SBSPR.

qxd 9/14/06 3:46 PM Page i

The JCT 05
Standard Building
Sub-Contract
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To Carol

Gracias para su paciencia y comprensin.

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The JCT 05
Standard Building
Sub-Contract
Peter Barnes
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2006 by Blackwell Publishing Ltd

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or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or
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prior permission of the publisher.

First published 2006 by Blackwell Publishing Ltd

ISBN-13: 978-1-4051-4048-5
ISBN-10: 1-4051-4048-8

Library of Congress Cataloging-in-Publication Data

Barnes, Peter.
The JCT 05 standard building sub-contract/Peter Barnes. 1st ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-1-4051-4048-5 (hardback : alk. paper)
ISBN-10: 1-4051-4048-8 (hardback : alk. paper) 1. Construction contractsGreat Britain.
2. Construction industrySubcontractingGreat Britain. I. Title.
KD1641.B375 2006
343.4107869dc22
2006021262

A catalogue record for this title is available from the British Library

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by TJ International Ltd, Padstow, Cornwall

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SBSPR.qxd 9/14/06 3:47 PM Page v

Contents

Preface ix
Definitions xi

1 Background and Introduction 1

The purpose and use of the JCT Standard Building Sub-Contract 1
Sub-contracting generally 4
Letters of intent 18
Standard forms of contract and sub-contract 20

2 SBCSub/A and SBCSub/D/A 23

The JCT Standard Building Sub-Contract Agreement (SBCSub/A or
SBCSub/D/A) introduction 23
The structure of SBCSub/A and SBCSub/D/A 24
The recitals 25
The articles 28
The sub-contract particulars 30
Summary of interim and final payment provisions 49
Attestation forms 49
Schedule of information 52
Notes (to annexures to the agreement and to the schedule
of information) 54
Supplementary particulars (containing information needed for
formula adjustment) 54

3 Definitions and Interpretations 55

The JCT Standard Building Sub-Contract Conditions (SBCSub/C
or SBCSub/D/C): section 1 (including clauses 1.1 to 1.10 of
SBCSub/C and SBCSub/D/C) 55
General 55
Section 1 definitions and interpretation 55

4 Sub-Contractors Obligations 62
SBCSub/C and SBCSub/D/C: section 2 carrying out the
sub-contract works (clauses 2.1, 2.2, 2.4 to 2.15 inclusive and
schedule 5 contractors design submission procedure) 62
Sub-contractors obligations 62
Supply of documents, setting out, etc. 72
Errors, discrepancies and divergencies 77
Sub-contractors design portion (SCDP) design work 82
Unfixed materials and goods 87

v
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vi Contents

5 Time 88
SBCSub/C and SBCSub/D/C: section 2 carrying out the
sub-contract works (clauses 2.3, 2.16 to 2.21 inclusive) 88
Sub-contractors obligations 88
Adjustment of period for completion 89
Practical completion and lateness 117

6 Defects, Design Documents and Warranties 121

SBCSub/C and SBCSub/D/C: section 2 carrying out the
sub-contract works (clauses 2.22 to 2.26 inclusive) 121
Defects 121
Sub-contractors design documents 123
Collateral warranties 124

7 Control of the Sub-Contract Works 129

SBCSub/C and SBCSub/D/C: section 3 control of the
sub-contract works (and schedule 1 sub-contract code of practice) 129
Assignment and sub-letting 129
Contractors directions 131
Opening up and remedial measures 131
Attendance and site conduct 136
Health and safety and CDM requirements 143
Suspension of main contract by contractor 154
Other provisions 155

8 Payment 158
SBCSub/C and SBCSub/D/C: section 4 payment (clauses 4.1 to
4.18 inclusive; schedule 3 forms of bonds; and schedule 4
fluctuations options) 158
Payment generally 158
Sub-contract sum and sub-contract tender sum 159
Payments 165
Gross valuation 171
Retention 182
Discount 188
The final payment 189
Counterclaim, set-off and abatement 190
The payment notice 192
The withholding notice 196
Timing of payments, payment notices and withholding notices 200
Interest 201
Sub-contractors right of suspension 204
Fluctuations options 207

9 Loss and Expense 219

SBCSub/C and SBCSub/D/C: section 4 payment (clauses 4.19 to
4.22 inclusive) 219
Introduction 219
Loss and expense 220
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Contents vii

Potential heads of claim for a loss and expense claim 235

Common law damages claims (in respect of a breach of
contract) (reservation of rights and remedies of contractor
and sub-contractor) 247
Liquidated damages 251

10 Variations 252
SBCSub/C and SBCSub/D/C: section 5 valuation of work and
variations (and schedule 2 quotation) 252
General 252
Valuation of work 255
Schedule 2 quotation 256
The valuation rules 260
Daywork 266
Additional provisions 269

