The building contract is usually treated as a formality to be sorted out once the price is agreed. It is the opposite: it is the document that decides what the price means. Who designed what, how a variation is valued, when payment falls due, what happens on delay and who carries the risk of the unknown are all contract questions, and they belong in procurement and contractor selection rather than in the solicitor’s in-tray at the end.
JCT publishes a family of standard forms of different weight, from short contracts for simple work through to full contracts for complex projects, with versions that place design responsibility either with the client’s team or with the contractor. What follows is how to think about the choice in general terms. The right form for a particular scheme depends on its size, its design status and the risks you want to carry, and the drafting itself should be settled with a construction solicitor.
The three questions that decide the form
First, how complicated is the work and how long will it take. A short, simple refurbishment and a multi-unit new build need different machinery. A lighter form has fewer provisions, which is an advantage when there is little to administer and a liability when something goes wrong.
Second, who is responsible for the design. Either your design team designs the building and the contractor builds it, or the contractor takes responsibility for some or all of the design. That single choice changes the risk profile of the project more than anything else in the contract.
Third, how much change do you expect. A scheme with a complete design and a fixed brief can live with a simpler change mechanism. A scheme that will develop during construction needs a form with a proper instruction and valuation procedure, because that procedure is what stops change becoming a negotiation at the end.
Design responsibility is the real decision
Where the contractor takes the design, you buy a single point of responsibility and a price that covers both design and construction. The trade-off is control: what you get is what the contractor’s proposals say, and your ability to direct the detail afterwards is limited and usually costs money.
That makes the employer’s requirements the critical document, because they define what the contractor has to achieve. Requirements that are vague transfer nothing: the contractor meets them with the cheapest compliant solution, which is exactly what a rational bidder should do. We cover how to write them in writing employer’s requirements that actually bind.
Where your team retains the design, you keep control of the detail and carry the risk of it being wrong or late. On a small scheme with an engaged investor that is often the better trade, provided the design is genuinely complete before tender.
There is a middle position in common use, where the contractor designs discrete packages within a scheme your team has otherwise designed. It works, but the interfaces have to be written down: who designs the connection between the package and the rest of the building, who checks it, and who carries it if it does not fit. Unwritten interfaces are where design and build risk quietly comes back to the client.
What the lighter forms leave out
Shorter contracts are shorter because they omit provisions. Depending on the form, there may be less machinery for extensions of time and loss and expense, fewer provisions for named or nominated subcontractors, simpler valuation rules, and less detailed arrangements for insurance of existing structures.
On straightforward work none of that matters. On work that goes wrong, the missing machinery is exactly what you need, and the alternative to a contractual procedure is an argument. The question to ask is not what the contract covers when the job goes well, but what it says when the job runs late.
Insurance is worth singling out. Work to an existing building raises questions about who insures the structure and what the policy covers, and the answer differs between forms and options. It is a point to settle before signature, not after a flood.
The clauses that decide your exposure
Payment and the dates that go with it, because the statutory payment framework interacts with the contract and missing a notice has consequences. Retention, how much and when it is released. Liquidated damages for delay, and whether the rate represents a genuine estimate of your loss. Extension of time and the grounds for it. The valuation rules for variations. Who the contract administrator is and what they are empowered to do.
The rate for liquidated damages deserves specific thought on a development, because your loss on delay is usually finance cost and a shifted sales period rather than rent. Setting it carelessly in either direction is a mistake, as explained in setting a liquidated damages rate.
Amendments to a standard form need reading rather than accepting. A heavily amended contract is no longer a standard form and it has lost the predictability that was the reason for using one.
Signing it, and then using it
A contract only works if somebody administers it. Instructions issued in writing, variations valued when they happen rather than at the end, notices served on time, records kept during the works. Without that, the form of contract is irrelevant, because every entitlement in it depends on a procedure being followed.
That administration is the ordinary work of cost control and variations, and on a development it needs to run from the same cost plan the appraisal was built on. Keeping the contract, the cost report and the investor reporting consistent is the point of development management, and the month-to-month side of it is delivery and cost control.
Choosing a contract for your scheme?
We advise on the commercial consequences of the form, the amendments and the clauses that will decide your exposure.