Interpretation and General   

 Interpretation of the Agreement

• The PBA uses square brackets the explanation for which is:

“Reference to a clause number written as [54.3.2] means that specific clause; clause [54.3.2-4] means the sub-clauses 2 to 4 inclusively; clause [54.3.2 & 4] means the sub-clauses 2 and 4 only ”

It is submitted that this can cause difficulties for those unfamiliar with the agreement and accordingly this guide avoids the usage of such square brackets.

Edition 6 contains a number of inconsistencies and incorrect references to clause numbers. For the sake of simplicity these errors have been ignored and/or corrected.

The parties to the agreement should take careful note of the final paragraph of the agreement which provides that:

• This agreement, the completed contract data and the listed documents as stated in the contract data comprise the entire contract between the parties. Explanation – no other document, letter, email, verbal agreement etc is binding upon the parties.

• Any provision in this agreement that may confer a right or benefit on a subcontractor shall be binding on the parties and be capable of acceptance by such subcontractor at any time. Explanation – subcontractors can make use of the content of the agreement where it applies to them. This is aimed at the payment provisions

• No representations, terms, conditions or warranties not contained in this agreement shall be binding on the parties. This is self-explanatory

• No agreement or addendum varying, adding to, deleting or terminating this agreement including this clause shall be effective unless reduced to writing and signed by the parties. Warning! Don’t rely on anything (even if reduced to writing) unless signed by both parties

 Importance of Definitions

The agreement contains certain words are specifically defined and have special meanings which you must be aware of.

The importance of attaching the correct meaning to the agreement's words cannot be emphasised enough.

Please refer to the definitions clause 1.1 of the agreement to see the specially defined words and the meanings that they have.

In the agreement specially defined words are in bold to draw the reader's attention to the definitions.

Importance of Written Notices

Every Notice Must be in Writing

In terms of clause 1.2.1 the words in the PBA “accept, allow, appoint, approve, authorise, certify, decide, demand, designate, grant, instruct, issue, list, notice, notify, object, record, reduce, refuse, request, state” (and the derivatives of such words) requires such acts to be in writing”

A failure to comply with this requirement will render any oral notices, instructions etc invalid with the recipient being perfectly entitled to ignore them.

NB – Never leave a written notice that requires an answer unanswered - always respond in writing.

Method of Sending Notices

Clause 2.3 provides that all communication or notices between the parties shall be in the language of the agreement and in a format that can be read, copied and recorded in terms of the contract data

Ed 6 distinguishes between legal processes and notices.

Legal processes may validly be delivered to and served on the parties at the physical address of the parties recorded in this agreement.

Clause 2.5 provides that the parties to the agreement may send notices to one another:

• By hand delivery – delivery is presumed to take place that same day – remember to get a signed receipt for hand delivered notices.

• By electronic mail - delivery is presumed to take place within 1 working day.

• By registered post – delivery is presumed to take place within 7 calendar days after posting

Note that delivery by fax is no longer provided for and accordingly the parties should not send notices by means of fax.

Contractors should note that in terms of clause 6.2 a contract instruction given to a site representative is deemed to have been given to the contractor.

Communication by SMS or electronic chat - Skype etc

Although instructions sent by texting are probably binding there is always the difficulty of keeping a record of such forms of communications. It is therefore suggested that such communication be confirmed by the recipient.

Notice calling for confirmation of message

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Site Minutes

Site minutes usually only record what was said or agreed upon verbally at site meetings. They therefore cannot be construed as written notices. Do not fall for assurances that formal notices are not required!

Changes to the standard JBCC agreements

Warning! Be very careful of any amendments made to the standard JBCC suite of agreements. Changes made are usually done with the intention of removing one of the parties' rights.

Tactics in cases of conflict

• Don't act in accordance with what you think the other party might do.

• Do act in accordance with what the other party is entitled and/or capable of doing.

Introductory Letter

The parties to the PBA sometimes do not appreciate that the contract is their “best friend” and, instead of applying the tools the agreement provides, choose to take an informal approach out of fear of being labelled as “claims conscious” or an unreasonable stickler for formalities.

When things go wrong the party who has not followed the procedures set out in the agreement finds himself in an embarrassing position of not only having to find a way around the lack of formal notices but also to prove what may have been orally agreed upon.

It is accordingly suggested that the parties politely inform one another before the works commence that their intention is to follow the provisions of the PBA.

Introductory letter

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Obligation to comply with the law

Contractors are reminded that clause 2 provides that:

“The contractor shall comply with the law, obtain permits, licenses and approvals required and pay related charges for the execution of the works.”

This includes Occupational Health and Safety

Employers are reminded that clause 2 provides that:

“The employer shall comply with the law, obtain permits, planning, building or similar permissions and pay charges for the works other than those which are the responsibility of the contractor [26.4.1] [CD]”

Prohibition of consent to cession or assignment of rights or obligations

Neither party may cede or assign any rights or obligations without the written consent of the other party.

In terms of clause 4.2 the contractor is prohibited from consenting to a nominated subcontractor assigning or ceding rights or obligations in terms of the NSSA without obtaining the prior written consent of the principal agent.

Normally the party to whom rights have been ceded must give notice of the cession for it to be effective. Clause 4.3 however provided that where cession is given to a financial institution (presumably for purposes of raising loan finance) such notice is not required. The written consent of the other party will nevertheless be required. See clause 4.3

Authority to act on behalf of the parties

Clause 5 provides that the persons who are authorised to act on behalf of the parties to the contract must be disclosed in the contract data.

Should a party change the appointment he must notify the other party

to the other party – principal agent/contractor/employer

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Employer's Agents – clause 6

In addition to the principal agent, employers may appoint specialist agents – see clause 6.2. To comply with clause 1.2.1 the appointment must be communicated to the principal agent and the contractor in writing.

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Agents interest in the works

Clause clause 6.3provides that the principal agent and any other agent must declare any interest or involvement in the works other than professional ones.

Notice to declare interest

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Principal Agent's Failure to Act

New edition 6 comes to the assistance of contractors finding themselves in the unfortunate situation where a principal agent fails to carry out his duties. The deeming provisions in prior editions left contractors no other remedy other than to declare disputes.

