This is the fifth in a series of articles on how the changes introduced by the suite of 2024 JCT (Joint Contracts Tribunal) contracts will impact the practical administration of the JCT contractual mechanisms.
In this article, we look specifically at the collaborative working obligations and the obligation to notify and negotiate disputes in the 2024 suite of JCT contracts. We address the updates and the impact of those changes in practice.
1. Obligations to collaborate (‘good faith’)
In the 2016 JCT contracts, the obligation for parties to collaboratively work with each other appeared within the Supplemental Provisions. This meant it was optional for parties to adopt in their contracts and, in practice, was rarely used. The collaborative working obligation now appears as Article 3 in the 2024 JCT contract:
Article 3 Collaborative working
'The Parties shall work with each other and with other project team members in a co-operative and collaborative manner, in good faith and in a spirit of trust and respect. To that end, each shall support collaborative behaviour and address behaviour which is not collaborative.'
The increased emphasis on good faith comes in response to The Construction Playbook (issued by the Cabinet Office) and reflects broader trends in the construction industry, with good faith recognised in the NEC and FIDIC contracts.
2. What do these obligations mean in practice?
The new Article 3 appears to be broad-reaching, applying generally to the contract as a whole. However, the key question is what the extent of these obligations are and what they mean that parties need to do in practice.
Obligation to support collaborative behaviours and address non-collaborative behaviour
This is a new obligation under the JCT and there may therefore be some uncertainty (unless and until tested in the courts) as to what this will require of parties.
Clearly, its aim is to foster a positive working relationship in carrying out the contract. However, it unclear how far a party is reasonably expected to go in order to comply with its obligation to collaborate. Further it is unclear what steps a party is expected to take in the face of ‘non-collaborative’ behaviour. In practice, we may see parties relying on Article 3 in a dispute context, however evidencing ‘non-collaboration’ may be challenging depending on the circumstances.
Obligation to co-operate and collaborate, in good faith and in a spirit of trust and respect
Generally, the application of good faith in practice is fact-specific and courts tend to apply it to reinforce existing obligations rather than as a stand-alone obligation.
It will likely take some time for the practical impact of new Article 3 in the JCT to be fully understood. It may take some time before we have any judicial guidance on this matter, though in the meantime parties may look to cases on the equivalent NEC provision to act ‘in a spirit of mutual trust and co-operation’.
3. Obligation to notify and negotiate disputes
One tangible example of the increased emphasis on collaborative working and good faith appears in a new provision in the JCT contracts requiring parties to:
- notify each other promptly of any matter that appears likely to give rise to a dispute, with a view to avoidance or early resolution of disputes; and
- thereafter arrange that senior executives meet as soon as practicable for “direct, good faith negotiations to resolve the matter”.
Again, such provisions were previously optional Supplemental Provisions, but are now included within the main body of the standard form JCT contracts.
This change reflects practices in other standard forms of contract and underscores the construction industry’s shift towards early warning of disputes and ways to resolve such disputes amicably. However, it will also be subject to either party’s right to refer a dispute to adjudication at any time.
Overall, the changes to emphasise collaboration, good faith and dispute avoidance are positive developments to the JCT suite. As with other standard form contracts, the real challenge comes in the implementation of those contractual intentions, with effort required from all industry players to entrench the necessary mindset and behaviours to achieve those principles.
Look out for the next article in the series and please get in touch with the team if you have any questions.
This article was written by Karen Paley and Sarah Forshaw.