Specialists applaud 'adult' subcontract

No retentions. No pay-when-paid or pay-when-certified. Final date for payment just 21 days from the due date.
These are some of the reasons why specialist subcontractors have welcomed this month's publication by the Joint Contracts Tribunal (JCT) of its new standard form of subcontract for use with the Major Project Form (MPF), which was launched last summer.
National Specialist Contractors Council contracts committee chairman Justin Perry said: "Fundamentally, this is a pretty fair subcontract. The main contractor has to be clear about what he expects from the subcontractor. Each has to look at the risks. Each has to carry the risks he is best capable of bearing. The parties have to behave like adults."
The subcontract form is a largely freestanding document. It is designed specifically for use with the MPF, but is not dependent on its operation. Both documents are intended for use by parties who are experienced in undertaking major projects.
The contracts are the first JCT forms to be externally drafted by an independent consultant. They were drawn up by Brewer Consulting and are both accompanied by guidance notes.
Crucial features of the subcontract are that it is both user-friendly and flexible. Under the MPF all subcontractors are "domestic" - so the subcontract is equally suitable for use where the subcontractor is a named specialist or one selected by the main contractor.
The subcontract provides for a variety of options for the completion of the design by the subcontractor and also includes a design submission procedure. It does not include warranties. Unlike the MPF, it excludes all third party rights.
In terms of payment, the subcontract is similar to the MPF. It does not provide for retention. The subcontractor is required to submit a payment application.
Other requirements include the main contractor keeping the subcontractor informed of actual and projected progress on the job. There is an early completion bonus option. Instructed acceleration is allowed, but only with prior agreement on cost. A value engineering procedure is included.
The new form provides much clearer guidance on insurance.
Andrew Mason, construction specialist with the Shoosmiths law firm, said: "Overall, the form will be welcomed by subcontractors because it is less legalistic and is a shorter contract. It assumes a sensible working relationship between the parties and rewards this approach by making the contracts much simpler.
"However, with limited connectivity with the main contract, no retentions, and no requirement for collateral warranties, this subcontractor-friendly document is unlikely to remain unamended."
Peter Hibberd, JCT secretary general, concluded: "The big question now is how it will impact on our other JCT forms."