful contribution to value
engineering exercises and it is to cover that phase that JCT has produced its two Pre-Construction Services
Agreements (PCSA and PCSA/SP). However, opportunities do arise later, often in the context of proposed
variations, and it is not unreasonable that Contractors whose ideas make for material savings or improvements
should receive a fair share of the benefits. A basic safeguard for Contractors ideas can be built in but it has to be
recognised that there are considerable problems in assessing those benefits and that lengthy periods frequently
have to elapse before they can properly be assessed. This makes positive formulation of benefit sharing
arrangements very difficult. When making suggestions, Contractors should take care to avoid accidental
assumption of design liabilities, particularly in cases where they otherwise have no design role.

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Fees, Royalties and Patent Rights (clauses 221 to 223)


54

Statutory fees, e.g. building regulation notification and inspection fees, are under clause 221 to be paid by the
Contractor. In the Q and XQ versions, they are his liability where they relate solely to the Contractors Designed
Portion; if they relate to the Works generally, they are to be reimbursed to him by the Employer, unless as a term of
the tender they are included in the Contract Sum. Under AQ, they are in any event to be included in the
Ascertained Final Sum and reimbursed.

55

In the case of the Works as originally designed or specified, any patent-related royalties or other payments to third
parties are deemed to be included in the Contract Sum; it is only where supply or use is required by a subsequent
instruction that the Contractor has right to reimbursement. Such cases are rare; if there is any question as to
whether a requirement may involve use or infringement of third party patent rights, the matter should be raised with
the Employer and the Architect/Contract Administrator before entry into the Contract or implementation of the
instruction, as the case may be. The provision does not extend to copyright or design right infringement, which
remains governed by general law.
Unfixed Materials and Goods (clauses 224 and 225)

56

The sub-section concerns the transfer to the Employer of property in Site Materials and Listed Items on payment to
the Contractor and the concomitant restriction on removal from site. This in practice is a matter which in a majority
of cases involves sub-contractors, so that the flow-down of these conditions required by clause 392 is generally
essential in cases of sub-contracts for work and materials. For Listed Items, the pre-conditions of payment are set
out in clause 417.
Adjustment of Completion Date (clauses 226 to 229 and Schedule 2)

57

The sub-section sets out the provisions governing extensions of time in all cases other than those where there is a
Pre-agreed Adjustment, i.e. agreement on an extension of time or for acceleration under the Schedule 2 quotation
procedures. In clause 229, SBC 2011 includes the minor extension to the list of Relevant Events mentioned above
in the introductory comments on Section 2.

58

Following the clause 226 definitions, clause 2271 sets out the Contractors obligation to notify: it should be noted
that the obligation arises not merely when progress is being delayed but when it becomes reasonably apparent that
it is likely to be delayed, and also that it arises in relation to any cause of delay or likely delay. The obligation is not
restricted merely to Relevant Events that entitle the Contractor to an extension (i.e. those listed in clause 229) nor,
where that likelihood exists, is it limited to events that have already occurred.

59

The obligation is to notify all the material circumstances, including the expected effects (clause 2272) and
thereafter to update the information given, as well as supplying any further information reasonably required (clause
2273). The Contractor must also use best endeavours both to prevent delay (or further delay) and, if that occurs,
do everything reasonably required to proceed (clauses 22861 and 22862).

60

On being duly notified, the Architect/Contract Administrator has power and, where appropriate, a duty to grant
extensions under clause 2281, though it is only to grant such extension as he considers fair and reasonable. The
Architect/Contract Administrator should reach a decision as soon as reasonably practicable (clause 2282). Where
there has been a Relevant Omission, as defined in clause 2273, he also has power under clause 2284 to fix an
earlier Completion Date. However he can exercise the latter power only where there has already been an extension

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of the original Completion Date, either through an earlier decision or by a Pre-agreed Adjustment, and he cannot do
so in such a way as to affect the length of any Pre-agreed Adjustment unless the omission is from the work that
formed the subject of that adjustment (clause 22864). In no circumstances may the date fixed by such a decision
be earlier than the Date for Completion given in the Contract Particulars.
61

In addition, under clause 2285, the Architect/Contract Administrator has not merely the power (as from the
Completion Date) but also the duty, immediately following practical completion, to review the overall position with
respect to extensions of time. In that review he may look at all the circumstances, including Relevant Events that
may not have been specifically notified under clause 2271 and has power to do what he considers fair and
reasonable, either by fixing a later or (for Relevant Omissions) an earlier Completion Date or by confirming the
existing date.

62

The provision for overall review appears frequently to be overlooked. It provides an opportunity for proper reflection
and assessment and is, in the JCTs view, essential. Without such a review, decisions made in the course of the
Works sometimes made in a short space of time and without a full knowledge of either the facts or the effects of
the various possible causes of delay inevitably risk giving rise to precisely the expensive and wasteful disputes
that the Contract seeks to avoid.

Licensed copy from CIS: heriotwatt, , 07/11/2014, Uncontrolled Copy.

Practical Completion, Lateness and Liquidated Damages (clauses 230 to 232)


63

The sub-section requires the Architect/Contract Administrator to issue a Practical Completion Certificate or Section
Completion Certificate when the Works or Section achieves practical completion and the Contractor has fulfilled his
obligations with respect both to as-built drawings and to health and safety file matters (clause 230). Where there
are Sections, good practice dictates issue of the Practical Completion Certificate for the Works at the same time as
the last Section Completion Certificate, but there is no reason why these should not form a single document.

64

The sub-section also requires the issue of a Non-Completion Certificate if the Contractor fails to achieve practical
completion by the relevant Completion Date (clause 231). In the event of such failure, liquidated damages will
become payable or deductible on notice from the Employer in accordance with clause 2322 provided that a
subsisting Non-Completion Certificate has been issued and provided that the Employer himself has notified the
Contractor in advance that he may require payment or make a withholding or deduction of such damages (clause
2321).

65

Grant of an extension of time requires cancellation of a Non-Completion Certificate and, within a reasonable time,
repayment of any liquidated damages insofar as they relate to the period of the extension; it also requires the issue
of a further certificate in respect of any residual period of default. Users should note the time limits for service both
of the warning notification (clause 23212) and of the notice of the claim itself (clause 2321, hanging paragraph);
they should also note that, where the Employer intends to withhold or deduct all or any of the liquidated damages
payable, he must also give a Pay Less Notice under clause 4125, 4154 or 41563 in order to comply with
section 111(3) of the Construction Act.
Partial Possession by Employer (clauses 233 to 237)

66

As indicated above, there is provision at clauses 26 and 27 whereby the Contractor may during the progress of
the Works be obliged to accommodate use and occupation of parts of the site by the Employer for storage or other
purposes and work by others that falls outside the Contract. Clause 26 contains a pre-condition as to insurance,
but the clauses otherwise have no effect on the operation of other terms of the Contract.

67

Clause 233, on the other hand, is concerned with outright repossession of part(s) of the site in advance of practical
completion, which has the consequences set out in clauses 234 to 237, i.e. deemed practical completion of the
relevant parts, commencement of the Rectification Period in respect of them, followed by a separate Certificate of
Making Good, responsibility for insurance of the part(s) in question immediately passing to the Employer and a
reduction (pro rata to value) in the rate of liquidated damages.

68

The clause 233 right can be of benefit to Employers in relation to discrete areas of the site, where use and
occupation will not impede the Contractor in managing the site and his completion of the Works as a whole, but it
should not be invoked without proper liaison and due consideration of its possible effects.
Defects (clauses 238 and 239)

69

Clauses 317 to 319 set out the Architect/Contract Administrators powers with regard to actual and suspected
defects arising during the progress of the Works: this sub-section gives him power to specify and require remedial
action in respect of defects that become apparent in the Rectification Period. This latter power is exercisable both
through an overall Schedule of Defects (clause 2381) and by instructions in respect of individual defects (clause
2382). The schedule or notice in each case must be given or delivered not later than 14 days after the expiry of
the Rectification Period. A Schedule of Defects should be comprehensive since, in the interests of a properly
managed rectification programme, the clause 2382 power in respect of individual defects ceases when that
schedule is served.

