Construction Contracts: Should you choose JCT or NEC for Your Project?

If you are involved in a construction project in the UK, whether as a developer, contractor or sub-contractor, the contract you sign shapes almost everything that happens afterwards, from who carries the risk of delay to how disputes get resolved. This guide is part of our wider work advising the construction sector, and explains what a construction contract is, the standard forms most used in the UK, specifically JCT and NEC, what a well drafted contract should include, and when it is worth having one reviewed before you sign.

What Is a Construction Contract?

A construction contract is a legally binding agreement that sets out the terms of a building or construction project. It records who is doing the work, what that work involves, how much it will cost, how long it should take, and what happens if something changes along the way.

In the UK, most construction contracts are not drafted entirely from scratch. Instead, parties typically start from a standard form contract, most commonly a JCT or NEC form, and amend it to suit the specific project. Smaller or more straightforward projects sometimes use a bespoke contract instead, particularly where the standard forms do not fit the scope of work well.

Whichever route is taken, the contract is what everyone falls back on if something goes wrong, which is why the detail matters considerably more than most people expect before their first project.

JCT and NEC Contracts: The Two Main UK Standard Forms

Two families of standard form contract dominate UK construction: JCT (Joint Contracts Tribunal) and NEC (New Engineering Contract).

JCT contracts are the more traditional and widely used option, particularly on commercial and residential building projects. They tend to be more prescriptive, setting out detailed procedures for payment, extensions of time and practical completion, and they come in several versions depending on the size and complexity of the project, from minor works to major projects.

NEC contracts were designed with a different philosophy in mind. Rather than focusing purely on allocating blame after something goes wrong, NEC contracts place more emphasis on collaborative project management and early warning of problems before they escalate. They are commonly used on larger infrastructure and public sector projects, and increasingly on private commercial developments too.

Neither form is inherently better than the other. JCT tends to suit projects where the parties want a more established, well understood framework with clear procedures. NEC tends to suit projects where proactive risk management and flexibility matter more than following a rigid, prescriptive process. The right choice depends on the nature, scale and complexity of your specific project, and on how the standard form is amended to reflect the realities of that project, since an unamended standard form rarely fits perfectly on its own.

What Should a Construction Contract Include?

Whatever form a construction contract takes, certain elements should always be covered clearly:

• Scope of work: a detailed description of exactly what is being built or done, and by whom
• Price and payment terms: the contract sum, payment schedule, and how valuations and payment applications are handled
• Programme and completion dates: the project timeline, including provisions for extensions of time where delay is not the contractor’s fault
• Variations: how changes to the scope are instructed, priced and agreed once work has started
• Liability and insurance: who is responsible for what, and what insurance each party is required to hold
• Warranties and guarantees protection for funders, purchasers or tenants who are not party to the main contract but have an interest in the project
• Dispute resolution: how disagreements are handled, whether through negotiation, adjudication, arbitration or, in limited cases, court proceedings

A contract that leaves any of these vague is not necessarily unenforceable, but it does leave more room for disagreement about what was agreed, which is exactly the situation that leads to disputes.

Common Construction Contract Disputes

Most construction disputes trace back to one of a small number of recurring issues: payment disagreements, disputes over the cause and responsibility for delay, defective work claims, and disagreements about what was included within the original scope versus what constitutes a chargeable variation.

Clear drafting does not eliminate the possibility of a dispute, projects are complicated, and things go wrong even with a well written contract, but it does make disputes considerably easier to resolve when they arise. A contract that clearly allocates risk and sets out a defined process for raising and resolving issues gives both sides a shared reference point, rather than leaving the outcome to depend on whose recollection of an informal conversation is more persuasive.

When Should You Get a Construction Contract Reviewed?

It is worth having a construction contract reviewed before you sign in a number of common situations: when you are using a standard form for the first time and are not familiar with how it has been amended, when a contract has been heavily amended from the standard wording, when the value or complexity of the project is significant enough that getting the terms wrong would be costly, or when you are asked to sign a bespoke contract drafted by the other party.

A review does not need to cover every clause in detail for every project. A focused check of the highest risk areas, payment, liability, and termination in particular, is often enough to catch the issues that matter most, without the cost or delay of a full line by line review.

Getting Your Contract Reviewed

If you are about to sign a construction contract, whether a JCT form, an NEC form or a bespoke agreement, our solicitors can review the key terms and flag anything that needs attention before you commit. Get in touch with MAR Legal to discuss your project.