D&B Gulde

Design and Build Contract Guide (DB/G)
This Guide is intended to provide a general introduction to the contract and is not a substitute for professional
advice.
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Published September 2005 by Sweet and Maxwell Limited

100 Avenue Road, London, NW3 3PF
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted,
in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except in
accordance with the provisions of the Copyright, Designs and Patents Act 1988, without the prior written
permission of the publisher.
# The Joint Contracts Tribunal Limited 2005
www.jctcontracts.com
{SweetAndMaxwell}XML/DBG.3d 18/8/05 15:56 Amended by Simon Merton
Contents
Introduction Page 1
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Part 1 – A Brief Overview 2
Format 2
Content 2
Structure 3
Origins and Destinations 4
Part 2 – Specific Provisions 5
Articles of Agreement 5
Conditions 6
Section 4 – Payment
Section 5 – Changes
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Section 1 – Definitions and Interpretation
Section 2 – Carrying out the Works
Section 3 – Control of the Works
Section 6 – Injury, Damage and Insurance

Section 7 – Assignment, Third Party Rights
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and Collateral Warranties
Section 8 – Termination 16
Section 9 – Settlement of Disputes 16
Schedules 18
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Schedule 1 – Contractor’s Design 18
Submission Procedure
Schedule 2 – Supplemental Provisions 18
Schedule 3 – Insurance Options 19
Schedule 4 – Code of Practice 20
Schedule 5 – Third Party Rights 20
Schedule 6 – Forms of Bonds 20
Schedule 7 – Fluctuations Options 21
Appendix A – Table of Destinations 22
Appendix B – Related Publications 28

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Introduction
1 Part 1 of this Guide gives a brief overview of the 2005 edition of the JCT Design and Build Contract (DB 2005),
including its main features and points of difference from the JCT Standard Form of Building Contract With
Contractor’s Design (WCD 98).
2 Part 2 then contains a more detailed consideration of the provisions of DB 2005, with particular emphasis
upon those provisions that have altered significantly from those of WCD 98.
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3 Appendix A contains a table of destinations to allow the easy location of WCD 98 clauses within DB 2005.
4 Appendix B contains a list of the additional documents issued by the JCT for use with DB 2005.
5 The Contract makes extensive use of defined terms (see clause 1?1), identified by capitalisation, and the
same convention is adopted in this Guide. Unless otherwise stated, references to clauses are to the
clauses in the DB 2005 Conditions.
6 The contract is intended to be used where the Employer wishes to appoint a Contractor for a lump sum on the
basis that the Contractor will be responsible for the completion of the design and the production of all further
design and/or production information that he requires. To assist in the administration of the Contract the
Employer is required to appoint an Employer’s Agent to act on his behalf, although there is no reason why
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the Employer’s Agent should not be a member of the Employer’s staff. The role of the Employer and the
Employer’s Agent differs from that of the Architect/Contract Administrator under, for example, SBC 2005,
as he is not required to act as a certifier or valuer, although some decisions are required to be made on a
fair and reasonable basis.
Although DB 2005 does not refer to the appointment by the Employer of an architect or quantity surveyor, the
Employer may wish to appoint professional advisers in order to assist in the preparation of the Employer’s
Requirements, with the invitation and review of tenders and in advising the Employer’s Agent in respect of
design matters.
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Part 1 – A Brief Overview
Format
8 The 2005 edition of the JCT Design and Build Contract (DB 2005), previously the JCT Standard Form of
Building Contract With Contractor’s Design (WCD 98), adopts a section-headed format aimed at greater
standardisation over the full range of JCT contracts and greater adaptability to future change.
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9 The JCT’s intention is that the content of DB 2005 should as far as possible be familiar to users of WCD 98.
Certain points have been clarified but there has been no material alteration in risk allocation and many of the
WCD 98 procedures have been retained. Within that framework, the content has been adjusted so as more
fully to reflect current needs; many of the WCD 98 provisions have been simplified and almost all have been
abbreviated.
10 Certain optional provisions have been included to facilitate use of DB 2005 by Local Authority employers.
Content
11 The following are the principal changes in the content of the Contract:
(i) DB 2005 now includes, as integrated options, provisions for:

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. Possession and completion by Sections;
. Purchaser’s/Tenant’s and Funder’s rights from the Contractor, either in the form of Third Party Rights
or by means of Collateral Warranties; and
. Collateral Warranties from relevant sub-contractors (including warranties in favour of the Employer).
Each of these options is substantially in the terms of the existing Modifications (Sectional Completion) in
WCD 98 or the relevant JCT Collateral Warranty, with the exception of warranties to the Employer.
(ii) A design submission procedure similar to that in the JCT Major Project Construction Contract
(previously the Major Project Form) has been included, though it may be modified by provisions in the
Contract Documents.
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(iii) Express reference is made to mediation as a means of dispute resolution.
(iv) Clause 22D (Insurance for Employer’s loss of liquidated damages) has been omitted; this reflects its
limited use, prospective non-availability and the increased sophistication of the wider Delay in
Completion insurance market.
(v) Adjudication in DB 2005, in line with revised JCT policy and in place of the existing JCT adjudication
rules, adopts by reference and with only minor addition the rules of the statutory Scheme for
Construction Contracts[1].
(vi) The previous default provision in favour of final dispute resolution by arbitration rather than by legal
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proceedings has been reversed, though the Parties may still elect to arbitrate, either by making the
relevant entry in the Contract Particulars or by subsequent agreement.
(vii) Since the industry is now familiar with the relevant procedures of the Construction Industry Scheme
(CIS) (and notwithstanding the modifications due to come into force in 2006), most of the provisions
of clause 31 of WCD 98 have been omitted. On similar grounds, the Supplemental Provisions relating
to VAT (‘‘the VAT Agreement’’) have also been omitted.
[1] i.e. those set out in Part I of the Schedule to The Scheme for Construction Contracts (England and Wales) Regulations 1998
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(viii) The Contractor is required to take out and maintain Professional Indemnity insurance.
(ix) Certain other provisions have also been revised, notably:

. EDI, now Electronic communications (section 1);
. Extension of time (now referred to as Adjustment of Completion Date) (section 2), with consequential
amendment of Loss and Expense (section 4);
. Payment and withholding notices (section 4); and
. Termination (section 8).
Structure
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12 The structure of DB 2005 broadly follows the original section-headed formats used in the Intermediate, Minor
Works and certain other JCT forms, but there has been some reordering.
13 DB 2005 retains the traditional Articles of Agreement, but incorporates within them the Contract Particulars,
formerly the Appendix. This brings together in sequence, at the front of the Contract, all the contract-specific
details which the Parties are required to complete, followed by the attestation provisions.
14 The Conditions consist of nine sections and seven Schedules:
Sections
Section 1
Section 2
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This is a conventional Definitions and Interpretation section.
This, under the heading Carrying out the Works, combines the Contractor’s
obligations to carry out and complete the Works (including his design obligations)
with those provisions, other than matters of control, most closely related to the
carrying out. These include provisions in relation to possession, documents, unfixed
materials and goods, time for completion, late completion and defects.
Section 3 This is the Control of the Works section, covering such matters as access for and
functions of representatives, sub-letting, Employer’s instructions and compliance with
CDM Regulations. The detailed provisions relating to Changes are now dealt with in
section 5.
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Section 4 The Payment section, principally covering the matters covered by clause 30 of WCD 98,
together with Loss and Expense.
Section 5 This is a separate section concerning Changes, their definition and valuation.
Section 6 The basic Injury, Damage and Insurance section, covering clauses 20 to 22 of WCD
98 but with the Works Insurance Options (the core provisions of clauses 22A, B and C)
set out separately in Schedule 3.
Section 7 This comprises the restrictions on, and limited right of, Assignment, together with the
enabling provisions for Third Party Rights and Collateral Warranties. The Third Party
Rights themselves are set out in Schedule 5 whilst the forms of Collateral Warranty
remain separate published documents.
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Section 8 The Termination section, based on clauses 27, 28 and 28A of WCD 98 but in
considerably abbreviated form.
Section 9 The Settlement of Disputes provisions (clauses 39A and B of WCD 98) in abbreviated
form, together with a new provision on mediation.
Schedules
Schedule 1 Contractor’s Design Submission Procedure
Schedule 2 Supplemental Provisions – substantially those of WCD 98, but with the design
submission procedures now replaced by those in Schedule 1.

Schedule 3 Insurance Options – Insurance Options A, B and C.
Schedule 4 Code of Practice – the existing WCD 98 code relating to opening up and testing.
Schedule 5 Third Party Rights – rights for Purchasers/Tenants and rights for a Funder, granted by
the Contractor.
Schedule 6 Forms of Bonds – the existing Advance Payment Bond and Bond in respect of payment
for off-site materials and/or goods.
Schedule 7 Fluctuations Options – Fluctuations Options A, B and C, the former WCD 98 clauses
36, 37 and 38.
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15 Each section of DB 2005 is divided into several sub-sections. The new arrangement simplifies clause
numbering and cross-references, and should prove more readily adaptable to future change.
16 The Schedules in DB 2005 form part of the Conditions, as opposed to the several categories of annexures
that were included in WCD 98.
Origins and Destinations
17 The Contents pages should enable users of JCT contracts readily to locate the DB 2005 equivalents of
existing WCD 98 provisions, though many of the headings have themselves been abbreviated.
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To assist the reference process and to enable users more readily to compare and contrast the provisions of
DB 2005 with those of WCD 98, a Table of Destinations is set out in Appendix A to this Guide.
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Part 2 – Specific Provisions
Articles of Agreement
19 These comprise:
. an identification of the Parties (the Employer and the Contractor).
. the Recitals, identifying the nature and location of the Works and whether they are to be completed in
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Sections.
. the Articles themselves, identifying the Contract Sum, the Employer’s Agent, the Planning Supervisor, the
Principal Contractor and the applicable dispute resolution provisions. Except to the extent that the
Employer notifies the Contractor otherwise in writing, the Employer’s Agent has full authority to act on
behalf of the Employer in connection with all matters concerning the Contract.
. the Contract Particulars, which are divided into two parts. Part 1 contains the general information
necessary to make the Contract work (including the identification of the Employer’s Requirements,
Contractor’s Proposals and Contract Sum Analysis) and stands in place of the Appendix to WCD 98.
Part 2 contains information specifically related to Third Party Rights and Collateral Warranties.
. the Attestation. Provision is made for the Contract to be executed either under hand or as a deed. Users
should be aware of the additional period allowed for the commencement of an action for breach of contract
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where the Contract is executed as a deed i.e. 12 years instead of 6 years.
Article 1 is fundamental to understanding how the Contract is to operate and sets out the Contractor’s
obligations in the following terms:
‘‘The Contractor shall complete the design for the Works and carry out and complete the construction
of the Works in accordance with the Contract Documents.’’
21 The Contract Documents are defined (see clause 1?1) as being the Agreement (i.e. the Articles of
Agreement), the Conditions, the Employer’s Requirements, the Contractor’s Proposals and the Contract
Sum Analysis.
22 The intention is that the Employer should set out his requirements, in whatever degree of detail is considered
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appropriate, within the Employer’s Requirements and that the Contractor should respond to these with the
Contractor’s Proposals, setting out the manner in which he proposes to design and construct the Works.
Depending upon the procurement approach adopted, the level of detail within the Employer’s
Requirements may vary between a performance-orientated statement of objectives and a detailed and
prescriptive statement of what the Contractor is to provide. Similarly, and responding to the degree of
detail within the Employer’s Requirements, the Contractor’s Proposals may contain the result of
substantial design development work or may simply be a reiteration of the Employer’s Requirements.
23 Article 8 provides for arbitration but this only applies if, in the Contract Particulars, it is stated to apply. The
Parties must now opt-in to arbitration if they wish this to be the forum for determining disputes – see also
section 9.
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24 The accurate completion of the Articles of Agreement and identification of the other Contract Documents is
important for any project and, whilst default positions are included for many of the entries in the Contract
Particulars, reliance on these is no substitute for a proper consideration of the provisions the Parties wish
to apply.
25 In terms of attestation, different provisions are required under the law of Scotland (for which the Scottish
Building Contract Committee Limited issues appropriate documentation). Other clauses may also be
needed in the case of certain housing associations, partnerships and foreign companies.
26 An increasing number of foreign companies involved in development and construction now themselves carry
on business in the United Kingdom, rather than operating here through U.K. subsidiaries.