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70

As under clauses 210 (Setting out) and 3182 (Work not in accordance with the Contract), if the Employer agrees
to defective work being allowed to remain, the Architect/Contract Administrator has power to make an appropriate
adjustment to the Contract Sum. Clause 239 then sets out his obligation to issue the Certificate of Making Good.
Under clause 49, unless the Parties are in the happy position of there having been no defects requiring the issue
of instructions or a Schedule of Defects, it is issue of the Certificate of Making Good that triggers the final Interim
Certificate and final release of Retention (see clause 4203). It also normally starts the Final Certificate timetable
under clause 4151.
Contractors Design Documents (clauses 240 and 241)

71

The sub-section deals first with the supply of as-built drawings. As noted in the context of clause 230, this is a precondition to issue of the Practical Completion Certificate or a Section Completion Certificate where there is a
Contractors Designed Portion. The sub-section then sets out the terms and conditions of the Employers licence to
use Contractors Design Documents. The licence is in substantially the same terms as that granted to Purchasers,
Tenants and Funder under Schedule 5 or the relevant collateral warranty; it is conditional upon the Contractor
having been paid in full.

Section 3 Control of the Works

Licensed copy from CIS: heriotwatt, , 07/11/2014, Uncontrolled Copy.

72

The section deals with most of the principal control issues other than the performance-related matters dealt with in
section 2 and payment-related matters dealt with in section 4. It consists of four sub-sections, namely Access and
Representatives; Sub-Contracting; Architect/Contract Administrators instructions; and CDM Regulations. The only
amendment to it in SBC 2011 is the minor clarification in clause 3924.
Access and Representatives (clauses 31 to 36)

73

For the purpose of inspecting work and the conditions under which it is being undertaken, clause 31 requires
reasonable access for the Architect/Contract Administrator and his nominees to the Works and the Contractors
premises and, so far as practicable, similar access to sub-contractors premises (a point reflected in clause 392).

74

In terms of representatives (clauses 32 to 34), the Contractor is obliged to maintain a competent person-in-charge
on site, who is also required to act as his agent there for receiving instructions and directions. The Employer has
power to appoint a representative and/or a clerk of works. Unless the Contractor is notified otherwise, the
Employers representative will be deemed to have full power in respect of the functions that the Conditions ascribe
to the Employer; on the other hand, the clerk of works powers of direction are dependent on Architect/Contract
Administrators written confirmation being issued in respect of such directions within 2 working days of their issue.

75

As indicated in the footnote to clause 33, the Architect/Contract Administrator and the Quantity Surveyor should
not act as Employers representative; there is clearly a potential conflict between such a role and their obligation to
act in a fair and professional manner in administering the Contract.

76

Where it becomes necessary to appoint a replacement Architect/Contract Administrator or Quantity Surveyor,


clause 351 requires the appointment to be made speedily, within 21 days, and, except in local government cases
where a council official is appointed, the Contractor has a right of reasonable objection to the replacement.

77

Clause 352 reinforces the point that a replacement Architect/Contract Administrator is bound by the acts of his
predecessor and that any reversal or change in them requires due observance of contractual procedures. On the
other hand, as clause 36 is intended to make clear, neither inspections by the Architect/Contract Administrator or
clerk of works nor (subject to clause 19) the issue of any certificate affects or limits the Contractors obligation to
carry out and complete the Works in accordance with the Conditions.
Sub-Contracting (clauses 37 to 39)

78

Sub-contracting by the Contractor requires Architect/Contract Administrators consent in the case of work and
Employers consent where it concerns design of the Contractors Designed Portion, though in neither case is it to
be unreasonably delayed or withheld (clause 37).

79

The JCT 98 provisions for nominated sub-contractors, which were unavoidably somewhat cumbersome and tended
to obscure issues of responsibility have been omitted from the Contract since 2005. However clause 38 retains
provision for a list of three or more approved sub-contractors for each relevant work package indentified in the
Contract Bills or (in the XQ version) the Specification or Work Schedules.

80

The Contractor retains power to select the sub-contractor from the list, since he remains fully responsible for the
sub-contractors work, but the procedure gives the Employer a degree of control over the selection of specialists
and some reassurance as to their competence.

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81

The JCT continues to keep the question of pre-selection under review, but, even in those cases where an
Employers selected or preferred specialist is acceptable to the Contractor, it is desirable that there should also be
the measure of agreement between the Parties as to possible alternatives that the list of three procedure inherently
involves. There is always the possibility (particularly in the case of work later in the programme) that, by the time
that the sub-contract is due to be entered into, the pre-named or pre-agreed specialist may have other priorities,
may have undergone an unwelcome change of control, may have lost key personnel or capabilities and/or be
materially less secure in financial terms.

82

Clause 39 sets out the minimum conditions required of any sub-contract, namely automatic termination of the subcontractors employment upon termination of the Contractors employment and sub-contract provisions that are
compatible with the main contract with respect to vesting and control of Site Materials, access to workshops, CDM
Regulations, interest on late payments and execution of sub-contractors collateral warranties.

Licensed copy from CIS: heriotwatt, , 07/11/2014, Uncontrolled Copy.

Architect/Contract Administrators instructions (clause 310 to 322 and Schedule 4)


83

The sub-section commences with the general requirement that the Contractor should forthwith comply with all
instructions (clause 310). In clause 311 it outlines the consequences of failure to do so in terms of liability for the
Employers additional costs. It then sets out in clauses 312 and 313 the procedures to be followed if the
Architect/Contract Administrator gives oral instructions or if there in the Contractors view is doubt as to the
Architect/Contract Administrators power to issue particular instructions.

84

The only express exceptions to the requirement for immediate compliance are in clauses 3101 and 3103. The
first of those applies where the instructions relate to a Variation within clause 512 (i.e. one that relates to site
access, imposes any limitation on working space or hours or affects the order of working) and operates if the
Contractor makes reasonable written objection to compliance. The second relates to instructions that have an
injurious practical effect on the design of the Contractors Designed Portion and, again, notice is required, though
subsequent confirmation of the instruction by the Architect/Contract Administrator requires immediate compliance
by the Contractor.

85

The sub-section then lists the Architect/Contract Administrators powers and duties in relation to specific types of
instruction. Provision for certain types of instruction, including a duty to issue those necessary to enable the
Contractor to carry out and complete the Works or to resolve discrepancies and divergences and those relating to
defects have already been made in section 2 (see, e.g., clauses 2121, 215, 2172 and 238).

86

Those contained in section 3 relate to the other key instructions, i.e. the power to instruct Variations and
postponement, the duty to give instructions on Provisional Sums, the powers in relation to opening up and testing,
non-compliant work or workmanship, and also in relation to finds of antiquities. There is also power to exclude
persons from the site. Where work, materials or goods are not in accordance with the Contract, the
Architect/Contract Administrator, if he wishes to issue instructions under clause 317 for opening up and testing to
establish whether there is more extensive non-compliance, is required by clause 3184 to have regard to the Code
of Practice set out in Schedule 4.

87

In relation to executed work comprising materials, goods or workmanship that are required to be to the
Architect/Contract Administrators satisfaction, it will be noted that under clause 320 he is under a duty to give
reasons for any dissatisfaction within a reasonable time.
CDM Regulations (clauses 323 and 324 and Supplemental Provision 2)

88

The sub-section provides specific contractual cross-undertakings by the Parties to comply with their respective
duties under CDM Regulations since failure to observe them may constitute grounds for termination. It highlights
certain of those duties, e.g. the Principal Contractors obligations with regard to welfare facilities and the obligation
to inform him of sub-contracting arrangements; it also provides for the supply of necessary information to the CDM
Co-ordinator and Principal Contractor at no cost to the Employer.

89

General Health and Safety matters, which as Statutory Requirements are in any event also covered by the
Contractors obligations under clause 21, are augmented by Supplemental Provision 2, unless it is disapplied.

Section 4 Payment (and Schedule 6 Forms of Bonds)


90

The section remains divided into six sub-sections Contract Sum and Adjustments (in the AQ version, Price and
Adjustments); Payments, Certificates and Notices; Gross Valuation; Retention; Fluctuations; and Loss and
Expense.

