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INTERMEDIATE BUILDING CONTRACTSWEET & MAXWELL

2011

MEMBERSBritish Property Federation LimitedContractors Legal Grp LimitedLocal Government AssociationNational Specialist Contractors Council LimitedRoyal Institute of British ArchitectsThe Royal Institution of Chartered SurveyorsScottish 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.

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IC/G 2011Intermediate Building Contract Guide 2011


Intermediate Building Contract Guide (IC/G)

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


© The Joint Contracts Tribunal Limited 2011 IC/G 2011 Page i

Introduction

General

2011 edition changes

Format and Risk Allocation

Content of the Guide

Page 1

Articles of Agreement 3

Recitals

Articles

Contract Particulars

Attestation

3

3

3

4

Conditions 6

Section 1 – Definitions and Interpretation

Definitions (clause 1·1)

Interpretation (clauses 1·2 to 1·11)

6

Section 2 – Carrying out the Works

Contractor’s obligations (clauses 2·1 to 2·3 and Supplemental Provisions 1 and 3 to 5)

Possession (clauses 2·4 to 2·7)

Supply of Documents, Setting Out etc. (clauses 2·8 to 2·11)

Errors, Inconsistencies and Divergences (clauses 2·12 to 2·16)

Unfixed Materials and Goods (clauses 2·17 and 2·18)

Adjustment of Completion Date (clauses 2·19 and 2·20)

Practical Completion, Lateness and Liquidated Damages (clauses 2·21 to 2·24)

Partial Possession by Employer (clauses 2·25 to 2·29)

Defects (clauses 2·30 and 2·31)

CDP Design Work (clauses 2·32 to 2·34 – ICD only)

6

Section 3 – Control of the Works

Access and Representatives (clauses 3·1 to 3·4)

Sub-Contracting (clauses 3·5 to 3·7)

Architect/Contract Administrator’s instructions (clauses 3·8 to 3·17)

CDM Regulations (clauses 3·18 and 3·19 and Supplemental Provision 2)

9

Section 4 – Payment (and Schedule 3 – Forms of Bonds)

Contract Sum and Adjustments (clauses 4·1 to 4·3)

Payments, Certificates and Notices (clauses 4·4 to 4·14)

Fluctuations (clauses 4·15 and 4·16 and Schedule 4)

Loss and Expense (clauses 4·17 to 4·19)

10

Section 5 – Variations

General (clauses 5·1 and 5·2)

The Valuation Rules (clauses 5·3 to 5·6 (IC); clauses 5·3 to 5·7 (ICD))

12

Contents


Page ii IC/G 2011 © The Joint Contracts Tribunal Limited 2011

Section 6 – Injury, Damage and Insurance (and Schedule 1 – Insurance Options)

Injury and property damage – indemnity and insurance (clauses 6·1 to 6·6)

Works insurance (clauses 6·7 to 6·11 and Schedule 1)

Joint Fire Code (clauses 6·12 to 6·15)

CDP Professional Indemnity insurance (clauses 6·16 and 6·17 – ICD only)

13

Section 7 – Assignment and Collateral Warranties 16

Section 8 – Termination

General (clauses 8·1 to 8·3)

Termination by the Employer (clauses 8·4 to 8·8)

Termination by the Contractor (clauses 8·9 and 8·10)

Termination by either Party (clause 8·11)

Consequences of Termination under clauses 8·9 to 8·11, etc. (clause 8·12)

16

Section 9 – Settlement of Disputes

General (and Supplemental Provision 6)

Mediation (clause 9·1) and ADR

Adjudication (clause 9·2)

Arbitration (clauses 9·3 to 9·8) and litigation (Article 9)

18

Named Sub-Contractors (Schedule 2) 19

Appendix A – IC and ICD 2011 changes 22

Appendix B – IC and ICD User Checklist 23

Appendix C – Related Publications 29


© The Joint Contracts Tribunal Limited 2011 IC/G 2011 Page 1

General

1 This edition of the Guide to the Intermediate Building Contract is has been issued in conjunction with the 2011

edition of the Contract.

2 The Intermediate Building Contract continues to be published in two versions: IC 2011, for use where the

Contractor himself is not required to design any of the Works, and ICD 2011 (Intermediate Building Contract with

contractor’s design) for use where he is required to design part or parts of the Works.

3 The Intermediate Building Contract is flexible; it is more detailed and has more extensive control procedures than

the Minor Works Building Contract (MW) but is less detailed than the Standard Building Contract (SBC).

4 It is primarily intended for use where:

• the proposed building works are of simple content involving the normal, recognised basic trades and skills of

the industry, without building service installations of a complex nature or other complex specialist work;

• the works, or most of them, have already been designed or detailed by or on behalf of the Employer, fairly

detailed contract provisions are necessary and the Employer is to provide the Contractor with drawings and

bills of quantities, a specification or work schedules to define adequately the quantity and quality of the work.

5 Each version requires the appointment of an Architect/Contract Administrator and Quantity Surveyor to administer

the contract, and allows for the works to be carried out in sections. Each continues to include the provisions that

meet the needs of both the Private and Local Authority sectors.

6 Each version also continues to allow the Employer to name specialist sub-contractors, either in advance or through

instructions as to the expenditure of provisional sums, on the same basis as previously.

7 In relation to ICD 2011, however, Named Sub-Contractors must not be appointed to undertake design or

construction work within the Contractor’s Designed Portion; the naming procedure should only be used for discrete

parts of the Works outside that portion. ICD 2011 itself is also not designed to be used as a design and build

contract.

2011 edition changes

8 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.)

9 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.

10 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 IC and ICD 2005 Revision 2, which were inserted as a counter to

failure or delay in the issue of payment certificates, are now redundant.

11 Together with minor consequential amendments, IC and ICD 2011 also:

• incorporates the revised Terrorism Cover provisions included in JCT’s December 2009 Update; and

• 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.

Introduction


IC/G 2011 © The Joint Contracts Tribunal Limited 2011

Format and Risk Allocation

12 The IC and ICD 2011 format remains substantially unchanged from that of IC and ICD 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.

13 The amendments to the Construction Act may in certain cases prove to have unexpected effects but, in JCT’s view,

the resultant changes incorporated in IC and ICD 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.

Content of the Guide

14 This Guide reviews the provisions of IC and ICD 2011 sequentially, starting with the Articles of Agreement, followed

by the Conditions. The Schedules, including the Supplemental Provisions (Schedule 5), are discussed in the

context of the Conditions to which they most closely relate. That commentary is followed by:

Appendix A – IC and ICD 2011 changes

Appendix B – IC and ICD User Checklist

Appendix C – Related JCT Publications.

15 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 IC or ICD 2011 contract form; Appendix

C lists the other JCT documents that form part of the 2011 edition of the Intermediate Building Contract suite or that

can readily be used in conjunction with the either version of the contract.



16 Each version of the Intermediate Building Contract 2011 retains the Intermediate Building Contract 2005 format,

comprising the Recitals, Articles and Contract Particulars, followed by Attestation clause. Part 1 of the Contract

Particulars sets out the general particulars required for both the Articles of Agreement and the Conditions; Part 2

contains the entries relating to Collateral Warranties.