27 Under the Companies Act 1989, as applied by the Foreign Companies (Execution of Documents)
Regulations 1994 and the 1995 amendments to those regulations, a foreign company can execute deeds
either:
. by affixing its common seal or any manner of execution permitted under the laws of its place of
incorporation; or
. by expressing the document to be executed by the company under the signature of persons authorised to
sign on its behalf in accordance with its domestic law.
28 Many foreign companies do not have a seal and the authority of relevant signatories needs to be checked but
if there is any doubt, professional advice should be obtained.
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29 To avoid complications as respects the service of claims or notices outside the jurisdiction, consideration
should also be given to inserting an obligation on the foreign company for the duration of the Contract to
maintain an agent for service within England and Wales or within Scotland or Northern Ireland, where
appropriate.
30 The main provisions of the Articles of Agreement are addressed subsequently, when considering the clauses
to which they relate.
Conditions
Section 1 – Definitions and Interpretation
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in clause 1?1.
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The definitions used by the Contract largely follow those with which users of WCD 98 will be familiar. Some
terms are actually defined in clause 1?1, whilst others are defined in other clauses, to which reference is made
A precedence of documents is created by clause 1?3, whereby the Agreement and the Conditions are to be
read as a whole, with nothing in the Employer’s Requirements, Contractor’s Proposals or Contract Sum
Analysis overriding or modifying the Agreement and the Conditions.
33 All communications are required to be in writing except to the extent that the Contract Particulars identify, or
the Parties subsequently agree, that electronic communications may be used. The address for service of
documents on either Party is either as stated in the Contract Particulars (or as may be otherwise agreed)
or, if there is no address in the Contract Particulars, the address in the Agreement or last known address.
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34 This section also establishes the effect of the Final Account and Final Statement (issued under clause 4?12),
once they have become conclusive as to the balance due between the Parties. Subject to the exceptions set
out in clause 1?9, such a Final Account and Final Statement also have the effect of conclusive evidence in any
proceedings arising out of or in connection with the Contract that:
. where particular qualities of any materials, goods or workmanship were stated by the Employer’s
Requirements as having to be for the approval of the Employer, then they are to the reasonable
satisfaction of the Employer;
. such extensions of time, and only such extensions of time, as are due have been given;
. such loss and/or expense as has been reimbursed is in full and final settlement of any claims the
Contractor may have for any cause related to the Contract.
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35 The three exceptions to this principle arise where adjudication, arbitration or other proceedings have been
commenced either prior to the issue of the Final Account and Final Statement or within 28 days of the
date when they would otherwise have become conclusive.
36 Other than as set out above, no payment by the Employer is conclusive evidence that any works, materials,
goods or design are in accordance with the Contract.

Section 2 – Carrying out the Works
Design
37 The Contractor’s obligations, as initially set out in Article 1, are further developed in clause 2?1. These include
the completion of the design for the Works, and the Contractor is prohibited from undertaking any work for
which it is necessary to produce Design Documents until such time as he has complied with either the design
submission procedure set out in Schedule 1 or such other requirements as are stated in the Contract
Documents (clause 2?8). Where Schedule 1 is applicable, if the Contractor fails to comply with the
procedure then he is not entitled to be paid for the work so executed (see paragraph 6 in Schedule 1).
38 The Contractor is required to undertake any design work to the standard expected of an appropriate
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professional consultant such as an architect or consulting engineer, appointed directly by the Employer
and not undertaking any construction work.
39 If the Parties wish, it is possible (except to the extent that the Defective Premises Act 1972 applies), to limit the
Contractor’s liability in respect of loss of use, loss of profit and other consequential losses arising from a
breach of his design obligations to a sum identified in the Contract Particulars. If no sum is inserted in the
Contract Particulars, the Contractor’s liability in respect of these matters will be unlimited. Clause 6?11
requires the Contractor to take out Professional Indemnity insurance in respect of his design liabilities.
40 In completing the design for the Works, the Contractor is not required to take responsibility either for the
contents of the Employer’s Requirements or for verifying the accuracy of any design they contain (clause
2?11), save only to the extent that they conflict with Statutory Requirements (see below). This provision is
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intended to counter the possible implications of the 2002 case of Co-operative Insurance Society Ltd v.
Henry Boot Scotland Ltd. If, however, the Contractor does identify a deficiency in the Employer’s
Requirements, and that deficiency has not been addressed by the Contractor’s Proposals, then the
Employer’s Requirements are modified accordingly and that modification is treated as a Change.
Subject to all monies due under the Contract having been paid to the Contractor, the Employer is granted a
licence to use the Contractor’s Design Documents for any purpose relating to the Works, although the
copyright in these documents remains with the Contractor (clause 2?38).
Statutory Requirements
42 As regards Statutory Requirements (a term which includes Development Control Requirements), the
Contractor is required to carry out and complete the Works in accordance with them, including giving all
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necessary notices, except to the extent that the Employer’s Requirements specifically state that any part
of those requirements comply with the Statutory Requirements.
43 Where there is a discrepancy between the Employer’s Requirements or the Contractor’s Proposals and a
Statutory Requirement then the Contractor is required to propose for the Employer’s agreement an
amendment and then complete the design and construction of the Works in accordance with that
amendment and entirely at his own cost, except where:
. the Statutory Requirements change after the Base Date, such as to require an alteration to the Works;
. the Contractor’s Proposals require modification to comply with Development Control Requirements (i.e.
statutory provisions which control the right to develop the site), unless the Employer’s Requirements say
that such matters are at the Contractor’s risk. (This provision is intended to recognise the fact that if the
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Contractor is appointed before full planning permission is obtained, there may be unforeseen conditions
applied by the planning consent.)
. it is necessary to alter any part of the Employer’s Requirements which the Employer has expressly stated
to be compliant with Statutory Requirements (see previously).
Progress and completion
44 The Contractor is to be given possession of the site (or relevant part(s) of the site, if there are Sections) on the
Date of Possession and is then required to proceed regularly and diligently to complete the Works on or
before the relevant Completion Date. The Contractor retains possession of the site (for insurance
purposes – see section 6) until the issue of the Practical Completion Statement (for the Works) or the
Section Completion Statement (for a Section).