91

Within the Payments, Certificates and Notices sub-section, the amendments to the Construction Act have involved
substantial redrafting of clauses 49 to 415 and, in addition to consequential amendments, SBC 2011 further
simplifies the text in certain other areas. However, there has been no change in the general format.

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92

The forms of the three bonds referred to (the Advance Payment, Off-site Materials and Goods (Listed Items), and
Retention bonds) are set out in Schedule 6. Employers approval of the proposed surety for each bond required
should wherever practicable be obtained before the Contract is executed.

Licensed copy from CIS: heriotwatt, , 07/11/2014, Uncontrolled Copy.

Contract Sum and Adjustments (clauses 41 to 45)


93

This sub-section deals with the basic principles of adjustments to the Contract Sum or, in the AQ version (which is
based on complete re-measurement) the calculation of the Ascertained Final Sum.

94

Clause 41 defines the quality and quantity of work included in the Contract Sum or, in the AQ version, that
included in the Tender Price; in the XQ version the clause has been slightly simplified. Clause 42 limits adjustment
to the express provisions of the Conditions and, in the Q and XQ versions, expressly states that any error in the
computation of the Contract Sum is accepted by the Parties. There is no contractual provision or mechanism for
correcting erroneous rates or unit prices in the Contract Bills or other Priced Document and those rates and prices
will continue to form the basis for any valuation of work of a similar character under the Valuation Rules.

95

Clause 43 in each case continues for convenience to list the various adjustments that are provided for in the
Conditions, with clause 44 then providing for the amount of each adjustment, when ascertained, to be reflected in
the next Interim Certificate. This is intended to apply both to monthly payments and to stage payments.

96

Clause 45 covers the final adjustment (final computation in the AQ version), with the relevant statement and
ascertainment to be provided to the Contractor within 3 months of the Contractors submission of the necessary
documentation; that documentation should itself be supplied within a maximum of 6 months after practical
completion of the Works. Where there are Sections, the JCT recognises that there may be practical difficulties in
following the procedure on completion of each Section but, where that is practicable and in order to reduce the
scope for later disagreements, the JCT would encourage the Parties to consider that course.
Payments, Certificates and Notices (clauses 46 to 415)

97

The sub-section commences with the standard JCT provisions with regard to VAT and the CIS and the optional
provisions for an advance payment and bond.

98

In terms of payments, a new sub-section (1D) inserted in section 110 of the Construction Act effectively requires
due dates to be fixed they can no longer simply be the date that a certificate is issued or a notice is given to the
payee. Clause 49 in the 2011 edition therefore starts by defining the due dates for interim payments and then
provides at clause 410 for the issue of Interim Certificates not later than 5 days thereafter, the maximum period
allowed under section 110A, itself also a new provision. The periods between due dates remain the same as in
SBC 2005 Revision 2, i.e. one month intervals up to practical completion and, unless otherwise agreed, intervals of
two months thereafter.

99

The amount due as an interim payment (clause 492) remains essentially the same, i.e. Gross Valuation less the
aggregate of the Retention, the cumulative total amount of any advance payment that has then become due for
repayment and the amounts shown as due in previous certificates. At clause 4924 SBC 2011 adds a provision for
deductions also to be made in respect of any sum paid by the Employer under the Acts default mechanism that
has not been reflected in a previous certificate. The reason for the addition is that the time limit for a certificate may
in certain circumstances be tight and the deadline may innocently be missed on occasion, e.g. through illness or a
sudden vacancy: this additional deduction enables the certification process to resume and catch up, without an
Employer who has duly paid otherwise being forced to give Pay Less Notices at every subsequent payment date
during the life of the Contract or to enter into a supplemental agreement with the Contractor to validate an out-oftime certificate.

100

Save as mentioned below, the final date for payment remains 14 days from the due date.

101

Clause 411 sets out the default mechanism now provided by section 110B of the Act. Subject to one point of
difference, it is essentially an extension of the long-standing provisions for Contractors applications. If the
Contractor makes an application not less than 7 days before the due date stating what he considers to be the sum
due to him at the due date in accordance with clause 492 and there is a failure to issue the certificate in due time,
then, under clause 4123, that serves as an Interim Payment Notice and the sum payable by the Employer will be
the amount stated by the Contractor, unless the Employer not later than 5 days before the final date for payment
issues a Pay Less Notice in accordance with clause 413.

102

Similarly, if the Contractor has not made an application 7 days or more before the due date and the certificate is not
issued in time, he may on or after expiry of the period for issue of the certificate give an Interim Payment Notice in
similar terms. Again, unless the Employer gives a Pay Less Notice, the sum payable will be the amount stated in
the Interim Payment Notice, but the final date for payment will be postponed by the number of days after expiry of
that period that the Contractor gives that notice.

103

The point of difference referred to above in relation to clause 411 is that indicated by the italicised words.
Previously a Contractors application under the Contract needed only to show the Gross Valuation but section 110B

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refers to the sum due, i.e. the Contractors application or payment notice should in addition to the Gross Valuation
show also the deductions under clause 492 and the net amount considered to be due.
104

The provisions for the payment of interest in the event of failure to pay the whole or part of the sum due as an
interim payment is now at clause 4126. In SBC 2011, the provisions of the former clause 4137 in SBC 2005,
covering interest in cases of failure to certify, and the corresponding provisions of clause 4157 in relation to the
Final Certificate have been deleted since the matter is now dealt with by the Contractors application/payment
notice mechanism. If the Contractor makes a prior application he suffers no loss of interest; if he gives timely notice
in the event of a failure to issue the certificate, the loss is minimal.

105

Clause 414 sets out the Contractors statutory right of suspension, exercisable after a warning notice; this has
been extended to reflect, in wording close to that of the amended Construction Act, the Contractors new statutory
right to reasonable costs and expenses, previously dealt with as Loss & Expense under clauses 423 and 424.

106

Clause 415 provides for issue of the Final Certificate, the effects of which are set out in clause 19. However, to
bring about the closure envisaged by clause 19, the Final Certificate must be issued on time, within the two month
period specified in clause 4151.

Licensed copy from CIS: heriotwatt, , 07/11/2014, Uncontrolled Copy.

Gross Valuation (clauses 416 and 417)


107

Clause 416 provides a straightforward basis for calculating amounts that have fallen due under the Contract prior
to making the clause 492 deductions. This makes a simple division for the purposes of clauses 492 and 418 as
between items that are subject to Retention, i.e. work materials and goods (excluding insurance repair items), and
those additional amounts that are not subject to Retention; it then nets off any applicable deductions provided for in
the Conditions that have been ascertained or fixed by the Architect/Contract Administrator, excluding those referred
to in clause 492 and any that may arise under clause 617.

108

Clause 417 sets out the pre-conditions for the inclusion of Listed Items in the valuation.
Retention (clauses 418 to 420)

109

Clause 418 sets out the fiduciary basis of retentions, coupled with the accounting requirements and the
Contractors option (other than in Local Authority cases) of requiring a separate bank account for any retention
made. (Clause 4184 of SBC 2005 has been omitted on the basis that the amount of any withholding against
Retention should be clear from the Pay Less Notice, when read against the latest certificate and statement under
clause 4182.)

110

Clause 419 sets out the terms governing the alternative option of a Retention Bond, for which there is an
appropriate entry in the Contract Particulars.

111

Clause 420 specifies the default percentage rates of retention. Application of the rules in clauses 4202 and 4203
in conjunction with clauses 410 and 416 should result in the release of one half of the Retention under the interim
certificate issued on or immediately following practical completion and of the remaining half under the certificate
issued with the Certificate of Making Good.
Fluctuations (clauses 421 and 422 and Schedule 7)

112

SBC 2011 retains the three Fluctuations Options without material amendment.
Loss and Expense (clauses 423 to 426)

113

Clause 423 expressly entitles the Contractor by written application to claim loss and expense that he incurs either
as a result of any deferment of possession under clause 25 or (subject to express exclusions in the Conditions)
because the regular progress of the Works or any part of them has been or is likely to be materially affected by any
of the Relevant Matters.