Recitals

17 The Recitals require insertion of a brief description of the Works, identifiers of the Contract Drawings or of their

listing and, in ICD, a brief description of the Contractor’s Designed Portion. They then also require identification of

the further Contract Document describing the Works (i.e. Bills of Quantities, a Specification or Work Schedules)

and the basis for valuing Variations and provisional sum work, i.e. Pricing Option A (where the Priced Document is

one of those three descriptive documents) or Pricing Option B, where the further Contract Document is an unpriced

Specification and the basis for valuation is either a Contract Sum Analysis or a Schedule of Rates.

18 Deletions are to be made if there are no Named Sub-Contractors, if a priced Activity Schedule or an Information

Release Schedule is not provided or if the Works are not divided into Sections.

19 The JCT would again stress the need for proper identification of drawings intended to form the Contract Drawings

and, in the case of ICD, the documents that are to comprise the Employer’s Requirements and Contractor’s

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

20 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.

21 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.

22 In terms of Article 7 (Adjudication) and clause 9·2 of the Conditions, care needs to be taken when the Intermediate

Building Contract 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.

23 Article 8 (Arbitration) applies only if the Contract Particulars specifically state that it and clauses 9·3 to 9·8 apply. If

they do not apply (and subject to either Party’s 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

24 Part 1 (General) and Part 2 (Collateral Warranties) both remain substantially in their IC and ICD 2005 (Revision 2)

form, with only minor adjustments, all in Part 1.

Part 1

25 In relation to the 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

Articles of Agreement



ground. More detailed coverage of such issues is commonplace but is often quite properly contained in the

Preliminaries rather than the contract conditions.

26 To reflect amendments to the Construction Act the clause 4·7·1 entry now specifies the due dates for interim

payments; the requirement and period for issue of Interim Certificates remain linked to those dates.

27 There is an additional entry for clause 6·10 and Schedule 1 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 6·10, the entry may also be used to record or refer to them.

28 In relation to Professional Indemnity insurance and the entries for clause 6·16 in ICD, 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 Employer’s Requirements.

29 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.

30 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.

31 In relation to the clause 9·2·1 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.

Part 2

32 General comments are made below in the context of section 7 but it should be noted, as it is in the footnotes to (E)

(Collateral Warranties from Sub-Contractors) that the requirements for Collateral Warranties from Named Sub-

Contractors are intended to be dealt with by the Intermediate Named Sub-Contractor/Employer Agreement

(ICSub/NAM/E), i.e. as a matter directly between the Sub-Contractor and the Employer, not as a matter for this

Agreement or the Intermediate Named Sub-Contract (ICSub/NAM).

33 To avoid later disputes and delays, it is important that full details of the requirements for Collateral Warranties be

given to prospective contractors and their domestic 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

Intermediate Sub-Contracts are predicated upon these (Main) Contract Particulars being made available in

substantially completed form for sub-contract tendering purposes and it is clearly sensible to reduce the number of

tender documents.

34 If Employers consider it easier to use separate, standard documentation for the warranty requirements, or if in hard

copy 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.

35 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.

Attestation

General

36 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

37 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 7·4) and the limitation period that applies to them.

Foreign companies

38 Many foreign companies involved in development and construction now themselves carry on business in the UK,

rather than operating here through UK subsidiaries.

39 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.

40 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.



Section 1 – Definitions and Interpretation

Definitions (clause 1·1)

41 Clause 1·1 contains few changes from IC and ICD 2005. Four of the five additional defined terms (Interim

Application, Interim Payment Notice, Final Payment Notice and Pay Less Notice) follows 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.

Interpretation (clauses 1·2 to 1·11)

42 This sub-section of IC and ICD 2011 contains similarly few changes from IC and ICD 2005. Clause 1·4·5 has been

extended to reflect the increasing devolvement of legislation; clause 1·8 has been abbreviated; and there are very

minor deletions in clauses 1·9·2 and 1·9·3 consequent on wider changes that were necessary in the corresponding

clause of the JCT Design and Build Contract. The Applicable law provision has now become clause 1·11,

consequent on the deletion of the IC and ICD 2005 clause 1·11 (Disputes or differences), the latter being redundant

as a result of the new statutory status accorded to Contractor’s applications/payment notices where payment

certificates are not issued on time.

43 In terms of clause 1·9, a corollary of the strict statutory time limits for issue of Architect/Contract Administrator’s

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 4·15·1.

Section 2 – Carrying out the Works

44 Section 2 remains substantially in its IC and ICD 2005 form, dealing sequentially with various aspects of the

construction process, starting with the Contractor’s basic obligations with respect to the carrying out and completion

of the Works.

Contractor’s obligations (clauses 2·1 to 2·3 and Supplemental Provisions 1 and 3 to 5)

45 Clause 2·1 develops the Contractor’s 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. building regulations, 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.

46 Clause 2·1 in ICD also includes the Contractor’s obligations to complete the design of the Contractor’s Designed

Portion, including the specification of goods, materials and workmanship for them, so far as not already established

by the Employer’s Requirements or Contractor’s Proposals, and to comply with Architect/Contract Administrator’s

directions on integration into the overall design to the Works.

47 Clause 2·2 makes further provision with regard to materials, goods and workmanship. Clause 2·3 sets out the

Contractor’s obligation to pay all fees and charges that are recoverable from him in connection with the Works; he

is then able to recover them as an adjustment to the Contract Sum, unless they were required to be included in it or

unless (in the case of ICD) they relate solely to the Contractor’s Designed Portion.

48 Unless disapplied, Supplemental Provision 1 in Schedule 8 makes certain provisions for collaborative working;

Supplemental Provisions 3 and 4 encourage Contractor’s suggestions for cost savings, value engineering and

improving environmental performance, with 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. In terms of Supplemental Provision 3, there are inherent and recognised problems in assessing

benefits and making suitable arrangements for sharing them; equally, when making cost saving and value

improvement suggestions, Contractors should take care to avoid accidental assumption of design liabilities,

particularly where IC is used and they have no design responsibilities.

Conditions



Possession (clauses 2·4 to 2·7)

49 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:

• the Employer’s 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 Contractor’s 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 Contractor’s obligations to allow the Employer or other contractors on the latter’s 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.

(Employer’s use or occupation for storage or other purposes under clause 2·6 should be distinguished from partial

possession being retaken by the Employer under clause 2·25; the latter is treated as practical completion of the

part repossessed. If there is any part of the Employer’s 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 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.)

Supply of Documents, Setting Out etc. (clauses 2·8 to 2·11)

50 At clause 2·8 this sub-section covers the Contract Documents, access to them and confidentiality and, at clause

2·9, levels and setting out dimensions for the Works as a whole. Under clause 2·10, the Architect/Contract

Administrator is responsible for supplying information from the Employer’s side in accordance with the Information

Release Schedule and is also required under clause 2·11 to issue any further drawings and such instructions as

are necessary to enable the progress of the Works to be maintained.

51 In ICD, clause 2·9 also provides for the supply of the Contractor’s Design Documents and the levels and setting out

dimensions for the Contractor’s Designed Portion.