11 Injury, Damage and Insurance 270

SBCSub/C and SBCSub/D/C: section 6 270
Definitions 270
Injury to persons and property 270
Insurance loss or damage to work and site materials 274
Sub-contractors design portion professional indemnity insurance 278
Joint fire code 279

12 Termination 282
SBCSub/C and SBCSub/D/C: section 7 termination 282
Summary of general law 282
Termination under SBCSub/C and SBCSub/D/C 286
Termination by contractor 286
Termination by sub-contractor, etc. 293

13 Settlement of Disputes 300

SBCSub/C and SBCSub/D/C: section 8 settlement of disputes 300
Introduction 300
Mediation 301
Adjudication 304
Arbitration 326
Legal proceedings 333

Appendix A Schedule of Notices and Instructions 337

Appendix B Standard Letter Precedents 339

Table of Cases 348

Table of Statues and Regulations 355
Clause, Recitals, Articles and Sub-Contract Particulars Index 357
Subject Index 367
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Preface

It is commonly recognized that the vast majority of construction work is carried

out by sub-contractors, and yet there is a dearth of books that deal with contract
law in the specific context of sub-contracting.
Long gone are the days of the naive sub-contractor. Sub-contractors in the
twenty-first century are generally extremely sophisticated and are keen to estab-
lish their rights and obligations, and main contractors and others that deal with
sub-contractors need to keep fully abreast of developments in contract law and
general law that affect sub-contracts and sub-contractors.
Because of the apparent lack of up-to-date law books that deal with the issues
of contracts in respect of the contractor/sub-contractor relationship, I had planned
to produce a more general book on sub-contracts. However, just as I was on the
point of commencing my planned book, the Joint Contracts Tribunal announced
that it was bringing out a new 2005 suite of contracts and sub-contracts, includ-
ing a Standard Building Sub-Contract (which, as an option, incorporates sub-
contractors design conditions).
This particular sub-contract was designed specifically to be used where the main
contract is the Standard Building Contract (with quantities, without quantities, or
with approximate quantities).
The Standard Building Contract is the successor of the JCT 98 Standard Form of
Building Contract, the form of main contract that is still used on a very large per-
centage of all construction works carried out in England and Wales.
Traditionally, where the main contract has been the JCT 98 Standard Form, the
sub-contract used has been the domestic sub-contract form DOM/1, and this trad-
ition largely continued despite the fact that in 2002 the JCT produced its own
Standard Form of Domestic Sub-Contract for use with all versions of the Standard
Form of Building Contract (i.e. the Standard Form of Domestic Sub-Contract 2002
Edition (DSC 2002)).
However, my understanding is that it is not planned to publish further editions
of the DOM/1 form, and that the DSC 2002 (which did not appear to be heavily
used in any event) has now been made largely redundant by the publication in
2005 of the new JCT suite of contracts and sub-contracts.
Given the above factors it is almost inevitable that the JCT Standard Building
Sub-Contract will become the regular sub-contract form adopted by contractors
when sub-contracting works under the JCT Standard Building Contract.
Therefore, in respect of this book, it seemed eminently sensible to provide a
detailed commentary on the Standard Building Sub-Contract, whilst at the same
time providing a review of the latest position on the relevant law (particularly as
it affects sub-contractors); and this is what I have attempted to do.
Whilst this book is principally aimed at sub-contractors and main contractors, it
will also be of particular interest to other construction professionals and lawyers
who need to have an understanding of the contractual relationship and the

ix
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x Preface

allocation of risk between main contractors and sub-contractors utilizing the Stan-
dard Building Sub-Contract.
Although this book can be used as an academic guide, my approach to the sub-
jects raised has, naturally, been influenced by my direct involvement in the con-
tractor/sub-contractor relationship for over 30 years. Through this experience,
I have faced nearly every type of problem that can occur in a contractor/sub-
contractor relationship and I have attempted to incorporate some of the knowledge
that I have gained through that experience into the text of this book.
As anyone involved with the law knows, the law is continually evolving, and
this factor may change some of the conclusions that I have reached. Also, of course,
it is quite possible that main contractors will amend the text of the Standard Build-
ing Sub-Contract in an attempt to gain an advantage.
I obviously have no control over either of these factors, but I believe that the
principles of the Standard Building Sub-Contract, as dealt with within this book,
will provide a very useful guide as to the possible effects that either a change in
the law, or amendments made to the text, will have on the parties respective rights
and obligations.
Peter Barnes
June 2006
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Definitions

In the JCT 2005 Standard Building Sub-Contract, certain defined terms, as listed
under clauses 1.1 and 6.1 of SBCSub/C and SBCSub/D/C are included in capital-
ized form. This convention is not generally followed within this book (see further
commentary on definitions on pages 55 and 56).
However, for the ease of general understanding, the definitions of certain defined
terms are provided below.

