More confusion in the building industry

At a time when the building Industry in South Africa is faced with a major cyclical depression triggered in part by high interest rates and the absence of government spending, and at a time when the country is still going through major changes pursuant to the establishment of a government of majority representation and the attendant drive to encourage previously disadvantaged individuals and companies as well as small, medium and micro enterprises the Joint Building Contracts Committee (JBCC) has seen fit to introduce a suite of documents, the JBCC 2000 Suite, which is intended to serve the building industry into the new millennium.

Regrettably the document is badly drafted, mired in antiquated ideas and filled with legal loopholes which must be making construction lawyers rub their hands with glee. The JBCC is currently working on a short form of contract which is intended to be the standard form for the smaller contracts leaving the main JBCC 2000 documents available for the larger contracts. This philosophy follows current International trends where major recognised suites of documents such as FIDIC and NEC also publish short forms of contract. It is to be hoped that in drafting the short form of contract JBCC avoids some of the many pitfalls that they have introduced into the main suite of documents.

A few of the more obvious flaws in this document are:

  1. Poor drafting is self-evident in the inclusion of terms and conditions in the definitions section (see Agent; Bills of Quantities; Principal Agent).
  2. The definition of the word “deemed” being conclusive that something is fact, regardless of the objective truth, creates the nonsensical situation that if a notice is given, (irrespective of whether or not it is received), providing proof of despatch is given, the document creates the arrogant truth and is incapable of being rebutted.
  3. Numerous examples exist of Irrelevant and superfluous clauses and other clauses which have no right to be present in the Principal Agreement being of application only to the Sub contract Agreement and vice versa.
  4. The construction guarantee as presently worded is probably invalid and is unacceptable to most financial institutions.
  5. The cash deposit provided in terms of Clause 1415 clearly subject to abuse by unscrupulous employers,
  6. The introduction of yet another step in terms of Works Completion being a step between practical completion and final completion is completely unnecessary. No time periods are specified to complete the works on the “works completion list” and indeed the whole aspect of completion under this contract is likely to lead to significant numbers of disputes.
  7. Provision is also made for deemed practical completion and deemed final completion. Although such situations are likely to be the exception rather than the rule, how does one convince a financial institution that one’s liabilities under the construction guarantee have been reduced in the absence of a certificate of practical completion or a certificate of final completion on the basis that same have deemed to have occurred? JBCC clearly recognised the difficulties where the principal agent has been dilatory in this regard but Instead of dealing with the situation in a practical fashion has introduced what can best be described as a nonsensical solution,
  8. Some of the grounds for extensions of time under clause 29 are totally detrimental to the normal rights of an employer to hold the main contractor liable, e.g. the inability of the contractor to obtain materials and goods, Why on earth should the employer be responsible for such delays?

It would be inappropriate to give a clause by clause analysis of the document in an opinion such as this but there is no doubt that many professionals in the building industry share the authors misgivings which is why some significant contracts are still coming through on the old 1981 White Form of Contract and why it is difficult to see any improvement provided by the new suite of contracts over JBCC 91 except perhaps in the realisation that when paid provisions were always inappropriate and have now been eliminated, JBCC’s failure to take note of modern trends in dispute resolution has resulted in it introduce adjudication as a step in the process Interestingly in the United Kingdom adjudication has now been legislated for in respect of most forms of written construction contracts and most of the modern international documents – Incorporate adjudication in one form or another.

Lest it should be suggested that the writer would prefer to see the building industry move to an alternative form of contract let me set the record straight:

There has always been a place and there will continue to be a standard form of building contract. Such document however needs to address the problems of the Industry in an enlightened fashion by incorporating modern thinking rather than being the author of more problems by introducing flawed contract drafting, In the opening page of the Principal Building Agreement a warning is contained of the dangers inherent in changing any part thereof, Unfortunately there is no warning to unsuspecting users of the dangers inherent in using the document in its present form.

SA BUILDER November / December 1999