Contractors now have a very useful tool at his disposal – the right to suspend the works should the principal agent simply ignore his duties.

Clause 6.4 provides that where any agent fails to act in terms of the authority delegated to him, the contractor may give notice to the agent to rectify the default within 5 working days.

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Should the principal agent fail to rectify the default within a further 5 working days, the contractor may give notice to suspend the works unless the default is remedied. See clause 28

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Should the situation persist then the contractor may give notice of suspension of the works

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When suspending the works the contractor must also give all nominated and selected subcontractors notice to suspend all subcontract works.

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Finally the contractor is reminded to apply for a revision of the date for final completion – see clause 28.4

Design Responsibility – clause 7

The contractor is not responsible for design and co-ordination. He is also not liable for a subcontractor's design responsibility. If however a contractor should take on this responsibility then he will become responsible.

As contractors are responsible for the timeous submission of design documentation by a selected subcontractor they should be careful to ensure that subcontractors comply with their design responsibilities on time.

Contractors must cede to the employer all contractual rights he may have against a subcontractor on final completion. See further under clause 21.10

Insurance and Security

 Works Risk

Clause 8 provides that the contractor must take responsibility for the works from date of site possession until practical or sectional completion.

The contractor's risk include loss arising from:

• Any cause arising prior to practical completion

  and

• The contractor's acts or omissions after practical completion done in pursuance of his obligations.

The contractor's liability includes but is not limited to the cost of:

• Making good physical loss, repairing damage, clearing the site and whatever else it costs to reinstate the site

• New replacement of free issue

• Additional professional services

The contractor's liability is limited to the amount of the Contract Works Insurance as specified in the contract data.

The contractor is not responsible for the cost of losses or damage caused by:

• The use, occupation, act or omission by the employer, his employees or agents for whose acts the employer is responsible

• The acts or omissions by direct contractors

• The design of the works for which the contractor is not responsible

• The defect in free issue or materials and goods specified by trade name (provided that the contractor does not have the right to substitute the materials).

• Force majeure (see definitions)

The cost of the losses and damage must be added to the contract value – see clause 8.6.

Clause 8.7 requires the contractor to immediately notify the principal agent on becoming aware of any physical loss or damage to the works.

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Indemnities

Clause 9 sets out the eventualities for which the parties indemnify one another

Contractor's Indemnities - clause 9.1

The agreement provides that the contractor indemnifies:

• The employer

  and

• The employer's employees or agents

From all claims or proceedings for damages, expense and/or loss (including legal fees and expenses) in respect of or arising from:

• Death or bodily injury or illness of any person

• Physical loss or damage to any property (except where the works consist of alterations clause 9.2.7) arising out of or due to the:

  • execution of the works

    or

  • presence on and/or occupation of the site by the contractor.

The contractor however does not provide indemnity in respect of acts attributable to an act or omission of the employer or the employer's employees or agents.

• Non-compliance by the contractor with any law, regulation, or bylaw of any local or other authority and the failure by the contractor to obtain any permit, license or approval that the contractor is required to obtain in terms of the agreement or in terms of clause 2.1.

• Physical loss or damage to construction equipment or other property belonging to the contractor or the contractor’s subcontractors but excluding direct contractors’ construction equipment or other property

Notice of loss or occurrence

Where there has been death or bodily injury or illness of any person or

physical loss or damage to any property the contractor must notify the principal agent

Notice of loss or occurrence in terms of clause 9.1.1

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Employer's indemnities - clause 9.2

The agreement provides that the employer indemnifies the contractor against all claims or proceedings for damages, expense and/or loss (including legal costs) in respect of or arising from:

• An act or omission of the employer, the employer's employees or agents and those for whose acts they are responsible

• An act or omission of a direct contractor in terms of clause 16.0

• Design of the works where the contractor is not responsible for such design. See clause 7.1

• The use or occupation of any part of the works by the employer, tenants, direct contractors or others authorised by the employer

• Proceeding with the works on instruction from the employer without the employer obtaining the required permission under the law in terms of this agreement

• Expense or loss incurred as a result of the unavoidable interference of any servitude or right not disclosed in the construction information. Should such an event occur the contractor must notify the principal agent.

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• Physical loss or damage to an existing structure and the contents thereof where the agreement is for alterations or additions to the existing structure - see clause 9.2.7. Should such an event occur, the contractor must immediately give notice to the principal agent

  Notice in terms of clause 9.2.7 of loss or occurrence

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• A defect in free issue recorded in the contract data

• Physical loss or damage to the works where practical completion has been certified in terms of clause 19.0 or is deemed to have been achieved

• Advance payments certified and paid by the contractor to subcontractors in terms of clauses 27.1.7 and 27.2.4

Insurances

Edition 6 regulates insurances under clause 10, the provisions of which are summarised below.

These are important clauses and readers should refer to the agreement when dealing with insurance issues.

Who must take out the insurance?

The party responsible for insurances in terms of the Contract Data must effect and keep in force the policies

• In the joint names of the parties

  and

• From date of possession of the site until the contractor's responsibility has ended.

Where the works are to be completed in sections or the works consist of alterations it is the employer's responsibility to obtain the cover.

Note: Clause 8.4 provides that where the contract value exceeds the contract sum by more than 10% then the employer must bear the cost of the additional insurance. The party responsible for effecting the cover remains liable to obtain the extra cover.

What cover must be obtained?

The following cover must be obtained

• Contract Works Insurance which must include cover for

  • Free issue

  • Materials and goods

  • Temporary works

  • Clearing and removal of rubble and debris and costs to reinstate the works (where required)

  • Damage to employer owned surrounding property in the care, custody, control or to be worked on by the contractor

• Public Liability in respect of accidental:

  • Death or injury to any person

  • Loss or damage to physical tangible property

(Note: The public liability cover must remain in force until date of final completion)

• Loss or damage caused by civil commotion, riot, strike, labour disturbance and lock out.

• Removal of lateral support where the employer considers the execution of the works will result in loss or weakening of lateral support of adjacent land or property.