45 Prior to practical completion of the Works or of a Section the Employer may take possession of a part of the
Works with the consent of the Contractor (clause 2?30) or, again with the consent of the Contractor, may use
or occupy part of the site or Works (clause 2?5). Additionally the Employer may, in accordance with the
Contract, undertake works on the site or require them to be undertaken by other contractors (Employer’s
Persons).
46 Clauses 2?23 to 2?26 contain provisions in relation to extension of time which will be familiar to users of WCD
98. The Relevant Events now appear in clause 2?26, where the list is somewhat shorter than in WCD 98 as a
consequence of fuller use of a general provision in relation to impediment, prevention or default, whether by
act or omission, by the Employer or the Employer’s Persons (Relevant Event 2?26?5).
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47 Upon receipt of the Contractor’s notice of delay and relevant particulars, the Employer is now required to
notify his decision as soon as is reasonably practicable, and in any event within 12 weeks of receipt of the
required particulars. Where the period to the Completion Date is less than 12 weeks the Employer must
endeavour to give his decision prior to the Completion Date. The new wording makes clear that, where a
project is running late, the Contractor may issue, and the Employer must respond to, notices after the
Completion Date, and not await the final review. As in WCD 98 the final review must be carried out no
later than 12 weeks after the date of practical completion.
48 When awarding an extension of time the Employer is now required to identify the amount of time he has
attributed to each Relevant Event.
49 Upon practical completion of the Works or a Section the Employer is required to issue a Practical Completion
Statement or a Section Completion Statement. Issue of this statement is dependant upon the Contractor
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having sufficiently complied with the obligation in clause 2?37 regarding the supply of as-built and
operating information and with his obligations regarding the supply of information for the health and
safety file.
Where the Contractor fails to complete the Works or a Section by the relevant Completion Date the Employer
is entitled to require the payment of liquidated damages at the rate specified in the Contract Particulars. Such
a payment is dependent upon:
. the issue, by the Employer, of a Non-Completion Notice for the Works or a Section (clause 2?29?1);
. the Employer having informed the Contractor, no later than the date the Final Account and Final
Statement become conclusive, that he may require the payment of liquidated damages (clause
2?29?1); and
. the Employer, no later than 5 days before the final date for payment in respect of the final balance, giving to
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the Contractor a written notice requiring that he either pay or (by way of a withholding from monies due)
allow liquidated damages (clause 2?29?2).
51 Where the Employer wishes to withhold liquidated damages from a payment otherwise due to the Contractor,
compliance with clause 4?10?4 or 4?12?9 in relation to withholding notices is also necessary, although this
requirement can be satisfied at the same time as the notification issued under clause 2?29?1.
52 Practical completion marks the commencement of the Rectification Period, which extends for the period
identified in the Contract Particulars (6 months unless stated otherwise). The Contractor is obliged to
make good, within a reasonable time and at no cost to the Employer, all defects, shrinkages and other
faults that are due to the Contractor’s failure to comply with his obligations under the Contract and that
are instructed to be made good no later than 14 days after the expiry of the Rectification Period. When all
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such defects have been made good, the Employer is required to issue a Notice of Completion of Making
Good.
Section 3 – Control of the Works
53 Clauses 3?3 and 3?4 control sub-letting of the Works. The Contractor may not sub-let any part of the Works or
the design for the Works without the consent of the Employer, which is not to be unreasonably delayed or
withheld. The giving of consent by the Employer in this manner does not in any way affect the
Contractor’s responsibilities under the Contract.