114

The Relevant Matters are listed in clause 424. They include Variations, other than those under the Variation
Quotation procedure (where loss and expense is to be included in the quotation). They also include instructions for
postponement, expenditure of provisional sums (where not for defined work), opening up or testing (except where
required to be provided for, or in cases of non-compliant work, etc.), instructions in relation to discrepancies or
divergences; actions and instructions relating to antiquities; material inaccuracy in any Approximate Quantities; and
impediment, prevention or default on the part of the Employer or those for whom he is contractually responsible. As
mentioned above in relation to clause 414, the Contractors statutory right to recover the reasonable costs and
expenses of suspension for non-payment is now dealt with in that clause and such suspension has been removed
from the list of Relevant Matters.

115

Loss and expense ascertained under clause 423 is added to the Contract Sum (or, in the AQ version, in the
Ascertained Final Sum). The provisions do not affect any other rights or remedies of the Contractor but for loss and
expense claims he is obliged, as for extension of time claims, to make his application as soon as the likelihood of

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an effect on progress has become (or should have become) apparent and, on request, to supply such further
information as is reasonably required.

Section 5 Variations
116

The section (in the AQ version entitled Measurement and Valuation) is divided into two sub-sections, the first a
General sub-section which includes at clause 51 the definition of Variations, and the second comprising the
Valuation Rules.

Licensed copy from CIS: heriotwatt, , 07/11/2014, Uncontrolled Copy.

General (clauses 51 to 55 and Schedule 2)


117

The clause 51 definition of Variations divides into two parts: the first, in clause 511, consists in alteration or
modification of the design, quality or quantity of the work; the second, the imposition or alteration of obligations or
restrictions affecting either access or time, method or order of working. (The Contractors clause 3101 right of
reasonable objection, excusing immediate compliance with instructions, arises only in relation to the second
category.)

118

Clause 52, in addition to Variations, covers work which is to be treated as a Variation, work under instructions as to
the expenditure of Provisional Sums and work for which there is an Approximate Quantity. In each case the value
may be pre-agreed by the Employer and the Contractor. If they do not agree the value, then, unless they agree on
some other method of valuing the work, it is a matter for a Valuation, i.e. a valuation by the Quantity Surveyor in
accordance with the Valuation Rules. The other method of determining value, short of a Valuation, is through the
Variation Quotation procedure set out in Schedule 2. Clause 53 brings the Variation Quotation procedure into
operation if the Variation instruction requires such a quotation and if the Contractor does not by notice given within
7 days of receiving the instruction object to producing one.

119

If he objects but the Architect/Contract Administrator then confirms the instruction or if the quotation is not accepted
but the instruction stands, the matter reverts to the Quantity Surveyor for a Valuation. If the Contractor makes a
Variation Quotation that is accepted, then, if the Architect/Contract Administrator instructs a further Variation to the
work that forms the subject of that quotation, that again is a matter for the Quantity Surveyor to value, but under
clause 533 (which requires that regard be had to the content of the quotation) rather than under the Valuation
Rules, which are essentially based on the Contract Documents.

120

Clause 54 gives the Contractor the right to be present at any measurement for the purpose of a Valuation.
The Valuation Rules (clauses 56 to 510)

121

Clause 56 (Measurable Work) provides that where the work to be valued is of a similar character to work in the
Contract Bills or (in the XQ version) the Contract Documents, is executed under similar conditions (e.g. as to site
and working conditions) and does not give rise to a significant change in the original quantity, the original rates and
prices apply. If on an objective view there is a significant change in conditions or in overall quantity, the rates and
prices still form the basis for valuation but with a fair allowance for the change(s); if the work is not of a similar
character, fair rates and prices are to be applied, a principle extended in the additional provisions at clause 5101.

122

Clause 57 makes provision for valuing Daywork: where using the Q and AQ versions, the Percentage Additions
and any All-Inclusive Rates applicable should be set out in the Contract Bills; where using the XQ version, there will
be no bills, and the document containing that information should be identified in the Contract Particulars.

123

Clause 58 applies the clause 56 and other principles to variations in the Contractors Designed Portion; these are
valued by reference to the CDP Analysis, where appropriate, and with specific allowance for the addition or
omission of design work. Clause 59 makes consequential provision for any resultant changes in conditions under
which other work, outside the direct scope of the instruction, is executed and there is a general safety-net
provision at clause 5101.

Section 6 Injury, Damage and Insurance (and Schedule 3 Insurance Options)


124

The section takes the form of five sub-sections: Injury to Persons and Property; Insurance against Personal Injury
and Property Damage; Insurance of the Works; CDP Professional Indemnity Insurance; and Joint Fire Code
compliance.

125

In terms of Works insurance, the three Insurance Options (A, B and C) are set out in Schedule 3.
Injury and property damage indemnity and insurance (clauses 61 to 66)

126

Clauses 61 and 62 set out the Contractors liability for personal injury and for injury or damage to property,
coupled with his indemnity to the Employer, subject to the clause 62 and clause 63 exclusions. As part of the

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overall insurance scheme, clauses 62 and 63 exclude liability for loss or damage to the Works, executed work and
Site Materials and, where Option C applies, liability for damage by any of the Specified Perils to the Employers
existing structures/contents prior to practical completion. (It will be noted that clause 632 deals with Sectional
completion.) Those exclusions are followed in the next sub-section by the Contractors clause 64 obligation to
effect insurance against liability under clauses 61 and 62 (i.e. Public Liability cover) with the level of cover (other
than in respect of employers liability insurance) specified in the Contract Particulars.
127

If the Contract Particulars state that insurance under clause 651 may be required and the Architect/Contract
Administrator requests, the Contractor is also required to take out insurance in the joint names of the Employer and
the Contractor in respect of claims against the Employer as a result of damage to property due to subsidence,
weakening or removal of support, vibration or the like arising out of the carrying out of the Works. Cover is to be the
amount stated in the Contract Particulars and is subject to the list of exclusions set out in that clause. This
insurance is sometimes referred to as non-negligent loss insurance, reflecting the Employers strict liability in
respect of damage to other properties, irrespective of whether or not there has been negligence or breach of duty
on the part of either the Employer or the Contractor. Where such insurance is required, the cost is added to the
Contract Sum.
Works insurance (clauses 67 to 611 and Schedule 3)

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128

129

For the purposes of Works insurance, it is envisaged that the Parties will effect a Joint Names Policy in the terms of
Insurance Option A, B or C, as appropriate, a choice effected by the relevant entry in the Contract Particulars for
clause 67:

Insurance Option A is generally intended for new buildings and requires the Contractor to take out a Joint
Names Policy for All Risks Insurance for the full reinstatement value of the Works, including Site Materials,
plus professional fees;

Insurance Option B is intended for new buildings and requires the Employer to take out a Joint Names Policy
for All Risks Insurance for the full reinstatement value of the Works, including Site Materials, plus professional
fees;

Insurance Option C is relevant where existing structures are involved and requires the Employer to take out
both a Joint Names Policy for the full reinstatement cost in respect of damage to the existing structures and
their contents by Specified Perils, and, in respect of the Works, a Joint Names Policy for All Risks Insurance on
the same basis as under Option B. (In the case of existing structures and contents, the Employer himself will
normally have, and will himself wish to retain, All Risks cover.)

To ensure that suitable arrangements are made, the Parties and their advisers are strongly advised to consult each
other and to seek professional insurance market advice prior to entering into the contract.
Relevant Definitions

130

The term Joint Names Policy, and other relevant insurance terms, are defined in clause 68. The policy (or
policies) are required to include the Employer and the Contractor as composite insured and to provide that the
insurer has no right of recourse against either of them, irrespective of which Party claims under the policy or may
otherwise have been liable for the loss or damage. By clause 69, the Joint Names Policy for the Works is also
required either to recognise each sub-contractor as an insured or to include a waiver of rights of subrogation
against him in respect of loss or damage caused by the Specified Perils.

131

All Risks Insurance as a defined term has a meaning somewhat narrower than the phrase all risks might
otherwise imply. Briefly, the policy is to cover physical loss or damage to work executed or Site Materials (but not
the Contractors plant and equipment), and it will usually exclude loss or damage caused by wear and
tear/deterioration, defects in design or workmanship, war or Excepted Risks and also inventory losses that are not
traceable to an identified event. However, as mentioned in the first footnote to the clause 68 definition, it is not
entirely straightforward and requires the buy back of Terrorism Cover, which is discussed in greater detail below.