(Note: The employer must appoint an agent of design and monitor appropriate support structures when necessary)

General Provisions

• The party responsible for effecting the insurances must provide proof to the other party of the insurances and renewals.

• Should the other party object to the form of proof he must do so within 10 working days of receipt of the proof failing which approval is deemed to have been given.

Notice of objection in terms of clause 10.3

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• The policy wording must be provided upon written request

Notice of request for policy wording in terms of clause 10.4

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• The insured amounts and deductibles must be stated in the contract data

• Where the agreement is:

• terminated

and

• the contractor is not required to make good physical loss or repair damage to the works

The right to the proceeds of an insurance claim vests in the employer.

(Note: In these circumstances the insuring party must notify the insurer of the above and to clarify the status of the insurance cover)

Notice to insurer in terms of clause 10.6

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• Where a party fails to:

  • take out and maintain the required insurances

    or

  • provide proof of insurance

The other party may give 5 working days notice to comply failing which he may effect the insurances and recover the cost from the defaulting party.

Notice in terms of clause 10.7

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• Should an employer fail to take out the insurances the contractor may, instead of giving notice to comply as above, give the employer 10 days notice to comply failing which the contractor may suspend the works

See under suspension of the works under Contractors

• Any amounts not recovered from an insurer must be borne in accordance with the parties' rights and obligations under the agreement

• Should a party:

  • fail to take out and maintain the required insurance

  • and

  • the other party does not

    • waive his right to demand compliance of the other party's insurance obligations

      and

    • take out the insurance himself

Any loss that should have been recoverable from an insurer must be borne by the party responsible for effecting the insurance.

• Employers must effect separate insurance in respect of direct contractors

• The party responsible for the insurance must keep the insurers informed about any relevant changes in respect of the agreement.

Security

Where the contractor is required to provide a guarantee for construction the contractor must do so within 15 working days of acceptance by the employer of the contractor's offer.

The types of guarantees are:

• Construction guarantees:

  • Variable – initially equal to 10% of the contract sum to be kept valid and enforceable until the issue of the final payment certificate

  • Fixed – set at 5% of the contract sum together with a payment reduction of 5% of the value of each payment certificate (up to a maximum of 5% of the contract sum). This must be kept valid and enforceable until the issue of the certificate of practical completion.

  • Advance payment guarantees:

This type of guarantee is usually provided to assist the contractor's cash flow e.g. where a contractor might need the ready funds to finance the purchase of expensive X ray machines for a hospital.

Advance payment guarantees must be equal to the total of all the advance payments to be made to the contractor. The amount of the guarantee may be reduced by the amount repaid by the contractor as certified in payment certificates.

see clauses 11.1.4 and 11.2

Notice of submission of contractor's construction guarantee

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Notice of submission of contractor's advance payment guarantee

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Note that:

• All guarantees must be extended or replaced at least 20 working days before they are due to expire. A failure to comply with this obligation may result in termination of the agreement.

• Should the contract value exceed the contract sum by more than 10% the guarantees (both construction and payment) must be increased accordingly and at the expense of the employer.

• A contractor must waive his contractor's lien upon receipt of a payment guarantee.

Contractor's failure to provide security

Should a contractor fail to provide security, the employer may, instead of exercising his right to terminate the contract, elect to hand the site to the contractor. In such an event interim payment certificates will reflect a 10% deduction of the contract sum. On practical completion this amount is reduced to 2.5% and 0% upon the issue of a final payment certificate.

Employer's failure to provide security

If a payment guarantee is required in the accepted tender the employer must provide such guarantee within 15 working days of acceptance of the tender.

In addition the employer must keep the guarantee in force or replace it at least 20 working days before the guarantee is due to expire.

Should the employer fail to provide the security the contractor may give 10 working days notice to suspend the works.

For guidance on the procedure and notices to suspend see later under this guide under Suspension of the Works.

Construction and advance payment guarantees

Clause 11.1.5 provides that all guarantees must be extended or replaced at least 20 working days before they are due to expire.

A default of the contractor's obligations in this regard may result in termination at the instance of the employer. See later under termination by the employer - clause 29

Calling up of Construction Guarantee

Clause 27.3 provides that where an amount owed by either party has not been paid then the other party may recover the amount by calling up a guarantee.

It should be remembered that clause 11.9 provides that “Where a party makes an unjustified call on a security, the amount paid and mora interest shall be paid to the other party.

Where the Employer wishes to call up the Construction Guarantee he must follow the procedure set out in the standard JBCC Construction Guarantee form.

The procedure is as follows:

In terms of clause 25.8 of the agreement the contractor must pay to the employer the amount certified within 21 calendar days of the issue of the certificate. Should the contractor fail to pay on time then the employer should:

Step 1

Issue a demand to the contractor

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Step 2

Give notice to the guarantor that the contractor has not complied with the written demand and calling up the guarantee.

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Calling up the payment guarantee

There are a number of steps to follow in calling up a guarantee.

Step 1

Send a demand to the Employer.

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Step 2

Demand payment from the guarantor

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End of Demo

 [/expand]

This agreement is reproduced courtesy of the JBCC – no unauthorised copying permitted

The Joint Building Contracts Committee® - NPC Principal Building Agreement – Edition 6.1 