52 The Contractor is to supply those design documents as and when necessary and in accordance with any design

submission procedure set out in the Contract Documents; ICD itself does not include the procedure set out in SBC

2011 and certain other JCT contracts, but that or another similar procedure can readily be incorporated in the

Employer’s Requirements.

53 If there are inaccuracies in the Contractor’s levels and setting out that are not required to be amended, the

Architect/Contract Administrator has power under clause 2·9 to make an appropriate deduction from the Contract

Sum but acceptance of the defect specifically requires Employer’s consent. A similar provision applies in the

context of clause 2·30 (Rectification).

Errors, Inconsistencies and Divergences (clauses 2·12 to 2·16)

54 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.

55 Subject to two exceptions in ICD, the general principle on cost in both versions of the contract is simple; it is borne

by the Party responsible for the document in question. If there are Contract Bills that contain undisclosed

departures from SMM 7, or if, in the case of ICD, there are inadequacies in the Employer’s Requirements (or in

designs contained in them) which are not dealt with in the Contractor’s Proposals, the Employer is responsible for

the cost of the necessary Variation (see also clause 2·34·5 in ICD). Under ICD the Contractor is responsible for

errors, discrepancies and divergences in the Contractor’s Proposals, in his CDP Analysis and in any other design

work he carries out.

56 The two ICD exceptions to that principle arise in relation to divergences from the Statutory Requirements. The first,

under clause 2·15, is that the Contractor is responsible for checking that the Employer’s Requirements and any

instructions relating to the Contractor’s 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 Contractor’s

documents or Employer’s documents, if the divergence arises from a change in Statutory Requirements after the

Base Date and that change necessitates an alteration in the Contractor’s Designed Portion.



Unfixed Materials and Goods (clauses 2·17 and 2·18)

57 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 3·6 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 4·12.

Adjustment of Completion Date (clauses 2·19 and 2·20)

58 Clause 2·19 gives the Architect/Contractor Administrator power and, where appropriate, a duty to extend the time

for completion beyond the Date for Completion in respect of the events (Relevant Events) listed in clause 2·20. The

Relevant Events are the same as those in SBC 2011 with one addition, namely compliance with an instruction

relating to a Named Sub-Contractor.

59 In respect of Relevant Events which occur before practical completion but after the due date for completion has

passed, the position under the Intermediate Building Contract remains that extensions of time may be given only in

respect of events for which the Employer is responsible.

60 The Contractor is under an obligation to notify the cause of delay or likely delay forthwith; 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 nor, where that likelihood exists, is it limited to events that have already occurred.

61 The Contractor must supply such information required by the Architect/Contract Administrator as is reasonably

necessary; he must also use best endeavours to prevent delay and do everything reasonably required to proceed.

62 The Architect/Contract Administrator’s duty to grant extensions is only to grant such extension as is fair and

reasonable; he should reach a decision as soon as reasonably practicable. Under clause 2·19·3, however, he has

power to review and to give an extension of time in respect of any Relevant Events at any time up to 12 weeks after

the date of practical completion. This power appears frequently to be overlooked; it provides an opportunity for

proper reflection and assessment and is, in the JCT’s view, essential.

63 The grant of an extension of time automatically cancels any certificate of non-completion previously issued in

accordance with clause 2·22. This in turn may lead to the operation of clause 2·24, requiring the Employer within a

reasonable time to repay any liquidated damages previously paid to or deducted by him in respect of the period

covered by the extension.

Practical Completion, Lateness and Liquidated Damages (clauses 2·21 to 2·24)

64 Clause 2·21 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 to health and safety file matters and, in ICD, as-built drawings. 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.

65 Clause 2·22 provides for issue of a certificate of non-completion if the Contractor fails to achieve practical

completion by the relevant Completion Date. In the event of such failure, liquidated damages will become payable

or deductible on notice from the Employer in accordance with clause 2·23·2, provided that a subsisting certificate of

non-completion 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 2·23·1).

66 Users should note the time limits for service both of the warning notification (clause 2·23·1·2) and of the notice of

the claim itself (clause 2·23·1, 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

4·11·5, 4·12·1 or 4·14·4 in order to comply with section 111(3) of the Construction Act.

Partial Possession by Employer (clauses 2·25 to 2·29)

67 As indicated above, there is provision at clauses 2·6 and 2·7 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 2·6 contains a pre-condition as to insurance,

but the clauses otherwise have no effect on the operation of other terms of the Contract.

68 Clause 2·25, 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 2·26 to 2·29, 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.



69 The clause 2·25 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 2·30 and 2·31)

70 Clauses 3·14 to 3·16 set out the Architect/Contract Administrator’s 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. Under clause 2·30, notice of the

defects or faults must be given or delivered not later than 14 days after the expiry of the Rectification Period.

71 As under clause 2·10 (Setting out), 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 2·31

then sets out his obligation to issue the certificate of making good. Under clause 4·9, unless the Parties are in the

happy position of there having been no notified defects, it is issue of the certificate of making good that triggers the

final release of Retention (see clause 4·9·2). It also normally starts the Final Certificate timetable under clause

4·14·1.

CDP Design Work (clauses 2·32 to 2·34 – ICD only)

72 This ICD sub-section deals with the supply of as-built drawings, the Employer’s licence to use Contractor’s Design

Documents and the Contractor’s design liability.

73 As noted in the context of clause 2·21, the supply of as-built drawings is a pre-condition to issue of the Practical

Completion Certificate or a Section Completion Certificate where there is a Contractor’s Designed Portion. The

terms and conditions of the Employer’s licence to use Contractor’s Design Documents are substantially the same

as those of the licence granted to Purchasers, Tenants and Funder under JCT Collateral Warranties; it is

conditional upon the Contractor having been paid in full.

74 Clause 2·34 sets out the Contractor’s liability in respect of his 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 2·34·3, 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 Contractor’s 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. However, in line with the comments above on clauses 2·12 to 2·16 and subject to ensuring conformity

with Statutory Requirements, clauses 2·34·4 and 2·34·5 make it clear that the Contractor is not responsible for the

Employer’s Requirements.

Section 3 – Control of the Works

75 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 Administrator’s instructions; and CDM Regulations. The only

amendment to it in IC and ICD 2011 is the minor clarification in clause 3·6·2·4.

Access and Representatives (clauses 3·1 to 3·4)

76 For the purpose of inspecting work and the conditions under which it is being undertaken, clause 3·1 requires

reasonable access for the Architect/Contract Administrator and his nominees to the Works and the Contractor’s

premises and, so far as practicable, similar access to sub-contractors’ premises (a point reflected in clause

3·6·2·2).

77 In terms of representatives (clauses 3·2 to 3·4), 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 clerk of works whose role is solely that of inspector: he has no power to issue instructions or

directions.

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

clause 3·4·1 requires the appointment to be made speedily, within 14 days, and, except in local government cases

where a council official is appointed, the Contractor has a right of reasonable objection to the replacement. Clause

3·4·2 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.



Sub-Contracting (clauses 3·5 to 3·7)

79 Save in the case of Named Sub-Contractors, any sub-contracting by the Contractor of work or (in ICD) design

requires Architect/Contract Administrator’s consent, though in neither case is it to be unreasonably delayed or

withheld (clause 3·5).