132

Difficulty can also arise in relation to joint names insurance of existing structures, particularly in cases that involve
residential owner-occupiers or leaseholders whose insurance is effected by their landlord. (In the case of
leaseholders, this often arises with work in blocks of flats and also arises with commercial premises, e.g. on fittingout contracts.) A solution in certain cases may be to use Option A (or possibly Option B) in respect of the Works
and Site Materials, with the Employer continuing separately with cover in his sole name for his own risk in respect
of loss or damage to the existing structures and contents and with the Contractor covering his risk in respect of
such loss and damage through his Public Liability policy under clause 64. There are, however, further
complications where the Employer is only one of several leaseholders in the building who might be affected and the
Contractor has difficulty in obtaining public liability cover in an appropriate amount. In such cases, prior to entering
into the contract, not only must the Employer inform the existing structure and contents insurers of the intention to
carry out the work, but appropriate professional advice must be sought on appropriate structuring of cover, cover
levels and the consequential amendments to the Contract that may be needed.

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Terrorism and Terrorism Cover


133

SBC 2011, in common with the 2011 editions of other relevant JCT contracts, incorporates the amendments set out
in the JCT Terrorism Cover Update issued in December 2009. These provide for the selection of the required type
of terrorism cover (with Pool Re cover as the default) and limit the obligations of the party responsible for Works
insurance to effecting the agreed type of cover.

134

The background is that, while insurers standard terms for Works insurance and, where relevant, existing structures
policies have for some time excluded cover for loss or damage caused by terrorism above a basic retained level
(generally 100,000), it was assumed for contractual purposes that the Party effecting the policy would simply buy
back terrorism cover up to the full reinstatement value required by the Contract. Originally, the risk appeared
substantially covered by the buy-back of cover under the Pool Re scheme, established by the Reinsurance (Acts of
Terrorism) Act 1993 (the 1993 Act) since insurers original exclusions of terrorism risk and Pool Re cover were
both based on that Acts definition of terrorist acts.

135

However, a problem arose after the passing of the Terrorism Act 2000 (the 2000 Act). Some (though not all)
insurers then began to base their exclusion on the wider definition of terrorism in the 2000 Act but the Government,
while extending the causes of damage covered by Pool Re in most relevant cases to include not only fire and
explosion but also the emerging nuclear, chemical and biological threat, declined to extend the definition of terrorist
acts under the Pool Re scheme beyond those covered by the 1993 Act definition, thereby opening up the insuring
party to uninsured contractual risks in relation to terrorism that was not overtly political, as exemplified in the Soho
Unibomber and Huntingdon Life Sciences cases.

136

As an alternative to Pool Re, Lloyds market cover has been available for many years and this has continued to
cover all types of terrorism, but does not cover chemical and biological damage, normally requires an extension for
nuclear risks and cannot practically speaking be used to supplement Pool Re Cover.

137

The amendments now incorporated in the sub-section consist principally in the new clause 610, which limits the
obligation to effect Terrorism Cover to whatever cover is selected, and in the extension of the clause 68 definition
of Excepted Risks to include terrorism risks that are not within the selected cover; clause 66 in its existing form
exempts the Contractor from any liability for and any obligation to insure against Excepted Risks and the existing
definition of All Risks Insurance in clause 68 also excludes those risks from the ambit of the Works insurance
policy which the relevant party is required to take out, so that the Employer also is now exempt from the technical
breach of his insurance obligations that might otherwise have arisen where Insurance Option B or C applies.

138

Reference has been made above in relation to Part 1 of the Contract Particulars to the clause 610 entry for the
type of Terrorism Cover (or particular terms of it) that may be required.

139

In relation to clause 610 and the costs of Terrorism Cover where Insurance Option A applies, it will be noted that
there are different approaches to Pool Re Cover and open market cover. In the case of Pool Re cover, the
Contractor is required to include the cost in his tendered price, subject to adjustment for changes in renewal costs
(clause 6102). Where cover other than Pool Re cover is required, the costs of effecting and renewing cover are
both treated as an addition to the Contract Sum (clause 6103). This is because the cost of effecting open market
cover may not be as predictable as that of Pool Re. (Clauses 6102 and 6104 consist of the provisions formerly
comprising paragraph A5 of Schedule 3; clause 6104 preserves a Local Authoritys right itself to assume the
terrorism risk in the case of an increase in the Contractors terrorism cover premium on any renewal).

140

Clause 611 (the former clause 610) retains the provisions regarding non-availability at the renewal date and the
Employers consequent option to terminate. However, it also now extends the provision to cover reductions in the
scope or level of cover by insurers and contains an option for the Employer, where the Contractor is responsible for
Works insurance, to require him to switch to any alternative form of Terrorism Cover reasonably available at the
renewal date.

141

It will be noted that in the case of residential property, i.e. houses and blocks of flats and other dwellings insured in
the name of a private individual, Pool Re continues to exclude nuclear, chemical and biological risks.

142

In all cases Pool Re Cover requires annual renewal: Lloyds market cover may be available for the duration of the
project.

143

Effecting Terrorism Cover may still be difficult in certain situations. The JCT would again stress that relevant
details of this, Works insurance generally and, in certain cases, Public Liability and Professional Indemnity
insurances also require discussion and agreement between the Parties and their insurance advisers prior
to entering into the Contract.
Reinstatement and other costs

144

The three Works Insurance Options are designed solely to meet the cost of restoring lost and damaged work and
materials, but in calculating reinstatement cost there are several factors to be borne in mind; other potential costs
and losses may also need to be considered.

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145

The costs of reinstatement generally include those of removing debris. They are often covered automatically by
insurers policy terms but appear on occasion to require to be dealt with by a separate item under the All Risks
policy: the Parties and their advisers should ensure that there is an appropriate level of cover for them.

146

If the Employer is exempt from VAT registration or if supplies made by him in the course of the business are wholly
or partially exempt, the Employer should include in his calculation of the reinstatement cost not only the normal
VAT-exclusive cost of reinstatement (adjusted for interim increases in those costs) and the percentage to cover
professional fees, but also the amount of the VAT chargeable on the work of reinstatement, to the extent that he
would not be able to recover it.

147

Other costs that are not generally covered automatically by the Works insurance and may require an extension of
cover or separate cover include increases in costs of working as a result of the damage or reinstatement work,
together with increases in the cost of the unbuilt portion through inflation.

148

In addition there are financial or consequential losses of the Employers Delay in Completion/Advance Loss of
Profits (ALOP)-type for which Employers may require their own separate cover.

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CDP Professional Indemnity insurance (clauses 612 and 613)


149

Where there is a Contractors Designed Portion, the Employer may require the Contractor to effect and thereafter,
provided it is available at commercially reasonable rates, maintain PI insurance of the type(s), with limit(s) of
indemnity and for a period not less than that stated in the Contract Particulars.

150

The provisions are in substantially the same terms as those in the JCT Collateral Warranties and the Contract
Particulars continue to make separate provision for cover against pollution and contamination. However, for
reasons explained above in relation to the Contract Particulars, the existing entries relating to asbestos and fungal
mould claims have now been deleted.

151

A realistic approach needs to be taken both to the type of PI cover and the cover level(s) required. Unless
otherwise specifically agreed, the terms and period agreed for the purposes of clause 612 will apply in relation to
the Third Party Rights and each Collateral Warranty that the Contractor is required to give.
Joint Fire Code (clauses 614 to 617)

152

The Joint Fire Code is generally required by insurers to apply and the Parties should comply both with its
requirements and the other provisions of clauses 615 and 616. Under clause 616 the Contractor is to ensure that
any remedial measures required by the insurers to achieve compliance are carried out and, if he fails to do so, the
Employer may employ others for the purpose, with an appropriate deduction being made from the Contract Sum. In
respect of amendments made after the Base Date there is an option as to which Party bears the cost.

