With recent figures revealing that the construction industry experienced the highest number of insolvencies over the past year, the resilience of the supply chain remains a priority, and Build UK’s contract terms recommendation identifies six contract terms which should be avoided to promote collaboration and ensure a fair allocation of risk
- Fitness for Purpose – Do not include a ‘fitness for purpose’ standard of care for design (except in the process sector)
- Unquantifiable Risks – Do not include delay/loss and expense risk where not reasonably ascertainable for dealing with asbestos; fossils, antiquities and other objects of interest or value; unexploded ordnance; and the carrying out by statutory bodies of work in pursuance of their statutory obligations
- ‘Specified Perils’ – Do not include that ‘Specified Perils’ (as defined in JCT) will not give rise to extension of time where caused by the (sub-)contractor
- Breach of Contract – Do not include a blanket indemnity for breach of contract
- Uncapped Liabilities – Do not include uncapped (sub-)contractor liability (save for certain aggregate cap carve-outs)
- Performance Securities – Do not use a pure on-demand performance bond; a Parent Company Guarantee (PCG) which does not include a ‘no greater liability’ clause and equivalent rights of defence; or a collateral warranty which does not include a ‘no greater liability’ clause.
Build UK have published comprehensive guidance to help implement the recommendation, explaining why each term should not be used and setting out ways to manage the underlying issues more effectively, with specific guidance for JCT and NEC contracts. The recommendation is non‐binding and FIS members are free to negotiate their own contractual terms with their clients.