80 Clause 3·6 sets out the minimum conditions required of any sub-contract, namely automatic termination of the sub-

contractor’s employment upon termination of the Contractor’s 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.

81 Clause 3·7 requires the Contractor to enter into any Named Sub-Contract specified in the Contract Documents. The

provisions governing Named Sub-Contracts and associated documentation are discussed below in the context of

Schedule 2, which makes detailed provision with respect to inability to sub-contract, provisional sum procedures,

termination and the exclusion of design liability.

Architect/Contract Administrator’s instructions (clauses 3·8 to 3·17)

82 The sub-section commences with the general requirement that the Contractor should forthwith comply with all

instructions (clause 3·8). In clause 3·9 it outlines the consequences of failure to do so in terms of liability for the

Employer’s additional costs and then in clause 3·10 deals with the position if there in the Contractor’s view is doubt

as to the Architect/Contract Administrator’s power to issue particular instructions.

83 The only express exceptions to the requirement for immediate compliance are set out in clause 3·8. In the case of

each version there is an exception for instructions relating to a Variation within clause 5·1·2 (i.e. one that relates to

site access, imposes any limitation on working space or hours or affects the order of working), which operates if the

Contractor makes reasonable written objection to compliance. In ICD, there is an additional exception which relates

to instructions that would have an injurious practical effect on the design of the Contractor’s Designed Portion;

again, notice is required, but subsequent confirmation of the instruction by the Architect/Contract Administrator in

this latter case requires immediate compliance by the Contractor.

84 The sub-section then lists the Architect/Contract Administrator’s 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 2·11·1, 2·13·1, 2·15·2 and 2·30).

85 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, and the powers in relation to opening up, testing,

and non-compliant work or workmanship. There is also power to exclude persons from the site.

CDM Regulations (clauses 3·18 and 3·19 and Supplemental Provision 2)

86 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 Contractor’s 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.

87 General Health and Safety matters, which as Statutory Requirements are in any event also covered by the

Contractor’s obligations under clause 2·1, are augmented by Supplemental Provision 2, unless it is disapplied.

Section 4 – Payment (and Schedule 3 – Forms of Bonds)

88 The section remains divided into four sub-sections – Contract Sum and Adjustments; Payments, Certificates and

Notices; Fluctuations; and Loss and Expense.

89 Within the Payments, Certificates and Notices sub-section, the amendments to the Construction Act have involved

substantial redrafting of clauses 4·7 to 4·14 and, in addition to consequential amendments, IC and ICD 2011 further

simplify the text in certain other areas. However, there has been no change in the general format.

90 The forms of the two bonds referred to (Advance Payment and Off-site Materials and Goods (Listed Items)) are set

out in Schedule 3. Employer’s approval of the proposed surety for each bond required should wherever practicable

be obtained before the Contract is executed.



Contract Sum and Adjustments (clauses 4·1 to 4·3)

91 This sub-section deals briefly with the Contract Sum and the underlying principles. Clause 4·1 defines the quality

and quantity of work included in the Contract Sum; the situation where there are no Contract Bills but quantities are

given in the Specification or Work Schedules is now dealt with in a separate sub-clause (4·1·3). Clause 4·2 limits

adjustment to the express provisions of the Conditions and 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 they will continue to form the basis for any

valuation of work of a similar character under the Valuation Rules. Clause 4·3 (previously clause 4·13) records the

adjustments to be made to the Contract Sum and the Contractor’s obligation to provide related documents following

practical completion.

Payments, Certificates and Notices (clauses 4·4 to 4·14)

92 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.

93 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 4·7 in the 2011 edition therefore starts by defining the due dates for interim payments and then

provides at clause 4·7·2 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 IC

and ICD 2005 Revision 2, i.e. one month intervals up to practical completion and, unless otherwise agreed,

intervals of two months thereafter. Save as mentioned below, the final date for payment remains 14 days from the

due date (clause 4·11·1).

94 The amount of each payment to be certified as due in the period up to practical completion is to be calculated in

accordance with clause 4·8. Retention is effected through application of the percentage referred to in clause 4·8·1:

this is to be specified in the Contract Particulars where the default position is a 5% retention reducing to 2½% on

practical completion, the balance being released on Final Certificate. (There is provision at clause 4·7·3 for interim

valuations whenever the Architect/Contract Administrator considers them necessary and the pre-conditions for the

inclusion of Listed Items in a valuation (previously clause 4·12) are now set out in clause 4·9.)

95 Clause 4·10 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 Contractor’s 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 4·8 and there is a failure to issue the certificate in due time,

then, under clause 4·10·2·1, 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 4·11·5.

96 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.

97 The point of difference referred to above in relation to clause 4·10 is that indicated by the italicised words.

Previously a Contractor’s application under the Contract needed only to show the amount of the valuation under

what is now clause 4·8, but section 110B refers to ‘the sum due’, i.e. the Contractor’s application or payment notice

should in addition to the amount of the valuation show also the deductions under clause 4·8 (i.e. amounts of any

advance payment due for reimbursement and amounts previously certified, as well as any deductions under clause

4·8·3) and show the net amount considered to be due.

98 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 4·11·6. In IC and ICD 2011, the provisions of the former clause 4·8·6, covering

interest in cases of failure to certify, and the corresponding provisions of clause 4·14·6 in relation to the Final

Certificate have been deleted since the matter is now dealt with by the Contractor’s 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. (If there is a failure to issue a certificate and the

Employer makes a payment in response to the Contractor’s Interim Payment Notice, the Employer may in respect

of the next certificate issued, and in the absence of any other arrangement, need to give a Pay Less Notice, since

the certificate deduction is technically limited to amounts certified and not amounts paid.)

99 Clause 4·13 sets out the Contractor’s 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 Contractor’s new statutory

right to reasonable costs and expenses, previously dealt with as Loss & Expense under clauses 4·17 and 4·18.



100 Clause 4·14 provides for issue of the Final Certificate, the effects of which are set out in clause 1·9. However, to

bring about the closure envisaged by clause 1·9, the Final Certificate must be issued on time, within the 28 day

period specified in clause 4·14·1.

Fluctuations (clauses 4·15 and 4·16 and Schedule 4)

101 The only Fluctuations Option provided by the Intermediate Building Contract is that in respect of Contribution, Levy

and Tax Fluctuations. Under a Named Sub-Contract, however, there is a further option (Formula Adjustment), for

which provision is made in clause 4·16.

Loss and Expense (clauses 4·17 to 4·19)

102 Clause 4·17 expressly entitles the Contractor by written application to claim loss and expense that he incurs either

as a result of a deferment of possession under clause 2·5 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.

103 The Relevant Matters are listed in clause 4·18. They comprise Variations, 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;

certain instructions in relation to Named Sub-Contractors; 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 4·13, the Contractor’s 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.

104 Loss and expense ascertained under clause 4·17 is added to the Contract Sum. The provisions do not affect any

other rights or remedies of the Contractor, e.g. to make a claim for damages, but he is obliged to make his

application for loss and expense within a reasonable time and supply such information in support as is reasonably

necessary.