Section 7 Assignment, Third Party Rights and Collateral Warranties (and


Schedule 5 Third Party Rights)
153

This section comprises the restrictions on, and the Employers limited optional right of, assignment, together with
the enabling provisions for Third Party Rights/Collateral Warranties. The terms of the Third Party Rights which the
Contractor may be called upon to give are set out in Schedule 5; the relevant forms of JCT Collateral Warranty are
available as separate published documents.

154

The assignment provisions form clauses 71 and 72. After the ancillary provisions of clauses 73 and 74, they are
followed by five clauses (7A to 7E) which perform essentially the same functions as the enabling clauses formerly
included with JCT Collateral Warranty forms. These provisions relate:

in the case of clauses 7A and 7B, to the grant by the Contractor of third party rights for Purchasers/Tenants
and a Funder respectively;

in the case of clauses 7C and 7D, to the alternative of collateral warranties by the Contractor;

in the case of clause 7E, to Sub-Contractors obligations to grant collateral warranties in favour of
Purchasers/Tenants, a Funder or the Employer.

155

In relation to each form of grant the required details are those set out or referred to in Part 2 of the Contract
Particulars. The terms of any third party rights from the Contractor are substantially identical to those in the
corresponding Collateral Warranty; to facilitate that in terms of the particulars, the clause numbering of the relevant
Collateral Warranties is the same as that of the paragraphs in the relevant Part of Schedule 5.

156

Clause 74 provides for the mode of execution of collateral warranties.

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Part 2 of the Contract Particulars


157

As indicated in the Contract Particulars section of this Guide, Part 2 of the particulars requires careful completion.
In terms of completing it, the point to be emphasised for the Parties and beneficiaries is that obtaining the rights
and/or warranties is in legal terms dependent upon certainty, i.e. upon the necessary particulars being given.

158

The first requirement is identification of the Purchaser/Tenant and Funder beneficiaries. Section 1 of the Contracts
(Rights of Third Parties) Act 1999 provides that a third party may enforce a term of a contract if the contract
expressly so provides but (by section 1(3)) that the third party must be expressly identified in the contract by name,
as a member of a class or as answering a particular description. As a matter of general law, the requirement for
certainty applies equally for collateral warranties.

159

The class or description can of course be quite simple and general, e.g. all first purchasers and/or all original/first
lessees of the building or of particular units or parts of the Works. Section 1(3) of the Act goes on to provide that
the third party need not be in existence when the contract is entered into. Where known, the Funder will no doubt
be named, but there should be no problem describing an as-yet unascertained Funder as, for example, the lead
bank providing finance for the project or as the special purpose vehicle to be incorporated or established under a
specified agreement.

160

Unless already selected, the same principle may need to be applied to identify relevant sub-contractors for the
purposes of the Table at (E), though reference there to those selected for identified work packages should
generally suffice.

161

As to whether rights to be granted by the Contractor are to be third party rights under the 1999 Act or granted by
collateral warranty, the default position is that rights under the Act will apply unless collateral warranties are
stipulated by entries in the third column of the Table at (A).

162

In completing the Sub-Contractor particulars at (E) in Part 2, regard should also be had to the default positions in
paragraphs (i) to (iv) and the footnotes following the Table. In completing the third column, the Employer and the
Contractor should recognise that not all Sub-Contractors carry or are able to obtain PI insurance cover, either on a
per event basis or at all, and any specified cover levels should be realistic, as should the selection of those SubContractors from whom collateral warranties may be required.

Section 8 Termination
163

The section comprises five sub-sections: General (defining insolvency and setting out certain ancillary provisions
that apply to the section generally); Termination by Employer; Termination by Contractor; Termination by either
Party (in cases of extended no-fault suspension); and Consequences of Termination (in cases of termination by the
Contractor or extended no-fault suspension).

164

The basis of the section is that each Party may terminate the Contractors employment either for a specified default
or insolvency on the part of the other or where substantially the whole of the Works is suspended for the period
stated in the Contract Particulars through a range of events outside the control of either Party. The default entry in
the Contract Particulars is a period of 2 months. In addition the Employer may terminate for corruption.

165

In each case it is the Contractors employment under the Contract that is terminated, not the Contract itself, which
remains in force to deal with the consequences of termination. These differ, depending on the grounds for
termination.

166

In the case of default by either Party (which, in the case of the Employer, includes certain acts and defaults of the
Architect/Contract Administrator or Quantity Surveyor), there is a requirement for a warning notice of the default to
be given prior to termination, giving an opportunity for the default to be remedied. If it is not remedied within 14
days of that notice, there is a 21 day period for giving notice of termination. Where, after a notice of default, a notice
of termination is not given within the 21 day period but the default is repeated, the Party not in default again
becomes entitled to give notice of termination, within a reasonable time.

167

Where either Party is insolvent or the Contractor commits a corrupt act, the other Party may terminate without a
warning notice but, where termination is due to prolonged no-fault suspension of the Works, a warning notice is
required.
General (clauses 81 to 83)

168

In clause 81 the definition of insolvency has in SBC 2011 been restated in order to facilitate the modification of
clause 873 to accord with the new section 111(10) of the Construction Act. Clauses 811 to 813 of the definition
reproduce section 113 of the Act; clause 814 retains two additional tests of insolvency from the SBC 2005 edition.
The latter tests remain grounds for termination under clauses 85 and 810, but do not under the Act entitle

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retention under clause 873 of sums already due. In terms of grounds for termination the ambit of the definition
remains essentially the same.
169

Clause 82 makes provision with respect to notices, commencing with the long-standing requirement that notice of
termination is not to be given unreasonably or vexatiously. Notice of termination takes effect on receipt; clause
823 is aimed at ensuring that there is no scope for argument on the question of receipt.

170

Clause 831 then provides that the operative provisions of the section do not limit the rights of the Employer or, as
relevant, the Contractor under general law; there may for example be occasions where there is repudiatory breach
by a Party that is not within the specified grounds for termination but which the innocent Party wishes to treat as
bringing the Contract to an end.

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Termination by the Employer (clauses 84 to 88)


171

Clause 84 sets out the Employers right to terminate for default, clause 85 his right to terminate for insolvency and
clause 86 the right to terminate for corruption (now updated for the Bribery Act 2010); it will be noted that the
grounds of termination for default are specific and that both the warning notice and notice of termination also
therefore need to be specific.

172

In relation to the Contractors insolvency and termination on any of the three grounds referred to, clause 853 and
clause 873 (which has been slightly modified in SBC 2011) respectively provide (inter alia) that, until issue of the
final account under clause 874 or 88, no further sums become due under the Contract. (There is a similar
provision in clause 8121, and also in clause 6113.) In the case of sums that are due but unpaid where no Pay
Less Notice has been given and the last date for giving such notice has passed, section 111(10) of the
Construction Act essentially confirms the position as that set out in the House of Lords decision in Melville Dundas
Ltd v. George Wimpey UK Ltd [2007] UKHL 18. That is that the sum due may be validly withheld if termination is on
the grounds of insolvency and the insolvency has occurred after the period for giving a Pay Less Notice has
expired, but not if the insolvency occurred before that expiry and not if the termination was on grounds other than
insolvency.

173

If there is any doubt as to the position as to possible termination or the notices to be given, professional advice
should be taken; where any sums are due but unpaid, a Pay Less Notice should of course be given by the payer
where that is still practicable.

174

The provisions of clause 87 as to the Employers rights, Contractors obligations and the basis of the final account
(clause 874) are reasonably straightforward, the final account being based on cost to complete and direct loss or
damage caused to the Employer. That is however predicated upon completion of the Works by a completion
contractor. If the Employer decides not to complete the Works or fails within 6 months of the termination to make
arrangements to that end, clause 88 provides for the final account to be prepared on the alternative basis of the
value of work properly executed less direct loss or damage.
Termination by the Contractor (clauses 89 and 810)

175

Over and above failure to pay, breach of the prohibition on assignment and breach of CDM Regulations (the latter
two of which are also grounds under clause 84), clause 89 gives the Contractor the right to terminate if the
Employer interferes with or obstructs the issue of any certificate and for continuous extended suspension caused
by instructions for variations or postponement, lack of instructions as to inconsistencies in documents or by any
other impediment, prevention or default on the part of the Employer, professional team or others for whom the
Employer is contractually responsible. (Here also the default period for the suspension is 2 months, plus 14 days
for a warning notice.) Clause 810 relates to Employer insolvency. The consequences of termination are not
dissimilar to those of termination under clause 811 and these are dealt with together in the final sub-section
(clause 812).