Actions by the parties / principal agent within a given time

Clause	Time period	Action	Purpose
2.0	1-7 CD	parties or principal agent	notices deemed to be received by e-Mail/post
6.4	5 WD	contractor > principal agent	non-performance of an agent i.t.o. this agreement
6.5	5 WD	employer	appoint another agent/contractor may object
10.3	10 WD	party responsible	proof/renewal of insurance – other party to accept
10.7	5 WD notice	party responsible	proof/renewal of insurance – other party to accept
10.8	10 WD	notice - contractor	no insurance = contractor suspend the works
11.1-4	15 WD	parties	provide securities [CD]
11.1.5/4.2	20 WD	parties	provide replacement security
11.4.1	15 WD	employer > contractor	provide guarantee for payment [CD]
11.6	10 WD	notice > employer	no security, contractor notice to suspend works
11.7	10 WD	parties	return original/replacement security forms
12.2.2	15 WD	contractor	submit priced document
12.2.3		contractor	submit priced document
12.2.6	15 WD	contractor	submit works programme
12.2.17	10 WD	contractor	start work on site
14.4.2	15 WD	contractor > subcontractor	submit security
14.5	5 WD	employer (principal agent)	pay subcontractor on default by contractor
14.6	5 WD notice	contractor + subcontractor	termination of subcontractor
15.2.2	15 WD	contractor > subcontractor	submit security
15.5	5 WD notice	employer (principal agent)	pay subcontractor on default by contractor
17.3	5 WD	contractor	carry out a contract instruction, where practical
19.1.1/3	days [CD]	principal agent > contractor	inspection for practical completion
19.3.4		contractor	rectify items on list for completion
19.4	5 WD	contractor > principal agent	no ‘list’ > notice > deemed practically complete
19.6	5 WD/ 30 WD	principal agent > contractor	employer occupies, list for completion, fix defects
21.3.1	10 WD	contractor	Inspect before expiry of defects liability period
21.3.2	5 WD	contractor > principal agent	Invite PA to inspect list for completion
21.4	5 WD notice	contractor > principal agent	inspect > list for final completion > certificate
21.5	5 WD notice	principal agent > contractor	no list for final completion > notice > complete
23.4.2* no notice, forfeit the opportunity to claim	20 WD notice	contractor > principal agent	notice of a possible delay, no details yet
23.5	40 WD	contractor > principal agent	delay ceased, details of delay and expenses
23.7	20 WD	principal agent > contractor	asses claim – accept/reduce/reject
25.2	date [CD]	principal agent > contr/empl	issue payment certificate and support forms
25.7	14 CD	employer > contractor	make payment from date of payment certificate
25.8	21 CD	contractor > employer	i.t.o. schedule from principal agent
25.11	7 CD	contractor > subcontractor	pay subcontractors ito schedule from principal agent
25.12	5 WD notice	contractor > employer	no/partial payment > suspend etc
25.12	5 WD	principal agent > contractor	final payment certificate after certificate of final completion
26.5 no notice, forfeit the opportunity to claim	20 WD notice	contractor > principal agent	notice of a possible delay, no details yet
26.6	40 WD	contractor > principal agent	substantiated claim
26.7	20 WD	principal agent > contractor	assess claim = accept/reduce/reject
26.10	90 CD	principal agent > contractor	issue final account
26.11	45 CD	contractor > principal agent	accept final account
26.12	10 WD notice	contractor + principal agent	agree final account or deemed acceptance
		notice to contractor	remedy default before next recovery statement
	5 WD notice	contractor > employer	- list of defaults to be remedied > suspend works
	5 WD notice	contractor > employer	- suspension of works where defaults not remedied
	10 WD	employer > contractor	intention to terminate if defaults not remedied
	10 WD	employer > contractor	default not remedied, termination forthwith
	10 WD	employer > contractor	instruction to vacate works and site
29.15	10 WD	contractor > employer	intention to terminate if defaults not remedied
29.17.1	forthwith	contractor > employer	default not remedied, termination forthwith
29.17.2	forthwith	contractor	remove construction equipment, temporary works, etc
29.21	10 WD	either party	intention to terminate > impossible to complete
29.29	20 WD	principal agent + contractor?	prepare status report
29.31	90 CD	principal agent	complete final account
30.2	10 WD	either party	disagreement not resolved > dispute
30.3	10 WD	aggrieved party	refer to adjudication
30.6.4	10 WD	aggrieved party	dissatisfied with adjudication
30.6.5	10 WD	aggrieved party	no adjudication/not accept adjudication ruling > arbitration
30.7.5	15 WD	parties	agree appointment of an arbitrator

Abbreviations: WD = working days, CD = calendar days, *no notice, forfeit the opportunity to claim

Table of Contents

Section	Clause No	Description
INTERPRETATION	1	Definitions and Interpretation
	2	Law, Regulations and Notices
	3	Offer and Acceptance
	4	Assignment and Cession
	5	Contract Documents
	6	Employer’s Agents
	7	Design Responsibility
INSURANCE AND SECURITY	8	Works Risk
	9	Indemnities
	10	Insurances
	11	Security
EXECUTION	12	Duties of the Parties
	13	Setting out
	14	Nominated Subcontractors
	15	Selected Subcontractors
	16	Direct Contractors
	17	Contract Instructions
COMPLETION	18	(Interim Completion = N/S Subcontract Agreement)
	19	Practical Completion
	20	Sectional Completion
	21	Defects Liability Period and Final Completion
	22	Latent Defects Liability Period
	23	Revision of the Date for Practical Completion
	24	Penalty for Late or Non-Completion
PAYMENT	25	Payment
	26	Adjustment of the Contract Value and Final Account
	27	Recovery of Expense and/or Loss
SUSPENSION AND TERMINATION	28	Suspension by the Contractor
	29	Termination
DISPUTE RESOLUTION	30	Dispute Resolution
AGREEMENT		Agreement

Interpretation

Definitions and Interpretation

1.1 Definitions

A word or phrase in bold type in this agreement shall have the meaning assigned to it in these definitions A word or phrase not in bold type shall be interpreted in the context of its usage

AGENT: An entity appointed by the employer to deal with specific aspects of the works

AGREEMENT: This JBCC® Principal Building Agreement and the completed JBCC® PBA contract data

BILLS OF QUANTITIES: The document drawn up in accordance with the measuring system [CD]

BUDGETARY ALLOWANCE: An amount included in the contract sum for work intended for execution by the contractor, the extent of which is identified but not detailed

CALENDAR DAYS: Twenty four (24) hour days commencing at midnight (00:00) which include Saturdays, Sundays, proclaimed public holidays and recorded annual builders’ holiday periods [CD]

CERTIFICATE of FINAL COMPLETION: A certificate issued by the principal agent to the contractor with a copy to the employer stating the date on which final completion of the works, or of a section thereof, was achieved

CERTIFICATE of PRACTICAL COMPLETION: A certificate issued by the principal agent to the contractor with a copy to the employer stating the date on which practical completion of the works, or of a section thereof, was achieved

CONSTRUCTION EQUIPMENT: Equipment and/or plant provided by or belonging to the contractor and/or the subcontractor used during the construction period