Section 5 – Variations

105 The section is divided into two sub-sections: the first a General sub-section which includes at clause 5·1 the

definition of Variations, and the second comprising the Valuation Rules.

General (clauses 5·1 and 5·2)

106 The clause 5·1 definition of Variations divides into two parts: the first, in clause 5·1·1, consists of 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 Contractor’s clause 3·8 right of

reasonable objection, excusing immediate compliance with instructions, arises only in relation to the second

category.)

107 Clause 5·2, 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 agreed or 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 Intermediate Building Contract contains no express Variation

Quotation procedure of the type included in SBC 2011.

The Valuation Rules (clauses 5·3 to 5·6 (IC); clauses 5·3 to 5·7 (ICD))

108 Clause 5·6 (Measurable Work) provides that where the work to be valued is of a similar character to work in 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. The clause also makes similar provision in relation to Approximate Quantities where there is only a

quantitative change.

109 Clause 5·4 makes provision for valuing Daywork; the Percentage Additions and any All-Inclusive Rates applicable

should be set out in the Priced Document.

110 Clause 5·5 makes consequential provision for any resultant changes in conditions under which other work, outside

the direct scope of the instruction, is executed, with a ‘safety-net’ provision at clause 5·6·1.



111 In ICD, clause 5·7 applies the clause 5·3 and other principles to variations in the Contractor’s Designed Portion;

these are valued by reference, where appropriate, to the CDP Analysis and with specific allowance for the addition

or omission of design work.

Section 6 – Injury, Damage and Insurance (and Schedule 1 – Insurance Options)

112 The section takes the form of four sub-sections in the IC version: Injury to Persons and Property; Insurance against

Personal Injury and Property Damage; Insurance of the Works; and Joint Fire Code – compliance. ICD contains an

additional subsection covering CDP Professional Indemnity Insurance.

113 In terms of Works insurance, the three Insurance Options (A, B and C) are set out in Schedule 1.

Injury and property damage – indemnity and insurance (clauses 6·1 to 6·6)

114 Clauses 6·1 and 6·2 set out the Contractor’s liability for personal injury and for injury or damage to property,

coupled with his indemnity to the Employer, subject to the clause 6·2 and clause 6·3 exclusions. As part of the

overall insurance scheme, clauses 6·2 and 6·3 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 Employer’s

existing structures/contents prior to practical completion. (It will be noted that clause 6·3·2 deals with Sectional

completion.) Those exclusions are followed in the next sub-section by the Contractor’s clause 6·4 obligation to

effect insurance against liability under clauses 6·1 and 6·2 (i.e. Public Liability cover) with the level of cover (other

than in respect of employer’s liability insurance) specified in the Contract Particulars.

115 If the Contract Particulars state that insurance under clause 6·5·1 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 Employer’s 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.

116 The sole Revision 2 amendment in these sub-sections is the insertion at the end of clause 6·1, for the sake of

consistency, of the reference to Statutory Undertakers.

Works insurance (clauses 6·7 to 6·11 and Schedule 1)

117 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 6·7:

• 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 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.)

118 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

119 The term ‘Joint Names Policy’, and other relevant insurance terms, are defined in clause 6·8. 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 6·9, 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.



120 ‘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 Contractor’s 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 6·8 definition, it is not

entirely straightforward and requires the “buy back” of Terrorism Cover, which is discussed in greater detail below.

121 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 fitting-

out 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 6·4. 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.

Terrorism and Terrorism Cover

122 IC and ICD 2011, in common with the 2011 editions of other relevant JCT contracts, incorporate 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.

123 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 insurer’s original exclusions of terrorism risk and Pool Re cover were

both based on that Act’s definition of terrorist acts.

124 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.

125 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.

126 The amendments now incorporated in the sub-section consist principally in the new clause 6·10, which limits the

obligation to effect Terrorism Cover to whatever cover is selected, and in the extension of the clause 6·8 definition

of Excepted Risks to include terrorism risks that are not within the selected cover; clause 6·6 in its existing form

exempts the Contractor from any liability for and any obligation to insure against Extended Risks and the existing

definition of All Risks Insurance in clause 6·8 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.

127 Reference has been made above in relation to Part 1 of the Contract Particulars to the clause 6·10 entry for the

type of Terrorism Cover (or particular terms of it) that may be required.

128 In relation to clause 6·10 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 6·10·2). 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 6·10·3). This is because the cost of effecting open market

cover may not be as predictable as that of Pool Re. (Clauses 6·10·2 and 6·10·4 consist of the provisions formerly

comprising paragraph A·5 of Schedule 3; clause 6·10·4 preserves a Local Authority’s right itself to assume the

terrorism risk in the case of an increase in the Contractor’s terrorism cover premium on any renewal).



129 Clause 6·11 (the former clause 6·10) retains the provisions regarding non-availability at the renewal date and the

Employer’s 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.

130 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.

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

project.

132 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

133 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.

134 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.

135 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.

136 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.

137 In addition there are financial or consequential losses of the Employer’s Delay in Completion/Advance Loss of

Profits (ALOP)-type for which Employers may require their own separate cover.

Joint Fire Code (clauses 6·12 to 6·15)

138 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 6·13 and 6·14. Under clause 6·14 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.

CDP Professional Indemnity insurance (clauses 6·16 and 6·17 – ICD only)

139 Where there is a Contractor’s 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.

140 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 the

reasons explained above in relation to the Contract Particulars, the existing entries relating to asbestos and fungal

mould claims have now been deleted.

141 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 6·16 will apply in relation to

the Third Party Rights and each Collateral Warranty that the Contractor is required to give.



Section 7 – Assignment and Collateral Warranties

142 This section comprises the restrictions on assignment, together with the enabling provisions for Collateral

Warranties. The relevant forms of JCT Collateral Warranty are available as separate published documents.

143 The assignment provision forms out in clause 7·1. After the ancillary provisions of clauses 7·2 and 7·3, clauses 7·4

to 7·6 perform essentially the same functions as the enabling clauses formerly included with JCT Collateral

Warranty forms. These provisions relate:

• in the case of clauses 7·4 and 7·5, to the grant by the Contractor of collateral warranties for

Purchasers/Tenants and a Funder respectively; and

• in the case of clause 7·6, to Sub-Contractors’ obligations to grant collateral warranties in favour of

Purchasers/Tenants, a Funder or the Employer.

144 In each case, the required details are to be set out in Part 2 of the Contract Particulars.

145 Clause 7·4 provides for the mode of execution of collateral warranties.

Part 2 of the Contract Particulars

146 As indicated in the Contract Particulars section of this Guide, Part 2 of those 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.

147 The first requirement is identification of the Purchaser/Tenant and Funder beneficiaries. As a matter of general law,

the requirement for certainty applies for collateral warranties in much the same way as is required for third party

rights under the Contracts (Rights of Third Parties) Act 1999.

148 Where the beneficiary cannot immediately be identified by name, the method of identification 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 or, in the case of an as-yet unascertained Funder, as the lead bank providing finance for the

project or special purpose vehicle to be incorporated or established under a specified agreement.

149 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.