54 There is no provision for the nomination of sub-contractors, although Schedule 2 contains (at paragraph 2)
an optional provision permitting the naming of sub-contractors by the Employer within the Employer’s
Requirements.
55 Whenever consent is given to sub-letting the Contract requires that the sub-contract contains certain specific
provisions, largely intended to ensure the proper operation of the Contract. These include provisions in
relation to unfixed materials, rights of access to workshops, etc. and the provision of collateral warranties.
Additionally, each sub-contract is required to contain a similar right for the sub-contractor to be paid
interest on terms equivalent to those in the Contract.
56 All instructions issued by the Employer are to be in writing, although there is a procedure for the Contractor to
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confirm a purported instruction issued otherwise than in writing and also for the Employer retrospectively to
confirm such instructions. All instructions that the Contract empowers the Employer to issue are to be
compiled with by the Contractor forthwith, except where the instruction requires a Change to obligations
or restrictions concerning the manner in which the Contractor is to undertake the Works (i.e. as envisaged
by clause 5?1?2) and the Contractor raises a reasonable objection to compliance.
57 Where the Contractor fails to comply with an instruction the Employer has the right, having first given 7 days’
notice, to engage others to comply with the instruction. The additional costs incurred are recoverable from the
Contractor.
58 Because of the possible implications of a Change upon the Contractor’s design the Employer is not entitled to
instruct a Change which necessitates an alteration in the design for the Works without first having sought the
consent of the Contractor, which must not be unreasonably delayed or withheld. Additionally, where the
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Contractor is the Planning Supervisor he has the right, and duty, to consider each instruction requiring a
Change or the expenditure of a Provisional Sum in the context of his duties under regulation 14 of the
CDM Regulations, and advise the Employer accordingly.
Section 4 – Payment
Payment and withholding notices
59 Two alternative provisions exist for the making of Interim Payments, selected by an entry in the Contract
Particulars. Payment is either to be made on the basis of stage payments set out in the Contract
Particulars (Alternative A) or on the basis of the value of work executed (Alternative B). If no selection is
made in the Contract Particulars then Alternative B will apply.
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60 Whichever Alternative is selected, the Contractor is required to make an Application for Interim Payment,
accompanied by any details called for by the Employer’s Requirements. Where Alternative A applies, the
applications are made upon completion of one of the stages identified in the Contract Particulars. Where
Alternative B applies, applications are made at monthly intervals during the period ending one month after
practical completion. After that date further applications are made whenever amounts become due, but
the Employer is not obliged to make a further payment within one month of a previous payment.
61 The sum applied for is the Gross Valuation determined in accordance with the applicable rules of the Contract
and the final date for payment is 14 days from receipt, by the Employer, of the Application for Interim Payment.
This provision effectively makes receipt of an Application for Interim Payment a condition precedent to an
Interim Payment.
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62 Once an Application for Interim Payment has been received by the Employer, he is required within 5 days to
serve a notice identifying the amount of his proposed payment and the basis of its calculation (a payment
notice). This sets out the Employer’s view of the Contractor’s entitlement to payment. Where the
Employer wishes to make a withholding from amounts he considers due (for example, in relation to
liquidated damages), a written notice must be given no later than 5 days before the final date for payment
which identifies the ground or grounds for the withholding and the amount attributable to each ground (a
withholding notice).
63 Subject to any withholding notice, the amount to be paid by the Employer is the amount stated in the payment
notice or, if there is no payment notice, the amount of the Gross Valuation (less Retention, previous Interim
Payments and any advance payments). This is in contrast to WCD 98 where, in the absence of any response
by the Employer to the Contractor’s application, the amount within the application became due for payment.

64 The Gross Valuation includes the cumulative value at the relevant stage (if Alternative A applies) or the total
value of work properly executed (if Alternative B applies), the value of Changes and Provisional Sum
expenditure, the value of materials and goods on site (if Alternative B applies but only in very limited
circumstances if Alternative A applies), the value of Listed Items (i.e. specific off-site materials, subject to
compliance with clause 4?15), amounts payable in accordance with the insurance provisions, amounts in
respect of loss and/or expense and amounts due in accordance with the fluctuations provisions. By
paragraph 6 of Schedule 1, which will apply unless there is a contrary provision in the Contract
Documents (see clause 2?8), the Contractor has no entitlement to payment in respect of work that has not
been executed in accordance with Design Documents marked (or deemed to have been marked) ‘A’ or ‘B’.
65 Where Alternative B applies, the Contract Sum Analysis is likely to be used to help determine the value of
work properly executed, and care should be taken to ensure that it contains sufficient detail to allow it to
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fulfil this function.
66 Where payment is not made in accordance with the Contract the Contractor has the right, subject to having
given 7 days’ notice, to suspend performance until such time as payment is made. This right is in addition to
any other rights or remedies that may exist. These other rights and remedies could include termination
(clause 8?9?1?1) or interest (clauses 4?10?6 and 4?12?11).
Retention
67 Retention (at a rate of 3% unless the Contract Particulars state otherwise) may be deducted in accordance
with the rules for determining the Gross Valuation (clauses 4?13 to 4?15) and retained by the Employer.
Where practical completion of the Works or a Section has occurred, the Retention Percentage is reduced
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by half, meaning that there will be a partial release of Retention with the next Interim Payment. Once a
Notice of Completion of Making Good has been issued in respect of the Works or a Section then the
Employer is no longer entitled to deduct Retention in respect of those works, and it will be released with
the next Interim Payment. Clause 4?9 requires the Contractor to issue an Application for Interim Payment
upon the issue of the Notice of Completion of Making Good.
Loss and expense
68 The Contractor’s right to have ascertained and be reimbursed for loss and/or expense incurred in certain
circumstances is contained in clauses 4?19 to 4?22. It follows the format of WCD 98, save that the number
of express matters giving rise to the entitlement (now termed Relevant Matters) is reduced as a
consequence of fuller use of a general provision in relation to impediment, prevention or default by the
Employer or the Employer’s Persons (Relevant Matter 4?20?5).
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69 Paragraph 5 of Schedule 2 contains an optional provision (operated by a selection in the Contract Particulars
in respect of the Supplemental Conditions) whereby agreement can be reached regarding the value of loss
and/or expense, on the basis of estimates provided by the Contractor.
Fluctuations
70 The relevant Fluctuations Option is selected by means of an entry in the Contract Particulars and, if no
selection is made, Option A applies (contribution, levy and tax fluctuations). Fluctuations Options A, B and
C are contained in Schedule 7.
VAT and CIS

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71 Any payment made is subject to VAT and the provisions of the CIS (Construction Industry Scheme), as may
be applicable. Note that, where the Employer is a ‘contractor’ for the purposes of the CIS, the Contractor’s
failure to comply with the CIS will prevent the Employer from making payments to the Contractor until that
failure is remedied.
Final Account and Final Statement
72 Within 3 months of practical completion the Contractor is required to submit the Final Account and Final
Statement for agreement by the Employer. The Final Account is required to set out the Contract Sum as
adjusted in accordance with clause 4?2, whilst the Final Statement is a calculation of the balance due
from the Employer to the Contractor, or vice versa.