Article An article in the sub-contract agreement (SBCSub/A

or SBCSub/D/A).
Bills of quantities Bills of quantities supplied by the contractor and
included in the numbered documents within
SBCSub/A or SBCSub/D/A.
Business day Any day which is not a Saturday, a Sunday or a
public holiday.
Completion date The date for completion of the main contract works
or of a section of the main contract works.
Contract bills The contract bills as defined in the main contract.
Contractors persons The contractors employees and agents and all other
persons employed or engaged on or in connection
with the main contract works or any part of them
or any other person properly on the site in
connection therewith excluding the
architect/contract administrator, the quantity
surveyor, the employer, the employers persons,
the sub-contractor, the sub-contractors persons
and any statutory undertaker.
Contractors requirements The documents relating to the sub-contractors
designed portion referred to in the fourth recital
and included in the numbered documents.
Employers persons All persons employed, engaged or authorized by
the employer, excluding the contractor, the
contractors persons, the architect/contract
administrator, the quantity surveyor, the
sub-contractor, the sub-contractors persons and
any statutory undertaker.
Excepted risks Ionizing radiations or contamination by
radioactivity from any nuclear fuel or from any
nuclear waste from the combustion of nuclear
fuel, radioactive toxic explosive or other
hazardous properties of any explosive nuclear
assembly or nuclear component thereof, pressure
waves caused by aircraft or other aerial devices
travelling at sonic or supersonic speeds.

xi
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xii Definitions

Health and safety plan
Main contract particulars
Numbered documents
Planning supervisor
Pre-agreed adjustment
Principal contractor
Provisional sum
Public holiday
Recitals
SCDP
SCDP analysis
SCDP documents
SCDP works
Schedule of information
Schedule of modifications
Section
Specified perils
Those parts of the health and safety plan for the
main contract works applicable to the
sub-contract works and annexed to the schedule
of information, together with any developments
of it by the principal contractor.
The contract particulars for the main contract
annexed to the schedule of information.
The documents listed in the sub-contract
particulars (item 15, SBCSub/A; item 16,
SBCSub/D/A) and annexed to the sub-contract
agreement.
The person named as such in the schedule of
information or any successor appointed by the
employer.
An adjustment to value and/or time agreed
between the contractor and sub-contractor before
variation works are undertaken.
The person named as such in the schedule of
information or any successor appointed by the
employer.
A sum provided for work that the contractor may
or may not decide to have carried out, or which
cannot be accurately specified in the sub-contract
documents.
Unless amended otherwise, Christmas Day, Good
Friday or a day which under the Banking and
Financial Dealings Act 1971 is a bank holiday.
The recitals in SBCSub/A or SBCSub/D/A.
Sub-contractors designed portion.
The sub-contractors price analysis of the SCDP.
The contractors requirements, the sub-contractors
proposals, the SCDP analysis and any further
documents referred to in clause 2.6.1.1 of
SBCSub/D/C.
That part of the sub-contract works comprised in
the SCDP.
The schedule of information in respect of the main
contract in SBCSub/A or SBCSub/D/A.
The schedule of modifications to the sub-contract
conditions.
One of the sections into which (where applicable)
the main contract works have been divided, as
referred to in the schedule of information.
Fire, lightning, explosion, storm, tempest, flood,
escape of water from any water tank, apparatus
or pipes, earthquake, aircraft and other aerial
devices or articles dropped therefrom, riot and
civil commotion, but excluding Excepted
risks.
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Definitions xiii

Statutory requirements Any statute, statutory instrument, regulation, rule

or order made under any statute, directive,
regulation or bye-law having the force of law
which affects the sub-contract works or
performance of any obligations under the
sub-contract.
Statutory undertaker Any local authority or statutory undertaker where
executing work solely in pursuance of its
statutory obligations.
Sub-contract documents The documents referred to in article 1 of SBCSub/A
or SBCSub/D/A.
Sub-contract particulars The particulars as completed by the parties in
SBCSub/A or SBCSub/D/A.
Sub-contractors design The drawings, details and specifications of
materials, goods and workmanship and other
related documents prepared by or for the
sub-contractor in relation to the sub-contractors
designed portion.
Sub-contractors persons The sub-contractors employees and agents and all
other persons employed or engaged on or in
connection with the sub-contract works or any
part of them or any other person properly on the
site in connection therewith excluding the
architect/contract administrator, the quantity
surveyor, the employer, employers persons, the
contractor, contractors persons and any statutory
undertaker.
Sub-contractors proposals The documents relating to the sub-contractors
designed portion referred to in the fifth recital
and included in item 16 of the sub-contract
particulars (SBCSub/D/A).
Terminal date Whichever occurs first:
(a) the date of practical completion of the
sub-contract works or, in respect of a section, of
such works in the section, as determined in
accordance with clause 2.20; or
(b) the date of termination of the sub-contractors
employment under the sub-contract, however
arising.
Terrorism cover Insurance provided by a joint names policy under
insurance option A, B or C of the main contract
conditions for physical loss or damage to work
executed and site materials or to an existing
structure and/or its contents caused by terrorism.