Build UK has published this recommendation to form a common ground between clients and the supply chain on contractual practice in the construction industry. The objectives are to promote collaboration, encourage a fairer allocation of risk through the supply chain, and deliver better project outcomes.

Build UK recommends that, as a minimum, its members do not use the contract terms set out below. In accordance with competition law, this is a non-binding recommendation and members must consider on an individual basis whether they wish to accept or reject all or some of the terms in their own contracts. Build UK and its members will not enforce the implementation of this recommendation in any way.

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 extension of time/loss and expense risk where not reasonably ascertainable for dealing with:

  • asbestos
  • fossils, antiquities and other objects of interest or value
  • unexploded ordnances
  • the carrying out by a Statutory Undertaker of work in pursuance of its statutory obligations in relation to the works, or the failure to carry out such work

‘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 such as fraud, misrepresentation, personal injury/death, wilful default)

Performance Securities

Where the following forms of performance security are required:

  • Do not use a pure on-demand performance bond
  • Do not use a Parent Company Guarantee (PCG) which does not include a ‘no greater liability’ clause (save for legal costs) and equivalent rights of defence
  • Do not use a collateral warranty which does not include a ‘no greater liability’ clause

There is a commitment in the Construction Sector Deal (page 34) to improve procurement practices, and Government has a specific action to promote the use of un-amended forms of contract on publicly funded projects.

By eliminating what Build UK and its members perceive to be poor market practices, such as those outlined in this recommendation, the construction industry can become more sustainable in terms of productivity, innovation and profitability.

This recommendation will be reviewed regularly and any feedback should be sent to info@BuildUK.org.