73 If the Contractor fails to submit the Final Account and Final Statement the Employer may, subject to giving 2
months’ notice of his intention to do so, prepare the Employer’s Final Account and the Employer’s Final
Statement. Whether the Final Account and Final Statement are prepared by the Contractor or by the
Employer then, one month after the latest of the end of the Rectification Period, the date named in the
Notice of Completion of Making Good or the date of submission of the Final Account and Final Statement,
they will become conclusive as to the balance due between the Parties except to the extent that they have
been disputed by the other Party before the date upon which they became conclusive.
74 Once the Final Account and Final Statement become conclusive as to the balance due between the Parties
that payment shall be made within 28 days, subject only to the Employer’s right to issue a withholding notice
no later than 5 days before the final date for payment.
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Bonds
75 Provision for an Advance Payment Bond and a Bond in respect of payment for off-site materials and/or goods
is maintained; these bonds should be from a surety approved by the Employer. It is desirable that the approval
be obtained before entering into the contract.
Section 5 – Changes
76 DB 2005 recognises two types of Change:

. firstly, there may be a Change to the Employer’s Requirements giving rise to a modification to the design,
quality or quantity of the Works (i.e. an alteration in what has to be provided by the Contractor);
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. secondly, the Employer may impose or alter obligations or restrictions as to the manner in which the
Contractor is required to undertake the Works (i.e. an alteration in how the Works are to be provided).
The Contractor has the right to make a reasonable objection to Changes of the second type (clause 3?5).
Unless a Valuation has been agreed between the Parties (for example, through the operation of paragraph 4
of the Supplemental Provisions in Schedule 2), any Change, any matter required by the Conditions to be
treated as a Change and any expenditure of a Provisional Sum is to be the subject of a Valuation in
accordance with the Valuation Rules in clauses 5?4 to 5?7.
79 The starting point for any Valuation is the value of work of a similar character in the Contract Sum Analysis,
making due allowance for any change in the conditions in which the work is to be executed or any significant
change in quantity. If there is no work of a similar character in the Contract Sum Analysis then a fair valuation
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must be made, this term including a valuation made on a Daywork basis. Allowance is required to be made in
the Valuation for the effect of the Change upon preliminaries type items, and the addition or omission of the
relevant design work.
80 Where the conditions under which any other work is executed are substantially altered as a consequence of a
Change, then that other work is also valued as if it were a Change.
81 The provisions of WCD 98 (clause 12?4?2, Alternative A) in relation to the Contractor’s Price Statement are
not included in DB 2005.
82 The reliance placed upon the Contract Sum Analysis means that it is important for the Parties carefully to
consider its contents and its ability to form a proper basis for the valuation of Changes. Thus it may
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include details of the Contractor’s preliminaries costs, quantified schedules of rates, analysis of the
Contractor’s rates and details of Daywork rates, as considered appropriate for the particular contract.
Section 6 – Injury, Damage and Insurance
83 The JCT has recently conducted a full review of its insurance provisions. The feedback received, with the
exception of that relating to clause 22D, suggests that the present provisions meet the required need and
are still generally appropriate to the Design and Build Contract.
84 Clauses 6?1 to 6?3 contain indemnities from the Contractor to the Employer in respect of certain claims made
against the Employer in respect of death, personal injury and damage to property (other than the Works and
Site Materials). These indemnities are supported by an obligation on the part of the Contractor to take out and

maintain various insurances, to the limits of cover that are required either by legislation or by the Contract
Particulars.
85 Whilst they have stood the test of time and remain generally appropriate to the requirements of DB 2005, the
insurance provisions remain subject to the ability of the Parties to procure (and the insurance market to
provide) appropriate cover. The Parties and their professional advisers are strongly advised to consult
with each other and seek professional advice in relation to insurance issues (including Terrorism Cover)
prior to entering into contract, in order to ensure that suitable arrangements can be made.
86 Where called for by the Employer’s Requirements, the Contractor is required to take out insurance in the joint
names of the Employer and the Contractor in respect of claims against the Employer as a result of damage to
property due to subsidence, weakening or removal of support, vibration or the like arising out of the carrying
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out of the Works. The cover to be obtained will be for an amount stated in the Contract Particulars and is
subject to the long list of exclusions previously found in clause 21?2?1 of WCD 98. This type of insurance
is sometimes referred to as ‘non-negligent loss insurance’, to reflect a situation where the Employer has
an absolute duty in respect of other properties, irrespective of any negligence or breach on the part of
either the Employer or the Contractor.
Works insurance
87 As regards the Works, the manner in which these are to be insured will depend upon whether Insurance
Option A, B or C is selected in the Contract Particulars. The detailed requirements in respect of each
option are contained in Schedule 3 and considered in that section of this Guide. Briefly:
. Option A applies to new buildings and requires the Contractor to take out a Joint Names Policy for All Risks
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Insurance for the full reinstatement value of the Works, plus professional fees;
. Option B applies to new buildings and requires the Employer to take out a Joint Names Policy for All Risks
Insurance for the full reinstatement value of the Works, plus professional fees;
. Option C applies where existing structures are involved and requires the Employer to take out a Joint
Names Policy for the full reinstatement cost in respect of damage to the existing structures and their
contents by Specified Perils, and a Joint Names Policy for All Risks Insurance for the full reinstatement
value of the Works, plus professional fees.
88 The requirement for the policies to be in joint names means that the insurer has no right of recourse against
either the Employer or the Contractor, irrespective of who makes the claim or who may otherwise have been
liable. The Joint Names Policy is also required to either name the sub-contractor as an insured or include a
waiver of rights of subrogation against sub-contractors in respect of loss or damage caused by the Specified
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Perils.
89 It should be carefully noted that All Risks Insurance is a defined term having a meaning somewhat narrower
than may be anticipated having regard to the use of the words ‘‘all risks’’, and the definition in clause 6?8
should be carefully considered. Briefly, the policy is to cover physical loss or damage to work executed or
Site Materials (but not the Contractor’s plant and equipment) and excludes loss or damage caused by
wear and tear/deterioration, design and workmanship matters, war, Excepted Risks and losses that are
not traceable to an identified event.
90 As has for some time been indicated by the footnotes to clause 22C of WCD 98 and in other JCT forms,
difficulty can arise in relation to joint names insurance of existing structures in cases that involve
residential owner-occupiers or leaseholders whose insurance is effected by their landlord. In such cases,
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the practical solution is to use Option A (or possibly Option B) in respect of the Works and Site Materials,
with the Contractor separately covering his own particular risk in respect of loss or damage to the existing
structures and contents. In either case, however, prior to entering into the contract, the Employer must
inform his existing structure and contents insurers of the intention to carry out the work.
Terrorism and Terrorism Cover
91 The change in the Terrorism Cover definition results from acceptance by Pool Re, the Government-linked
reinsurer of terrorism risks, that the reinsured risks should no longer be limited to physical damage
caused by fire and explosion: it will now reinsure other risks, e.g. physical damage caused by impact or by
nuclear, biological or chemical contamination. However, risks reinsured by Pool Re remain limited to acts
of terrorism within the Reinsurance (Acts of Terrorism) Act 1993, i.e. ‘‘any act of any person acting on