150 In completing the Sub-Contractor particulars at (E), regard should also be had to the default positions in

paragraphs (i) to (iii) (IC) ((i) to (iv) in ICD) and to 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 Sub-Contractors from whom collateral warranties may be required.

Section 8 – Termination

151 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).

152 The basis of the section is that each Party may terminate the Contractor’s 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.

153 In each case it is the Contractor’s 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.

154 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.



155 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 8·1 to 8·3)

156 In clause 8·1 the definition of insolvency has been restated in order to facilitate the modification of clause 8·7·3 to

accord with the new section 111(10) of the Construction Act. Clauses 8·1·1 to 8·1·3 of the definition reproduce

section 113 of the Act; clause 8·1·4 retains two additional tests of insolvency from the 2005 edition. The latter tests

remain grounds for termination under clauses 8·5 and 8·10, but do not under the Act entitle retention under clause

8·7·3 of sums already due. In terms of grounds for termination the ambit of the definition remains essentially the

same.

157 Clause 8·2 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

8·2·3 is aimed at ensuring that there is no scope for argument on the question of receipt.

158 Clause 8·3·1 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.

Termination by the Employer (clauses 8·4 to 8·8)

159 Clause 8·4 sets out the Employer’s right to terminate for default, clause 8·5 his right to terminate for insolvency and

clause 8·6 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.

160 In relation to the Contractor’s insolvency and termination on any of the three grounds referred to, clause 8·5·3 and

clause 8·7·3 (which has been slightly modified) respectively provide (inter alia) that, until the final account under

clause 8·7·4 or 8·8, no further sums become due under the Contract. (There is a similar provision in clause 8·12·1

and also in clause 6·11·3.) 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.

161 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.

162 The provisions of clause 8·7 as to the Employer’s rights, Contractor’s obligations and the basis of the final account

(clause 8·7·4) 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 8·8 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 8·9 and 8·10)

163 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 8·4), clause 8·9 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 8·10 relates to Employer insolvency. The consequences of termination are not

dissimilar to those of termination under clause 8·11 and these are dealt with together in the final sub-section

(clause 8·12).

Termination by either Party (clause 8·11)

164 As indicated above, the bilateral right of termination under clause 8·11 is not entirely dissimilar to termination by the

Contractor under clause 8·9 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 8·11·2 contains the appropriate exclusion for

Contractor’s negligence.)

Consequences of Termination under clauses 8·9 to 8·11, etc. (clause 8·12)

165 This sub-section covers the consequences of termination under clauses 8·9 to 8·11 and also where termination

arises under clause 6·10·2·2 (withdrawal of Terrorism Cover) or paragraph C·4·4 of Schedule 1 (material loss of or

damage to existing structures). As under clause 8·8, 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 Employer’s default or insolvency or where

Specified Perils damage giving rise to an extended suspension and then to termination under clause 8·11 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)

166 IC and ICD contain provisions in relation to four external means of settling disputes:

• it refers to the possibility of resolving the 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

9·2), with adjudication being conducted in accordance with the Scheme for Construction Contracts, subject

only to the clause 9·2 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.

167 Supplemental Provision 6 in Schedule 5, 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 9·1) and ADR

168 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 9·2)

169 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 Employer’s advisers should consider with

their client whether the adjudication provision is desirable or whether it should be deleted.

170 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 9·3 to 9·8) and litigation (Article 9)

171 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.



172 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

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 9·7) the parties agree may be referred to the courts.

Named Sub-Contractors (Schedule 2)

Procedures

173 Clause 3·7 and Schedule 2 provide a framework for part or parts of the Works to be carried out by a Named Sub-

Contractor, i.e. a person named by the Employer or Architect/Contract Administrator who is to be employed by the

Contractor as a sub-contractor on the basis of the JCT Intermediate Named Sub-Contract Tender & Agreement

(ICSub/NAM).

174 As stated in paragraph 12 of Schedule 2, these provisions do not apply to the execution of part of the Works by a

Statutory Undertaker acting in that capacity. Where ICD is used, i.e. where the main contract includes elements of

design by the Contractor, the Named Sub-Contract procedure must also not be used in relation to work (or its

design) that falls within the Contractor’s Designed Portion.

175 The Named Sub-Contractor may be named in one of two ways:

• ‘Procedure One’, i.e. naming in the Contract Bills/Specification/Work Schedules at the tender stage, under

which the Contractor prices the sub-contract work described; or

• ‘Procedure Two’, i.e. naming in an instruction as to the expenditure of a provisional sum included in whichever

of those documents applies.

176 The Contractor must be given a full description of the work, either in the Contract Bills/Specification/Schedules of

Work where Procedure One applies or in an instruction under Procedure Two, together with details of the Named

Sub-Contractor’s tender, as referred to in the Third Recital of IC (in ICD, the Fourth) and in paragraph 5·2 of

Schedule 2.

177 Where the sub-contractor is named under Procedure One in advance of the Contractor being selected, it is

important that prospective Contractors also take full account of the Named Sub-Contractor’s requirements and, if

they have concerns, raise the matter with the Architect/Contract Administrator in good time before the submission

of Main Contract tenders. (See also the footnotes to the Named Sub-Contract Agreement (ICSub/NAM/A)

regarding Numbered Documents.)

178 In the case of Procedure One, paragraph 2 of Schedule 2 provides that:

• if the Contractor is unable to enter into a sub-contract with the sub-contractor named in the Contract

Documents, then, provided that the Architect/Contract Administrator is satisfied with the reasons given, he is

required to issue further instructions; and

• at any time before the Contractor has entered into a sub-contract with the sub-contractor named, the

Architect/Contract Administrator may, by omitting the work and substituting a provisional sum, instruct that

another person shall carry out the work.

179 In the case of Procedure Two the Contractor has a right of reasonable objection, exercisable within 14 days of the

instruction, and any inability to enter into the sub-contract may be dealt with by the Architect/Contract Administrator

issuing a further instruction as to expenditure of the provisional sum.

180 Once appointed and design liability apart, the relationship between the Contractor and the Named Sub-Contractor

is generally the same as that with a domestic sub-contractor. However, if the Contractor becomes aware of events

that may lead to termination of a Named Sub-Contractor’s employment, the Contractor must notify the

Architect/Contract Administrator; if termination then takes place because of the default or insolvency of the Named

Sub-Contractor or with the Architect/Contract Administrator’s consent, the Contractor is entitled to some relief from

the financial consequences.

Use of Intermediate Named Sub-Contract Tender & Agreement (ICSub/NAM)

181 Both procedures involve the use of ICSub/NAM, which is divided into three parts:



• Invitation to Tender (ICSub/NAM/IT), to be completed by the Architect/Contract Administrator. This part gives

particulars of the Main and Sub-Contract Works, together with indications of the sub-contract programme, the

basis of fluctuations etc;

• Tender (ICSub/NAM/T), to be completed by the tendering sub-contractor, who quotes a sub-contract sum

together with the percentage additions to the prime cost of daywork which he requires. In addition, he

specifies any additional attendances or other special requirements and gives programme information and

details of fluctuations arrangements, to the extent not already stated in the Invitation to Tender;

• Agreement (ICSub/NAM/A), to be completed and executed by the Contractor and the chosen sub-contractor.