CONSTRUCTION INFORMATION: All information issued by the principal agent and/or agents including the contract documents, specifications, drawings, schedules, notices and contract instructions required for the execution of the works

CONSTRUCTION PERIOD: The period commencing on the intended date [CD] of possession of the site by the contractor and ending on the date of practical completion, excluding annual industry holiday periods

CONTRACT DATA: The document listing the contract variables

[CD]: The notation used where project specific information is recorded in the contract data

CONTRACT DOCUMENTS: This agreement, the contract drawings, the priced document and other identified documents [CD]

CONTRACT DRAWINGS: The drawings listed on which the accepted tender or the negotiated amount was based [CD]

CONTRACT INSTRUCTION: A written instruction issued by or under the authority of the principal agent to the contractor, which may include drawings and other construction information

CONTRACT SUM: The accepted tender amount, inclusive of tax, that is not subject to adjustment [CD]

CONTRACT VALUE: A monetary value initially equal to the contract sum that is subject to adjustment in terms of this agreement

CONTRACTOR: The party [CD] contracting with the employer for the execution of the works

DEFECT: Any aspect of materials and workmanship forming part of the works that does not conform to the contract documents

DIRECT CONTRACTOR: An entity appointed under separate agreement by the employer to do work on site prior to practical completion [CD]

EMPLOYER: The party [CD] contracting with the contractor for the execution of the works

FINAL ACCOUNT: The document prepared by the principal agent that reflects the final contract value of the works at final completion or termination

FINAL COMPLETION: The stage of completion of the works as certified by the principal agent as being free of defects

FREE ISSUE: Materials and goods provided at no cost to the contractor by the employer for inclusion in the works whether stored on or off the site or in transit [CD]

 

FINAL PAYMENT CERTIFICATE: The certificate issued by the principal agent after the issue of the certificate of final completion after the final account has been agreed, or deemed to have been agreed

FORCE MAJEURE: An exceptional event or circumstance that:

1. could not have been reasonably foreseen
2. is beyond the control of the parties, and
3. could not reasonably have been avoided or overcome

Such an event may include but is not limited to:

• Acts of war (declared or not), invasion, and hostile acts of foreign enemies
• Insurrection, rebellion, revolution, military or usurped power, war (whether declared or not), terrorism
• Civil commotion, disorder, riots, strike, lockout by persons other than the contractor’s employees or his subcontractors
• Sonic shock waves caused by aircraft or other aerial devices, and ionising or radioactive contamination
• Explosive materials, except where attributable to the contractor’s use of such technology
• Natural catastrophes including earthquakes, floods, hurricanes, or volcanic activity

GUARANTEE for ADVANCE PAYMENT: A security in terms of the JBCC® Guarantee for Advance Payment form obtained by the contractor from an institution approved by the employer [CD]

GUARANTEE for CONSTRUCTION: A security in terms of the JBCC® Guarantee for Construction form obtained by the contractor from an institution approved by the employer [CD]

GUARANTEE for PAYMENT: A security in terms of the JBCC® Guarantee for Payment form obtained by the employer from an institution approved by the contractor [CD]

INTEREST: The bank rate applicable from time to time to registered banks borrowing money from the Central or Reserve Bank of the country [CD]. The ruling bank rate on the first calendar day of each month shall be used in calculating the interest due for such month

JBCC®: The Joint Building Contracts Committee® NPC

LATENT DEFECT: A defect that a reasonable inspection of the works by the principal agent and/or agents would not have revealed

LAW: The law of the country [CD]

LIST for COMPLETION: A list issued by the principal agent where practical completion has been certified, listing defects and/or outstanding work to be completed

LIST for FINAL COMPLETION: An updated list for completion issued by the principal agent after the inspection of the works for final completion, where final completion has not been achieved, listing defects and/or outstanding work to be completed to achieve final completion

LIST for PRACTICAL COMPLETION: A comprehensive and conclusive list issued by the principal agent after the inspection of the works for practical completion, where practical completion has not been achieved, listing the defects and/or outstanding work to be completed to achieve practical completion

MATERIALS AND GOODS: Unfixed materials, goods and/or items fabricated for inclusion in the works whether stored on or off the site or in transit

Mora interest: The rate of interest applicable from time to time prescribed in the relevant Act

NOTICE: A communication issued by either party, the principal agent and/or agents to the other party or any agent to, inter alia, record an event, request for outstanding information and/or where suspension and/or resumption of the works, or termination of this agreement is contemplated

N/S SUBCONTRACT AGREEMENT: The JBCC® Nominated/Selected Subcontract Agreement (NSSA) and the completed JBCC® NSSA contract data, between the contractor and the subcontractor used in conjunction with the JBCC® Principal Building Agreement

PARTY: The employer or the contractor and “parties” shall refer to both of them

PAYMENT CERTIFICATE: A certificate issued at regular agreed intervals [CD] by the principal agent to the parties certifying the amount due and payable in terms of the JBCC® Payment Certificate format

PENALTY: The stipulated amount per calendar day [CD] payable by the contractor to the employer where the date or the revised date for practical completion, whichever is the later, has not been met

PRACTICAL COMPLETION: The stage of completion as certified by the principal agent where the works or a section thereof has been completed free of patent defects other than minor defects identified in the list for completion and can be used for the intended purpose [CD]

PRELIMINARIES: The priced items listed in the preliminaries document with any additions, alterations or modifications thereof incorporated in the contract documents

PRICED DOCUMENT: Bills of quantities, schedule of rates or other documents appropriate to this agreement [CD]

PRIME COST AMOUNT: An amount included in the contract sum for the delivered cost of materials and goods obtained from a supplier as instructed by the principal agent

PRINCIPAL AGENT: The entity [CD] appointed by the employer with full authority and obligation to act in terms of this agreement

PROGRAMME: A diagrammatic representation of the planned execution of units of work or activities indicating the dates for commencement and completion prepared and maintained by the contractor

PROVISIONAL SUM: An amount included in the contract sum for the supply and installation of work by a subcontractor

RECOVERY STATEMENT: The statement prepared and issued in conjunction with each payment certificate by the principal agent in terms of the JBCC® Recovery Statement format