behalf of or in connection with any organisation with activities directed towards the overthrowing or
influencing of any government de jure or de facto by force or violence’’.
92 The fundamental concern for the Employer and the Contractor is the general exclusion from All Risks policies
for the Works, and (where relevant) from Existing Structures policies, of cover for damage by terrorism.
Insurers’ exclusions of Terrorism Cover from policies may vary and it is incumbent upon the Parties, as
composite insured, to understand the scope of Terrorism Cover being granted (normally purchased at an
additional premium). Should Terrorism Cover cease to be available the Employer has the option (clause
6?10) of either terminating the Contractor’s employment under the Contract or stating that he wishes the
Contractor to continue. Where the Employer wishes the Contractor to continue, the risk of damage to the
Works caused by terrorism will rest with the Employer.
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93 The JCT continues to keep the matter of Terrorism Cover under review.
Reinstatement and other costs
94 Although included in clause 22A?1 of WCD 98 as well as in the corresponding provisions of clauses 22B and
C, the issue of VAT exemption in relation to reinstatement cost appears to have been relevant only to Works
insurance by the Employer.
95 The point which it was sought to address is relatively simple. In a case where clause 22B or C (now Insurance
Option B or C) applies, if there is damage to the Works, VATwill be chargeable by the Contractor on the supply
of the materials, goods and labour required for reinstatement. If the Employer is exempt from VATregistration
or if supplies made by him in the course of the business are wholly or partially exempt, the Employer should
include in his calculation of the reinstatement cost not only the normal VAT-exclusive cost of reinstatement
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(adjusted for interim increases in those costs) and the percentage to cover professional fees, but also the
amount of the VAT chargeable on the work of reinstatement, to the extent that it is not recoverable by him.
The costs of reinstatement also generally include those of removing debris. They are often covered
automatically by insurers’ policy terms but appear on occasion to require to be dealt with by a separate
item under the All Risks policy: the Parties and their advisers should ensure that there is an appropriate
level of cover for them.
97 As Works Insurance Options are designed solely to meet the costs of restoring lost and damaged work and
materials, other losses need to be considered.
98 In addition to financial or consequential loss of the Employer’s Delay in Completion/ALOP-type, there are
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other costs that are not generally covered by the Works insurance obligations and would require separate
cover, or an extension of cover. These include increases in costs of working as a result of the damage or
reinstatement work, together with increases in the cost of the unbuilt portion.
99 The amount to be allowed in respect of professional fees is entered as a percentage in the Contract
Particulars, with 15% applying if no entry is made.
Fire Code
100 As an optional provision, operated by an entry in the Contract Particulars, the Parties can agree that the Joint
Fire Code is required by insurers to apply to the Works and that they should comply with its requirements. Any
remedial measures required by the insurers to achieve compliance with the code are to be carried out by the
Contractor, at the Contractor’s expense.
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Professional Indemnity insurance
101 A new requirement, not found in WCD 98, is that the Contractor must take out Professional Indemnity
insurance for an amount stated in the Contract Particulars, and then maintain that insurance for a period
stated in the Contract Particulars from the date of practical completion of the Works. If no level of cover is
stated in the Contract Particulars, the Contractor is not required to have Professional Indemnity
insurance. Where the period for maintaining the insurance is not stated in the Contract Particulars, the
Contractor must maintain the insurance for 6 years.