This incorporates by reference the Intermediate Named Sub-Contract Conditions (ICSub/NAM/C) and

includes as Numbered Documents the appropriate sub-contract tender documents.

Intermediate Named Sub-Contract Conditions (ICSub/NAM/C)

182 These Conditions are similar to those of the other Intermediate Sub-Contracts (i.e. ICSub/C and ICSub/D/C) with

only minor adjustments, principally reflecting the fact that the Named Sub-Contractor’s obligations with regard to

design, PI insurance and collateral warranties are matters to be dealt with directly between him and the Employer

and contained in the Intermediate Sub-Contractor/Employer Agreement, as referred to below. (Clause 7·7·4 of the

Conditions covers a no-loss point that might otherwise arise from termination of a Named Sub-Contract as a result

of the Contractor’s limited obligations under paragraph 10 of Schedule 2.)

Design of sub-contract works

183 The Named Sub-Contract procedures are intended primarily for work involving a specialist’s design input, which

commonly appears to be required even where the installation or other specialist work involved is not of an unduly

complex nature. Under paragraph 11·1 of Schedule 2, the Contractor is in such cases expressly relieved of

responsibility to the Employer for defects in the Named Sub-Contractor’s design of the sub-contract work. However,

this relief does not affect the Contractor’s obligation in regard to the supply of goods, materials and workmanship.

184 Since the Contractor is relieved of responsibility for the Named Sub-Contractor’s design, it is important that the

Employer obtains suitable warranties or undertakings from the Named Sub-Contractor during the tender process, in

or based on the form of the JCT Named Sub-Contractor/Employer Agreement, though such an agreement may be

kept separate from the ICSub/NAM Tender and its terms need not be disclosed to the Contractor.

Intermediate Named Sub-Contractor/Employer Agreement (ICSub/NAM/E)

185 The Intermediate Named Sub-Contractor/Employer Agreement (ICSub/NAM/E) contains undertakings by the

Named Sub-Contractor to use reasonable skill and care in his design work and the selection of materials and

goods and also to satisfy any relevant performance specifications. Those undertakings are substantially in the

terms of the JCT Collateral Warranty SCWa/E and the benefit of the Agreement is, within the usual limits,

assignable by the Employer. In addition, there is provision for the Named Sub-Contractor to give collateral

warranties to such purchasers, tenants and/or funder as are identified in the relevant Schedule. The latter is

important because, as indicated in the footnotes to Part 2 of the Contract Particulars in both Intermediate Building

Contracts, collateral warranties by the Named Sub-Contractor are intended to be dealt with by the direct

undertaking to the Employer contained in this Agreement; there is no provision for collateral warranties in the

Named Sub-Contract Agreement or Conditions.

186 The Intermediate Named Sub-Contractor/Employer Agreement is intended to be entered into on selection of a

Named Sub-Contract tender or approximate estimate. It also is designed to facilitate preliminary design work and

procurement by the Named Sub-Contractor where lead times require and the potential requirements can be stated.

In relation both to design information supplied and such procurement, there is an undertaking by the Employer to

meet the Named Sub-Contractor’s reasonable costs if through no fault of the latter there is no resultant Named

Sub-Contract with the Contractor.

187 The Agreement recognises that, to facilitate the process, other payments by the Employer may be required and

contains a degree of flexibility in relation to ‘instruction to proceed’ aspects.

Pricing

188 The Contractor is responsible for paying the Named Sub-Contractor in the same way as his own domestic sub-

contractors; the Named Sub-Contractor’s work is not made the subject of a prime cost sum in the Contract

Documents. Accordingly:

• where the Named Sub-Contractor is named under Procedure One, the Contractor must take into account the

description and particulars given and, in addition to the Named Sub-Contractor’s price, include in his price or

tender sum an amount for managing and supervising execution of the Named Sub-Contract work (see also

the following, final sub-section of this Guide);



• where Procedure Two applies, the Employer pays the Contractor for managing and supervising the execution

of the work by the Named Sub-Contractor either such amount as is agreed between the Employer and

Contractor or the amount determined by the Quantity Surveyor by way of a Valuation under clause 5·2.

Consequences of termination

189 The Named Sub-Contract Conditions at section 7 include the normal JCT sub-contract provisions for termination of

a sub-contractor’s employment and the consequences in terms of the Sub-Contract.

190 However, paragraph 6 of Schedule 2 requires the Contractor to liaise with the Architect/Contract Administrator

regarding any prospective termination for default, insolvency or corrupt act on the part of the Named Sub-

Contractor and requires the Contractor to obtain the Architect/Contract Administrator’s consent before he accepts

termination or repudiation by the Named Sub-Contractor.

191 Paragraph 7 of that Schedule then provides the Architect/Contract Administrator in the event of such termination

with the options, exercisable by instructions, of naming another sub-contractor (subject to the Contractor’s right of

reasonable objection), allowing the Contractor to arrange for carrying out the work either by himself or through an

approved domestic sub-contractor, or omitting the work from the main contract.

192 The Contractor should ensure that such instructions are given promptly so that he receives an appropriate

extension of time and also needs to take into account that he generally is not entitled to recover from the Employer

any loss and expense arising from the termination or the costs of repair of any defects in the terminated sub-

contractor’s work (for which he, the Contractor, remains responsible) (see paragraph 8). Under paragraph 10·2, he

is also under a duty to use reasonable endeavours to recover from the terminated sub-contractor the amounts

referred to in paragraph 10·2·1, and to account to the Employer for amounts recovered.



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

Articles

Article 5

Article 6

Article 8

Contract Particulars (entries)

Part 1: Eighth Recital and clause 4·5

Clause 4·6 (two entries)

Clause 4·7·1*

Clause 4·8·1*

Clause 4·9·4

Clause 4·9·5

Clause 6·10 and Schedule 1*

Clause 6·12

Clause 6·15

Clause 6·16 (ICD)

Clause 9·2·1

Conditions (clauses)

1·1: Final Payment Notice*

Interim Application*

Interim Payment Notice*

Pay Less Notice*

SWMP Regulations

1·4·5

1·8

1·9·2, 1·9·3,

1·11

2·17

2·18

2·20·5

2·23·1 hanging paragraph

2·26

3·6·2·1·1, 3·6·2·4, 3·6·2·6

4·1·2, 4·1·3

4·2

4·3

4·4

4·5

4·6

4·7*

4·8*

4·9

4·10*

4·11*

4·12*

4·13*

4·14*

4·18·3, 4·18·4

6·8 (Excepted Risks*, Pool Re Cover*, Terrorism

Cover*)

6·10*

6·11*

6·12

6·13

6·14

2011 numbering

6·15

6·16 (ICD)

6·17 (ICD)

8·1*

8·5·3·1

8·6

8·7·3*, 8·7·4 introduction

8·8·1

8·9·1·1

8·12 introduction, 8·12·1, 8·12·3 introduction

9·3

Schedules

Schedule 1:

Option A paragraph A·4·2, A·4·6

Option B paragraph B·3·2

Option C paragraph C·4·2

Appendix A – IC and ICD 2011 changes



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

Parties’ details

□ Employer’s name and address

□ Contractor’s name and address

Works (First Recital)

□ nature

□ location

Contractor’s Designed Portion (Second Recital in ICD)

□ applicable?