SECTION: An identified portion of the works for which practical completion is required by a date earlier than that required for the works as a whole [CD]

SECURITY: A monetary guarantee provided by the employer to the contractor, or the contractor to the employer in terms of this agreement [CD] from which either party may recover expense and loss in the event of default

SITE: The land or place where the works is to be executed [CD]

STATUS REPORT: A report compiled by the principal agent and/or agents in the event of termination of the agreement, or where the works has been suspended due to a force majeure event, or in the event of termination of the n/s subcontract agreement by the contractor, to record the state of completion or otherwise of the works or the n/s subcontract works, as the case may be.  Such status report may include marked up drawings and photographs

SUBCONTRACTOR: A nominated or a selected subcontractor appointed in terms of the n/s subcontract agreement by the contractor in accordance with a contract instruction for the supply and installation of work for which a provisional sum has been included in the contract sum [CD]

SUSPENSION: The temporary cessation of the works by the contractor

TAX: Value-added tax or any other tax, duty or levy applicable by law

WORKING DAYS: Calendar days which exclude Saturdays, Sundays, proclaimed public holidays and recorded annual builders’ holiday periods [CD]

WORKS: The extent of work to be executed by the contractor described in the contract documents and contract instructions, which includes free issue, and materials and goods. Work or installations to be executed by direct contractors and others responsible to the employer are excluded [CD]

1.2 Interpretation

1.2.1 In this document, unless inconsistent with the context, the words ‘accept, allow, appoint, approve, authorise, certify, decide, demand, designate, grant, instruct, issue, list, notice, notify, object, record, reduce, refuse, request, state and their derivatives require such acts to be in writing

1.2.2 The masculine gender includes the feminine and neuter genders and vice versa, the singular includes the plural and vice versa, and a person includes juristic or artificial persons

1.2.3 The headings of clauses are for reference purposes only and shall not be used in interpretation

1.2.4 Reference to a clause number written as [54.3.2] means that specific clause; clause [54.3.2-4] means the sub- clauses 2 to 4 inclusively; clause [54.3.2 & 4] means the sub-clauses 2 and 4 only

1.2.5 The word ‘deemed’ shall be conclusive that something is fact, regardless of the objective truth

2.0 Law, Regulations and Notices

2.1 The contractor shall comply with the law, obtain permits, licenses and approvals required and pay related charges for the execution of the works. The employer shall comply with the law, obtain permits, planning, building or similar permissions and pay charges for the works other than those which are the responsibility of the contractor [26.4.1] [CD]

2.2 Documents referred to in this agreement shall mean the current edition thereof with all amendments thereto as at the date of submission of the contractor’s offer unless otherwise stated [CD]

2.3 All communication or notices between the parties shall be in the language of this agreement and in a format that can be read, copied and recorded [CD]

2.4 Legal processes arising out of or concerning this agreement may validly be delivered to and served on the parties at the physical address of the parties recorded in this agreement. Either party may, at any time, by notice to the other, change its physical address provided it is in the same country

2.5 Notices given in terms of this agreement shall be deemed to have been received where:

2.5.1 Delivered by hand - on the day of delivery

2.5.2 Sent by electronic mail - within one (1) working day

2.5.3 Sent by registered post - within seven (7) calendar days after posting

3.0 Offer and Acceptance

3.1 The objective of this agreement is the execution of and payment for the works for which there has been an offer by the contractor and an acceptance by the employer

3.2 This agreement shall come into force on the date of acceptance by the employer (the contract date) and continue to be of force and effect until the end of the latent defects liability period - notwithstanding termination or the certification of final completion and final payment [11.0; 29.0 & 30.0]

3.3 Where any provision of this agreement, which is not material to its efficacy as a whole, is rendered void, illegal or unenforceable under any law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired. The parties shall endeavour in good faith to agree an alternative provision to the void, illegal or unenforceable provision

3.4 Failure by a party to enforce any provision of this agreement shall not constitute a waiver of terms of this agreement or affect such party’s rights to require the performance at any time in the future

4.0 Assignment and Cession

4.1 Neither party shall assign or cede rights or obligations under this agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld

4.2 The contractor shall not consent to a nominated subcontractor assigning or ceding rights or obligations in terms of this agreement without obtaining the prior written consent of the principal agent

4.3 Notwithstanding the above, where a party cedes any right to any monies due or to become due under this agreement as security in favour of a financial institution, consent shall not be required provided notice of such cession is given to the other party

5.0 Contract Documents

5.1 The parties shall sign the original contract documents and shall each be issued with a copy thereof. The original signed contract documents shall be held by the principal agent [CD]

5.2 Persons authorised to act on behalf of the parties and/or agents appointed by the employer shall be identified in the construction information. Such authorised person may be changed by notice to the other party

5.3 The priced document shall not be used as a specification of materials and goods or methods

5.4 The contract documents shall not be published or disclosed or used for any purpose other than that specified in this agreement by one party without the prior written consent of the other party

5.5 The principal agent shall timeously provide the number of copies [CD] of drawings, un-priced bills of quantities and other construction information at no cost to the contractor

5.6 The contract documents shall be deemed to be mutually explanatory of one another. In the event of ambiguity, discrepancy, divergence or inconsistency in or between them, this agreement shall prevail over all other contract documents

6.0 Employer’s Agents

6.1 The employer warrants that the principal agent has full authority and obligation to act and bind the employer in terms of this agreement. The principal agent has no authority to amend this agreement

6.2 The employer may appoint agents to deal with specific aspects of the works in terms of this agreement [CD]. The principal agent shall give notice to the contractor where such authority to issue contract instructions and perform duties for specific aspects of the works is delegated to agents. An agent appointed in terms of this clause shall not be entitled to subdelegate its authority without the prior written consent of the employer

6.3 The principal agent and agents shall declare any interest or involvement in the works other than a professional interest, where applicable [CD]

6.4 Where any agent fails to act in terms of delegated authority, the contractor shall give notice to the principal agent to rectify such default within five (5) working days. Where such default has not been rectified, the contractor may give notice to suspend the works [28.0]