176

Where he has given Third Party Rights or a Collateral Warranty to a Funder, the Contractors right to terminate will,
as indicated above, be subject to either paragraph 6 in Part 2 of Schedule 5 or clause 6 of Collateral Warranty
CWa/F, providing for notice to the Funder to enable the Funder to decide whether to exercise its step-in rights.
Termination by either Party (clause 811)

177

As indicated above, the bilateral right of termination under clause 811 is not entirely dissimilar to termination by the
Contractor under clause 89 for extended suspension; it has the same default period and, entitlement to direct loss
and damage apart, the same consequences. It is based on events beyond the reasonable control of either party
force majeure, negligence or default of Statutory Undertakers, Specified Perils damage, civil commotion and UK
Government action. (In relation to Specified Perils damage, clause 8112 contains the appropriate exclusion for
Contractors negligence.)

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Consequences of Termination under clauses 89 to 811, etc. (clause 812)


178

This sub-section covers the consequences of termination under clauses 89 to 811 and also where termination
arises under clause 61022 (withdrawal of Terrorism Cover) or paragraph C44 of Schedule 3 (material loss of or
damage to existing structures). As under clause 88, the final account is based on value of work properly executed
and other amounts due to the Contractor under the Conditions. In addition the Contractor is entitled to direct loss
and damage arising from the termination where he has terminated for Employers default or insolvency or where
Specified Perils damage giving rise to an extended suspension and then to termination under clause 811 has been
caused by negligence or default on the part of the Employer or those for whom the latter is responsible.

Section 9 Settlement of Disputes


General (and Supplemental Provision 6)

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179

180

The Contract contains provisions in relation to four external means of settling disputes:

it refers to the possibility of resolving disputes through mediation, using a third party to assist the negotiation
process;

it gives a contractual right as well as the statutory right to refer disputes to adjudication (Article 7 and clause
92), with adjudication being conducted in accordance with the Scheme for Construction Contracts, subject
only to the clause 92 provisions regarding the nomination of adjudicators and for cases of opening up and
testing;

the Contract Particulars for Article 8 provide the option of agreeing to refer disputes to arbitration by making
the appropriate entry in them; the Parties may also subsequently agree to do so; the arbitration agreement in
Article 8 is subject to the three exceptions there mentioned and, under section 9, arbitration is to be conducted
in accordance with the JCT 2011 edition of the Construction Industry Model Arbitration Rules (CIMAR);

in relation to litigation and subject to any agreement to arbitrate, Article 9 records the jurisdiction of the English
Courts; selection of another jurisdiction requires an appropriate amendment.

Supplemental Provision 6 in Schedule 8, where it applies, also requires each Party to give the other prompt notice
of potential disputes and encourages nomination by each of an employee of sufficient seniority and authority to act
as its representative with a view to early settlement of any dispute.
Mediation (clause 91) and ADR

181

The JCT supports the use of mediation, ADR or ENE (Early Neutral Evaluation) in appropriate cases, but considers
that it would not be appropriate to endorse particular techniques or bodies. The variety of techniques and bodies
that have developed over recent years would appear to suggest that such choices are frequently better made by
the Parties when the dispute has actually arisen and its nature is clear: in cases where mediation is likely to assist,
possible exposure to litigation costs under the Civil Procedure Rules may be sufficient incentive for the Parties to
agree such matters.
Adjudication (clause 92)

182

In the case of adjudication, the adjudicator may be named and the nominating body identified in the Contract
Particulars. Where the Employer is a residential occupier (as defined by section 106 of the Act) there is no statutory
requirement for the contract to contain an adjudication provision, and the Employers advisers should consider with
their client whether the adjudication provision is desirable or whether it should be deleted.

183

The costs of adjudication are generally less than those of litigation or arbitration, but they are not inconsiderable. If
a dispute arises, and whether or not Supplemental Provision 6 applies, the Parties should consider whether to
allow a reasonable period for negotiation before recourse to adjudication or other external means of resolving the
dispute.
Arbitration (clauses 93 to 98) and litigation (Article 9)

184

A range of factors outside the scope of this Guide will determine the choice between arbitration and litigation.
Litigation is the default position and will apply unless the Parties specifically make arbitration operative.

185

Where arbitration is agreed under the Contract and CIMAR Rules apply, Rule 2.3 in effect provides that an
arbitrator cannot be named by the appointor identified in the Contract Particulars until at least 14 days after the
arbitration notice is served and it is only after that period, if no agreement is reached as to who is to act as
arbitrator, that either Party has the right to apply to the appointor, requesting him to name the arbitrator. The award

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of the arbitrator is final and binding on the Parties except in respect of any question of law arising in the course of
the reference or arising out of an award, which (by clause 97) the Parties agree may be referred to the courts.

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Appendix A SBC 2011 changes


The following provisions in 2011 Edition contain textual changes. The provisions with substantive textual changes
have been identified with *. For an explanation of those changes, please refer to the main body of the Guide.
2011 numbering

2011 numbering

Articles
Article 5
Article 6
Article 8

617
81*
8531
86
873*, 874 introduction
881
8911
812 introduction, 8121, 8123 introduction
93

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Contract Particulars (entries)


Part 1: Clause 491*
Clause 610 and Schedule 3*
Clause 612
Clause 614
Clause 617
Clause 921
Conditions (clauses)
11:
Final Payment Notice*
Funder Rights Particulars
Interim Application*
Interim Payment Notice*
Pay Less Notice*
P&T Rights Particulars
Retention
SWMP Regulations
145
18
192 introduction, 193, 194
111
22921, 2294*, 2295 to 22914
2321 hanging paragraph
3924
41 (XQ)
(AQ):
434, 435, 438*, 439, 4310
(Q, XQ): 4313, 4323, 4335, 4336,
4337*, 4338
452
49*
410*
411*
412*
413*
414*
415*
416 introduction, 41611, 41621, 41622*,
41623, 41624, 41625, 41632
417 introduction
418
4191, 4193, 4194
420 introduction, 4203
4244, 4245
68 (Excepted Risks*, Pool Re Cover*, Terrorism
Cover*)
610*
611*
612
613
614
615
616
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Schedules
Schedule 3:
Option A
Option B
Option C
Schedule 5:
Part 1
Part 2
Schedule 7:
Option C

paragraph A42, A46


paragraph B32
paragraph C42
paragraph 5
paragraph 64, 9, 13
paragraph C21 (XQ)
paragraph C31 (AQ)

The Joint Contracts Tribunal Limited 2011

Appendix B SBC User Checklist


This is a checklist of the key information that will help you to complete the Articles of Agreement.

Parties details

Employers name and address


Contractors name and address

Works (First Recital)

nature
location

Activity Schedule (Second Recital in SBC/Q; Third Recital in SBC/XQ)

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Has the Contractor provided a priced Activity Schedule?

Contract Drawings (Third Recital in SBC/Q and SBC/AQ; Second Recital in SBC/XQ)

identification

Pricing Option (Third Recital in SBC/XQ only)

applicable option: A or B?
Option A

Priced Document: Specification or Work Schedules?

Option B

Priced Document: Contract Sum Analysis or Schedule of Rates?

Construction Industry Scheme (Fourth Recital and clause 47)

Is the Employer a contractor?

Information Release Schedule (Fifth Recital)

Has the Employer provided an Information Release Schedule?

Sections (Sixth Recital)

applicable?
description

Framework Agreement (Seventh Recital)

Is the Contract supplemented by a Framework Agreement?


details (date, title, parties)

Supplemental Provisions (Eighth Recital and Schedule 8)


Collaborative working (Schedule 8, paragraph 1)

applicable?

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Health and safety (Schedule 8, paragraph 2)

applicable?

Cost savings and value improvements (Schedule 8, paragraph 3)

applicable?