□ description

Employer’s Requirements (Fourth Recital)

□ identification

Contractor’s Proposals (Sixth Recital)

□ identification

CDP Analysis (Sixth Recital)

□ identification

CDP: limit of Contractor’s liability for loss of use etc. (clause 2·34·3)

□ amount

Professional Indemnity insurance (clause 6·16)

□ type, amount, expiry

PI insurance sub-limit: Cover for pollution and contamination claims (clause 6·16)

□ applicable?

□ amount

Contract Drawings (Second Recital (IC); Third Recital (ICD))

□ identification

Documents which the Employer has supplied to the Contractor (Third Recital

(IC); Fourth Recital (ICD))

□ Bills of Quantities

□ Specification

□ Works Schedules

□ particulars of the Intermediate Named Sub-Contract Tender & Agreement

Appendix B – IC and ICD User Checklist



Pricing Option (Fourth Recital (IC); Fifth Recital (ICD))

□ applicable option: A or B?

Option A

□ Priced Document: Bills of Quantities, Specification or Work Schedules?

Activity Schedule (Fourth Recital (IC); Fifth Recital (ICD))

□ Has the Contractor provided a priced Activity Schedule?

Construction Industry Scheme (Fifth Recital and clause 4·5 (IC); Eighth Recital and

clause 4·5 (ICD))

□ Is the Employer a ‘contractor’?

Information Release Schedule (Sixth Recital (IC); Ninth Recital (ICD))

□ Has the Employer provided an Information Release Schedule?

CDM Regulations (Tenth Recital in ICD)

□ Is the project notifiable?

CDM Co-ordinator (Article 5)

□ name and address

Principal Contractor (Article 6)


CDM Planning Period (clause 1·1)

□ period (days/weeks)

□ commencement/end date

Sections (Eighth Recital (IC); Eleventh Recital (ICD))

□ applicable?

□ description

Framework Agreement (Ninth Recital (IC); Twelfth Recital (ICD))

□ Is the Contract supplemented by a Framework Agreement?

□ details (date, title, parties)

Supplemental Provisions (Tenth Recital and Schedule 5 (IC); Thirteenth Recital and

Schedule 5 (ICD))

Collaborative working (Schedule 5, paragraph 1)

□ applicable?

Health and safety (Schedule 5, paragraph 2)

□ applicable?

Cost savings and value improvements (Schedule 5, paragraph 3)

□ applicable?



Sustainable development and environmental considerations (Schedule 5, paragraph 4)

□ applicable?

Performance Indicators and monitoring (Schedule 5, paragraph 5)

□ applicable?

Notification and negotiation of disputes (Schedule 5, paragraph 6)

□ applicable?

□ name of the Employer’s nominee

□ name of the Contractor’s nominee

Contract Sum (Article 2)

□ amount

Architect/Contract Administrator (Article 3)


Quantity Surveyor (Article 4)


Adjudication (Article 7)

□ applicable?

□ Adjudicator’s name?

□ Adjudicator nominating body?

Arbitration (Article 8)

□ applicable?

□ appointor of Arbitrator?

Base Date (clause 1·1)

□ date

Date for Completion (clause 1·1)

□ Works: date

□ Sections: date for each Section

Address for service of notices (clause 1·7)

□ Employer

□ Contractor

Date of Possession (clause 2·4)

□ Site: date

□ Sections: date for each Section



Deferment of possession (clause 2·5)

□ applicable?

□ Site: period

□ Sections: period for each Section

Liquidated damages (clause 2·23·2)

□ Works: rate and period

□ Sections: rate and period for each Section

Section Sums (clause 2·29)

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

Rectification Period (clause 2·30)

□ Works: period

□ Sections: period for each Section

Advance payment (clause 4·6)

□ applicable? (Not applicable for Local Authority employer)

□ amount or percentage

□ payment date

□ reimbursement: amount(s) and time(s)

□ Advance Payment Bond: applicable?

Interim payments – due dates (clause 4·7·1)

□ first due date

Interim payments – percentages of value (clause 4·8·1)

□ before practical completion, percentage of total value in respect of the works that have not achieved

practical completion

□ on and after practical completion, percentage in respect of the completed works

Bond for Listed Items uniquely identified (clause 4·9·4)

□ applicable?

□ amount

Bond for Listed Items not uniquely identified (clause 4·9·5)

□ applicable?

□ amount

Fluctuations Option (clause 4·15 and Schedule 4)

□ applicable?

□ percentage addition (paragraph 12)



Insurance: Contractor’s liability – injury to persons or property (clause 6·4·1·2)

□ amount

Insurance: Employer’s liability (clause 6·5·1)

□ applicable?

□ amount

Works Insurance Options A, B and C (clause 6·7 and Schedule 1)

□ applicable option: A, B or C?

Option A

□ percentage to cover professional fees

□ renewal date of annual policy

Option B


Option C


Terrorism Cover (clauses 6·10 and Schedule 1)

□ details of the required cover

Joint Fire Code (clauses 6·12 and 6·15)

□ applicable?

□ Has the insurer specified the Works are a ‘Large Project’?

□ Who is to bear the cost for amendments?

Period of suspension (clause 8·9·2)

□ period

Period of suspension (clauses 8·11·1·1 to 8·11·1·5)

□ period

Purchaser and Tenant Warranties (clauses 7·4 and 7·6)

□ applicable?

□ identification of Purchasers/Tenants

□ the part of the Works to be purchased or let

Contractor’s liability for costs (clause 1·1·2 of CWa/P&T)

□ applicable?

□ amount and type

Net Contribution: Consultants (clause 1·3·1)

□ identification



Net Contribution: Sub-Contractors (clause 1·3·2)

□ identification

Funder Warranties (clauses 7·5 and 7·6)

□ applicable?

□ Identity of Funder

Net Contribution: Consultants and Sub-Contractors (clause 1·1 of CWa/F)

□ identification

Collateral Warranties from Sub-Contractors (clauses 3·5 and 3·6)

□ 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?



The 2011 editions of the following documents have been issued by the JCT for use with IC and ICD 2011, where

required:

• Intermediate Sub-Contract in the following versions:

• Agreement (ICSub/A) and Conditions (ICSub/C), and

• Agreement and Conditions with sub-contractor’s design (ICSub/D/A and ICCSub/D/C)

• Intermediate Named Sub-Contract comprising:

• Tender & Agreement (ICSub/NAM), and

• Conditions (ICSub/NAM/C)

• Intermediate Named Sub-Contractor/Employer Agreement (ICSub/NAM/E)

• Intermediate Sub-Contract Guide (ICSub/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)

Appendix C – Related Publications


INTERMEDIATE BUILDING CONTRACTSWEET & MAXWELL

2011

MEMBERSBritish Property Federation LimitedContractors Legal Grp LimitedLocal Government AssociationNational Specialist Contractors Council LimitedRoyal Institute of British ArchitectsThe Royal Institution of Chartered SurveyorsScottish 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.

80th

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11 80th

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IC/G 2011Intermediate Building Contract Guide 2011


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