6.5 Where any agent fails to act or is unable to act, or ceases to be an agent, in terms of this agreement, the employer shall appoint another agent within five (5) working days of the date of such notice from the contractor. The employer shall not appoint an agent against whom the contractor makes reasonable objection within five (5) working days of receipt of notice of intention to make such an appointment

6.6 The employer shall not interfere with or prevent the principal agent or an agent from exercising fair and reasonable judgement when performing their obligations in terms of this agreement

7.0 Design Responsibility

7.1 The contractor shall not be responsible for the design of the works other than the contractor’s and subcontractors’ temporary works. The contractor shall not be responsible for the coordination of design elements

7.2 Any design responsibility undertaken by a subcontractor shall not devolve on the contractor. All contractual or other rights the contractor has against such subcontractor arising from any design responsibility undertaken shall be ceded to the employer on the date of final completion or the date of termination of this agreement [9.2.3]

7.3 The contractor shall be responsible for the timeous submission of design documentation by a selected subcontractor for acceptance by the principal agent and/or agents [23.2.8]

Insurance and Security

8.0 Works Risk

8 .1 The contractor shall take full responsibility for the works from the date on which possession of the site is given to the contractor and up to the date of issue of the certificate of practical completion or deemed achievement of practical completion for a section or the works as a whole. Thereafter responsibility for the works shall pass to the employer

8.2 The contractor shall make good physical loss and repair damage to the works caused by or arising from:

8.2.1 Any cause before the date of practical completion [19.0]

8.2.2 Any act or omission of the contractor in the course of any work carried out in pursuance of the contractor’s obligations after the date of practical completion

8.3 The liability of the contractor in respect of any loss or damage shall include, but not be limited to:

8.3.1 The cost of making good such physical loss and repairing damage to the works including clearing away and removing all debris, and any other costs to reinstate the works

8.3.2 The new replacement value of free issue [12.1.11] [CD]

8.3.3 The cost of additional professional services

8.4 The limit of the contractor’s liability shall not exceed the Contract Works Insurance [CD]. Where the contract value exceeds the contract sum by more than ten per cent (10%) or the percentage stated [CD] the insurance provisions shall be adjusted at the employer’s expense. The party responsible for effecting insurance shall provide written proof of such adjustment [10.0]

8.5 The contractor shall not be liable for the cost of making good physical loss and repairing damage to the works caused by or arising from:

8.5.1 The use or occupation of any part of the works by the employer, the employer's employees or agents and those for whose acts they are responsible

8.5.2 An act or omission of the employer, the employer's employees or agents and those for whose acts they are responsible

8.5.3 An act or omission by a direct contractor

8.5.4 The design of the works for which the contractor is not responsible [7.1]

8.5.5 A defect in free issue or materials and goods specified by trade name where the contractor has no right of substitution. The contractor hereby cedes any right of action to the employer that may exist against the supplier and/or manufacturer of such free issue, and/or materials and goods

8.5.6 Force majeure

8.6 Where the contractor is not liable for the cost of making good physical loss or repairing damage [8.5] such making good and/or expense and/or loss shall be measured and valued and added to the contract value by the principal agent [17.1.10]

8.7 The contractor shall immediately give notice to the principal agent on becoming aware of physical loss or damage to the works

9.0 Indemnities

9.1 The contractor indemnifies the employer, the employer's employees or agents from all claims or proceedings for damages, expense and/or loss (including legal fees and expenses) in respect of or arising from the following events (except those attributable to an act or omission of the employer, the employer's employees or agents):

9.1.1 Death or bodily injury or illness of any person or physical loss or damage to any property other than the works [9.2.7] arising out of or due to the execution of the works or presence on and/or occupation of the site by the contractor. Should such an event occur, the contractor shall forthwith give notice to the principal agent

9.1.2 Non-compliance by the contractor with any law, regulation, or bylaw of any local or other authority and the failure by the contractor to obtain any permit, license or approval that the contractor is required to obtain in terms of this agreement [2.1] 

9.1.3 Physical loss or damage to construction equipment or other property belonging to the contractor or the contractor’s subcontractors but excluding direct contractors’ construction equipment or other property

9.2 The employer indemnifies and holds the contractor harmless from all claims or proceedings for damages, expense and/or loss (including legal fees and expenses) in respect of or arising from:

9.2.1 An act or omission of the employer, the employer's employees or agents and those for whose acts they are responsible

9.2.2 An act or omission of a direct contractor [16.0]

9.2.3 Design of the works [7.1] where the contractor is not responsible for such design

9.2.4 The use or occupation of any part of the works by the employer, tenants, direct contractors or others authorised by the employer

9.2.5 Proceeding with the works on instruction from the employer without the employer obtaining the required permission under the law in terms of this agreement [2.1]

9.2.6 Interference with any servitude or other right not depicted in construction information issued to the contractor that is the unavoidable result of the execution of the works including the removal of or weakening of or interference with the support of land and property adjacent to or within the site unless resulting from any negligent act or omission by the contractor or his subcontractors. Should such an event occur, the contractor shall forthwith give notice to the principal agent

9.2.7 Physical loss or damage to an existing structure and the contents thereof where this agreement is for alterations or additions to the existing structure [CD]. Should such an event occur, the contractor shall forthwith give notice to the principal agent

9.2.8 A defect in free issue [CD]

9.2.9 Physical loss or damage to the works where practical completion has been certified [19.0] or deemed to have been achieved

9.2.10 Advance payments certified and paid by the contractor to subcontractors [27.1.7; 27.2.4]

10.0 Insurances

10.1 The party responsible for the respective insurances [CD] shall effect and keep in force in the joint names of the parties from the date of possession of the site until the contractor’s responsibility has ended:

10.1.1 Contract Works Insurance [CD] for the works that shall include free issue [CD], materials and goods and temporary works (as defined in the insurance policy) and adequate cover for the clearing away and removing of all debris, and any other costs to reinstate the works and where required, damage to employer owned surrounding property [CD] in the care, custody or control of the contractor or to be worked upon by the contractor

10.1.2 Public Liability Insurance [CD] providing indemnity in respect of accidental death or injury to any person and accidental loss of or physical damage to tangible property, to remain in force until the date of final completion