Sustainable development and environmental considerations (Schedule 8, paragraph 4)

applicable?

Performance Indicators and monitoring (Schedule 8, paragraph 5)

applicable?

Notification and negotiation of disputes (Schedule 8, paragraph 6)

applicable?
name of the Employers nominee
name of the Contractors nominee

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Contractors Designed Portion (Ninth Recital)

applicable?
description

Employers Requirements (Tenth Recital)

identification

Contractors Proposals (Eleventh Recital)

identification

CDP Analysis (Eleventh Recital)

identification

CDP: limit of Contractors liability for loss of use etc. (clause 2193)

amount

Professional Indemnity insurance (clause 612)

type, amount, expiry

PI insurance sub-limit: Cover for pollution and contamination claims (clause 612)

applicable?
amount

Contract Sum (Article 2 in SBC/Q and SBC/XQ)

amount

Architect/Contract Administrator (Article 3)

name and address

Quantity Surveyor (Article 4)

name and address

Page 24 SBC/G 2011

The Joint Contracts Tribunal Limited 2011

CDM Regulations (Article 5)

Is the project notifiable?

CDM Co-ordinator (Article 5)

name and address

Principal Contractor (Article 6)

name and address

CDM Planning Period (clause 11)

period (days/weeks)
commencement/end date

Adjudication (Article 7)

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applicable?
Adjudicators name?
Adjudicator nominating body?

Arbitration (Article 8)

applicable?
appointor of Arbitrator?

Base Date (clause 11)

date

Date for Completion (clause 11)

Works: date
Sections: date for each Section

Address for service of notices (clause 17)

Employer
Contractor

Date of Possession (clause 24)

Site: date
Sections: date for each Section

Deferment of possession (clause 25)

applicable?
Site: period
Sections: period for each Section

Master programme (clause 2912)

applicable?

The Joint Contracts Tribunal Limited 2011

SBC/G 2011

Page 25

Liquidated damages (clause 2322)

Works: rate and period


Sections: rate and period for each Section

Section Sums (clause 237)

amount for each Section (These must add up to the Contract Sum.)

Rectification Period (clause 238)

Works: period
Sections: period for each Section

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Advance payment (clause 48)

applicable? (Not applicable for Local Authority employer)


amount or percentage
payment date
reimbursement: amount(s) and time(s)
Advance Payment Bond: applicable?

Interim payments (clause 491)

first due date

Bond for Listed Items uniquely identified (clause 4174)

applicable?
amount

Bond for Listed Items not uniquely identified (clause 4175)

applicable?
amount

Contractors Retention Bond (clause 419)

applicable? (Not applicable for Local Authority employer)


amount
expiry date

Retention Percentage (clause 4201)

percentage

Fluctuations Options A, B and C (clause 4201 and Schedule 7)

applicable option: A, B or C?

Option A

percentage addition (paragraph A12)

Page 26 SBC/G 2011

The Joint Contracts Tribunal Limited 2011

Option B

percentage addition (paragraph B13)

Option C

Base Month (rule 3)


Non-Adjustable Element (percentage) (rule 3) (For Local Authority employer only)
Method of formula adjustment (Section 2 of the Formula Rules: Part I or Part II?) (rules 10 and 30(i))
(Not applicable in SBC/AQ)

Daywork (clause 57 in SBC/XQ only)

identification of document for Percentage Additions and All-Inclusive Rates

Insurance: Contractors liability injury to persons or property (clause 6412)

amount

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Insurance: Employers liability (clause 651)

applicable?
amount

Works Insurance Options A, B and C (clause 67 and Schedule 3)

applicable option: A, B or C?

Option A

percentage to cover professional fees


renewal date of annual policy

Option B

percentage to cover professional fees

Option C

percentage to cover professional fees

Terrorism Cover (clause 610 and Schedule 3)

details of the required cover

Joint Fire Code (clauses 614 and 617)

applicable?
Has the insurer specified the Works are a Large Project?
Who is to bear the cost for amendments?

Assignment of rights (clause 72)

applicable?
applicable to each Section?

Period of suspension (clause 892)

period

The Joint Contracts Tribunal Limited 2011

SBC/G 2011

Page 27

Period of suspension (clauses 81111 to 81115)

period

P&T Rights (clauses 7A, 7C and 7E)

applicable?
identification of Purchasers/Tenants
the part of the Works to be purchased or let
Third Party Rights (clause 7A) or Collateral Warranty (clause 7C)?
Contractors liability for costs (paragraph/clause 112 of Schedule 5, Part 1 or CWa/P&T)

applicable?
amount and type

Net Contribution: Consultants (paragraph/clause 131)

identification

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Net Contribution: Sub-Contractors (paragraph/clause 132)

identification

Funder Rights (clauses 7B, 7D and 7E)

applicable?
identity of Funder
Third Party Rights (7B) or Collateral Warranty (7D)?

Net Contribution: Consultants and Sub-Contractors (paragraph/clause 11 of Schedule 5, Part 2 or CWa/F)

identification

Collateral warranties from Sub-Contractors (clauses 37 and 39)

applicable?
identification of sub-contractors
type(s) of warranty (SCWa/P&T, SCWa/F, SCWa/E) required
levels of Professional Indemnity insurance required for each sub-contractor

Attestation

Execution under hand


Execution as a Deed
Other forms of Attestation needed?

Page 28 SBC/G 2011

The Joint Contracts Tribunal Limited 2011

Appendix C Related Publications


The 2011 editions of the following documents have been issued by the JCT for use with SBC 2011, where required:

Licensed copy from CIS: heriotwatt, , 07/11/2014, Uncontrolled Copy.

Standard Building Sub-Contract in the following versions:

Agreement (SBCSub/A) and Conditions (SBCSub/C), and

Agreement and Conditions with sub-contractors design (SBCSub/D/A and SBCSub/D/C)

Standard Building Sub-Contract Guide (SBCSub/G)

Short Form of Sub-Contract (ShortSub)

Sub-subcontract (SubSub)

Partnering Charter (Non-binding)

Framework Agreement (FA) and


Framework Agreement Guide (FA/G)

Pre-Construction Services Agreement (General Contractor) (PCSA)


Pre-Construction Services Agreement (Specialist) (PCSA/SP)

Consultancy Agreement (Public Sector) (CA)

Collateral Warranties

Contractor Collateral Warranty for a Purchaser or Tenant (CWa/P&T)

Contractor Collateral Warranty for a Funder (CWa/F)

Sub-Contractor Collateral Warranty for a Purchaser or Tenant (SCWa/P&T)

Sub-Contractor Collateral Warranty for a Funder (SCWa/F)

Sub-Contractor Collateral Warranty for Employer (SCWa/E)

Adjudication Agreement (Adj) and


Adjudication Agreement (Named Adjudicator) (Adj/N)

JCT 2011 edition of the Construction Industry Model Arbitration Rules (CIMAR)

The Joint Contracts Tribunal Limited 2011

SBC/G 2011

Page 29

Licensed copy from CIS: heriotwatt, , 07/11/2014, Uncontrolled Copy.

Standard Building Contract


Guide 2011

MEMBERS
British Property Federation Limited
Contractors Legal Grp Limited
Local Government Association
National Specialist Contractors Council Limited
Royal Institute of British Architects
The Royal Institution of Chartered Surveyors
Scottish Building Contract Committee Limited
All parties must rely exclusively upon their own skill and
judgment or upon those of their advisers when using this
document and neither Thomson Reuters (Professional) UK
Limited nor its associated companies assume any liability to
any user or any third party in connection with such use.

Standard Building Contract


Guide 2011

11

SE

DARD

TA
N

011

-2

TS

A RY 1 9 3 1

N
T CO TRAC
JC

F
YEARS O

E
8 0 th
A N NIV

RS

TS
AC

80

Y1 9 3 1-20

80

CONT
JCT
R

AR

2 011

31
9

E R S A RY 1

th

NIVER

AN

IV

AN

80 80 80
th

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SBC/G 2011

TT

IN G T HE

YEARS OF SETTING

THE STANDARD

80
YEARS OF SETTING

THE STANDARD

2011

SWEET & MAXWELL

STANDARD BUILDING CONTRACT

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