10.1.3 Supplementary Insurance [CD] for the works against loss or damage caused by civil commotion, riot, strike, labour disturbance and lockout to the extent not insured under the Contract Works Insurance

10.1.4 Removal of Lateral Support Insurance [CD] where the employer considers that the execution of the works could cause the removal of or weakening of or interference with the support of land or property adjacent to or within the site and the consequences thereof. The employer shall appoint an agent to design and monitor appropriate support structures for use in excavations and/or in existing property that form part of the works and/or the site

10.2 Where practical completion in sections is required [20.0] or the works is for alterations and additions the employer shall effect and keep in force Contract Works Insurance, Public Liability Insurance, Supplementary Insurance and where applicable, Removal of Lateral Support Insurance, in the joint names of the parties until the date of final completion

10.3 The party responsible [10.1] for effecting insurances [10.1.1-4 and/or 10.2] shall provide proof of the insurances effected to the other party before the commencement of the construction period and, where required, provide proof of extension or renewal of such policy before expiry of the existing policy. Approval by the other party shall be deemed unless a reasonable objection is lodged within ten (10) working days of receipt of such proof

10.4 Upon request the party responsible for effecting insurance shall provide the other party with the entire policy wording of such policies

10.5 The contractor shall be responsible for the policy deductibles [CD] in respect of the insurances arranged by the employer where an action or inaction by contractor is the cause of a claim

10.6 Where this agreement is terminated [29.0] and the contractor is not required to make good the physical loss or repair damage to the works, the right to the proceeds of an insurance claim shall vest solely in the employer. The party responsible for the insurance shall give notice to the insurer to clarify the status of the insurance cover and/or further insurance obligations applicable to the works, Public Liability Insurance, Supplementary Insurance and Removal of Lateral Support Insurance

10.7 Where a party [CD] fails to effect or maintain the required insurances [10.1] or fails to provide proof of such insurance [10.4] the other party may give five (5) working days notice to comply failing which the other party may, without prejudice to any other remedy, effect such insurance and recover the expense and/or cost so incurred from the defaulting party

10.8 Where the employer fails to effect the specified insurances within ten (10) working days after notice to do so by the contractor, the contractor may, on expiry of the notice period, suspend the works until such insurances have been effected [28.1.4]

10.9 Any amounts not recovered from insurers shall be borne by the employer or contractor (as the case may be) in accordance with their respective obligations, liabilities and responsibilities under this agreement. However, where a party fails to effect and maintain insurance under this agreement, and the other party does not waive its right to demand such insurance be effected or maintained by that party and does not effect the insurance itself [10.7], any loss or damage which should have been recoverable under the insurance in question will be borne by the party responsible for effecting the insurance [CD]

10.10 The employer shall effect separate insurance in respect of direct contractors outside this agreement [CD]

10.11 The party responsible for effecting the insurance shall keep insurers informed of any relevant changes in respect of this agreement

11.0 Security

11.1 The contractor shall:

11.1.1 Provide to the employer a JBCC® Guarantee for Construction, where applicable [CD], within fifteen (15) working days of acceptance of the contractor’s offer and choose:

11.1.2 A JBCC® Guarantee for Construction – (variable) [CD] initially equal to ten per cent (10%) of the contract sum and keep such security valid and enforceable until the final payment certificate has been issued to the contractor [25.6]

Or …

11.1.3 A JBCC® Guarantee for Construction - (fixed) set at five per cent (5%) of the contract sum [CD] and a payment reduction of 5% of the value of each payment certificate up to a maximum of five per cent (5%) of the contract sum [25.3.3]. The contractor shall keep such security valid and enforceable until the only or last certificate of practical completion has been issued

11.1.4 A JBCC® Guarantee for Advance Payment where an advance payment is required equal in value to the aggregate amount of all such advance payments [CD]. The contractor shall keep such security valid and enforceable until the advance payment is repaid [11.2]

11.1.5 Extend or provide a replacement JBCC® Guarantee for Construction - (variable) or (fixed) and/or a JBCC® Guarantee for Advance Payment at least twenty (20) working days before such security is due to expire [11.1.2-4]

11.2 The amount of the JBCC® Guarantee for Advance Payment may be reduced by the amount repaid by the contractor as certified by the principal agent in payment certificates. If the advance payment is not repaid by the date a certificate of practical completion is issued or practical completion is deemed achieved, or by the date of termination by the employer due to contractor default [29.9], the entire outstanding amount shall immediately become due and payable

11.3 Where the contractor fails to provide the security the employer may:

11.3.1 Hand over the site to the contractor and withhold in interim payment certificates to the contractor an amount equal to ten per cent (10%) of the contract sum. The amount withheld shall be reduced at practical completion [19.0] to two and one half per cent (2.5%) of the contract sum and to zero per cent (0%) in the final payment certificate [25.6]

Or …

11.3.2 Terminate this agreement [29.1.1]

11.4 The employer shall:

11.4.1 Provide to the contractor a JBCC® Guarantee for Payment where required in the accepted offer [CD] within fifteen (15) working days of acceptance of the contractor’s offer

11.4.2 Keep such JBCC® Guarantee for Payment valid and enforceable in terms of the security form and/or provide a replacement JBCC® Guarantee for Payment at least twenty (20) working days before such security is due to expire [11.4.1]

11.5 Where the employer fails to provide the JBCC® Guarantee for Payment [CD], or such security has expired, the contractor may, after ten (10) working days notice forthwith suspend the works until such security has been provided [28.1.1]

11.6 Where the contract value exceeds the contract sum by more than ten per cent (10%) the applicable security shall be adjusted at the employer’s expense. The party responsible for adjusting the security value shall provide written proof of such adjustment

11.7 A security held by either party shall be for the due fulfilment of the other party’s obligations in terms of this agreement

11.8 The parties shall return the original or the replacement security form within ten (10) working days after the expiry date, or after the date of termination

11.9 Where a party makes an unjustified call on a security, the amount paid and mora interest shall be paid to the other party

11.10 The contractor shall waive his lien on receipt of JBCC® Guarantee for Payment from the employer

Execution

End of Demo