102 Where Professional Indemnity insurance ceases to be available at commercially reasonable rates, the
Contractor is required to notify the Employer in order that they can discuss the best methods of protecting
their respective positions in such circumstances.
103 A realistic approach needs to be taken as respects those levels of cover and there will also be sub-contractors
that maintain Product Guarantee, rather than Professional Indemnity, cover. Product Guarantee insurance is
intended to protect the sub-contractor against his legal liability for claims arising as a result of a defective
product or one that fails to fulfil the required purpose.
104 For each policy of insurance required by the Contract there are provisions enabling the Party not responsible
for taking out the insurance to satisfy himself that the insurance has been taken out and is being maintained in
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accordance with the Contract. Additionally, for all the insurances apart from the Professional Indemnity
insurance, there is provision for the Party not responsible for taking out the insurance to take out his own
cover against the risks he faces where the other Party has failed to insure in the manner required by the
Contract. In these circumstances the cost of this additional insurance is recoverable from the Party in default.
Financial Services regulation
105 The regulatory requirements imposed by the Insurance Mediation Directive are being implemented through
the Financial Services and Markets Act 2000. With effect from 15 January 2005, a person who is carrying on
by way of business and in the United Kingdom any insurance mediation activity for remuneration is required
either to have obtained authorisation from the Financial Services Authority (FSA) or to be exempt as the
appointed representative of an authorised firm.
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With the possible exception of Employer’s Liability insurance, this is relevant to insurance arrangements
under section 6 and Schedule 3 generally. The JCT understands that each of its member bodies has
issued guidance to their members; users of JCT contracts should ensure that they are familiar with the
requirements and take professional advice where necessary.
Section 7 – Assignment, Third Party Rights and Collateral Warranties
Assignment
107 Both the Employer and the Contractor are prohibited from assigning both the Contract and any rights under
the Contract without the consent of the other.
108 By an optional provision (clause 7?2, operated by an entry in the Contract Particulars) the Employer is
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permitted to assign to anyone acquiring a freehold or leasehold interest in the premises comprising the
Works the right to bring proceedings in the name of the Employer in order to enforce any of the
Employer’s benefits under the Contract. This assignment of the Employer’s benefits does not affect the
Employer’s obligations to the Contractor, which remain in full force and effect.
Third Party Rights and Collateral Warranties
109 The section also addresses the commonly found requirement that, in certain circumstances:
. Purchasers, Tenants and Funders should be able to have direct recourse to the Contractor; and
. Purchasers, Tenants, Funders and the Employer should be able to have direct recourse to key sub-
contractors.
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110 DB 2005 offers the following options:

. requiring the Contractor to give Third Party Rights to Purchasers and/or Tenants and/or a Funder (clauses
7A and 7B). This utilises the provisions of the Contracts (Rights of Third Parties) Act 1999 to give rights
under the Contract to third parties, thus avoiding the requirement to provide warranties. The particular
rights conferred in this manner are identified in Schedule 5 and are considered in that section of this Guide.
. requiring the Contractor to give Collateral Warranties to Purchasers and/or Tenants and/or a Funder
(clauses 7C and 7D), utilising the relevant JCT form (i.e. CWa/P&T or CWa/F). The rights conferred in
this manner are intended to be substantially identical to those conferred as Third Party Rights (clauses
7A and 7B).

. requiring the Contractor to obtain from sub-contractors or consultants warranties in favour of Purchasers
and/or Tenants and/or a Funder (clause 7E). Where provided by sub-contractors these are to be
substantially in the form of SCWa/P&T or SCWa/F, as amended by the Contractor and the Employer at
the reasonable request of the sub-contractor. Where the Collateral Warranty is provided by a
consultant, it is to be in the form required by the Contract Documents, and this point should therefore
be addressed in the Employer’s Requirements.
. requiring the Contractor to obtain from sub-contractors warranties in favour of the Employer (clause 7F).
These are to be in the form set out in the Contract Documents, as amended by the Contractor and the
Employer at the reasonable request of the sub-contractor. Again, this point should be addressed by the
Employer’s Requirements. The JCT has subsequently agreed to produce its own form SCWa/E but the
relevant particulars have not yet been incorporated in Part 2 of the Contract Particulars.
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111 Part 2 of the Contract Particulars identifies which, if any, options are required. If desired it is possible to, for
example, require a Collateral Warranty to be provided for the Funder, whilst conferring on Purchasers and
Tenants the benefit of Third Party Rights. Part 2 also provides that, in respect of the rights given by the
Contractor and sub-contractors, if the Contract Particulars do not identify by name, class or description
the Purchaser and/or Tenant and/or Funder then no rights will be conferred upon them – either by means
of Third Party Rights or by way of a Collateral Warranty.
112 Proper and accurate completion of Part 2 of the Contract Particulars or the separate document there referred
to (logically a section of the Employer’s Requirements) is therefore essential if these provisions are to be of
effect. Section 1 of the Contracts (Rights of Third Parties) Act 1999 provides that a third party may enforce a
term of a contract if the contract expressly so provides but (by section 1(3)) that the third party must be
expressly identified in the contract by name, or as a member of a class or as answering a particular
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collateral warranties.
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description. As a matter of general law, the requirement for certainty is of course the same with regard to
The class or description can of course be quite simple and general, e.g. ‘‘all first purchasers’’ and/or ‘‘all
original/first lessees’’ of the building or of particular units or parts of the Works. Section 1(3) of the Act
goes on to provide that the third party need not be in existence when the contract is entered into. The JCT
anticipates that, where known, the Funder will be named, but there should be no problem describing an
as-yet unascertained Funder as, for example, the lead bank providing finance for the project or as the
company to be incorporated or established as the special purpose vehicle under a specified agreement.
114 Where Third Party Rights are conferred (i.e. clauses 7A and 7B) these apply from the date of receipt by the
Contractor of a notice either identifying the Funder or identifying the Purchaser/Tenant and the nature of their
interest in the Works.
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115 Where the Contractor is required to provide a Collateral Warranty (i.e. clauses 7C and 7D), he must do so
within 14 days of receipt of a notice from the Employer requiring its provision. As regards the provision of
Collateral Warranties by sub-contractors, the Contractor has to secure the provision of such warranties by
the sub-contractor within 21 days of being required to do so by the Employer. To allow this to happen,
clause 3?4?2?4 requires it to be a condition of any sub-contract that the sub-contractor shall provide the
Collateral Warranties it is required to provide by the Contract Documents within 14 days of a request (by
the Contractor) to do so.
116 In respect of rights to be obtained from sub-contractors and/or consultants it is essential that Part 2 of the
Contract Particulars (or the separate document) identifies the sub-contractors (or classes of sub-
contractors) and consultants from whom a warranty is required. It is recommended that Employers are
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selective in listing the sub-contractors and consultants from whom Collateral Warranties are required and
limit their requirements to those upon whom significant reliance is being placed.
117 Sub-contractors may be required by the terms of a draft Collateral Warranty to have Professional Indemnity
insurance but it will be recognised that certain sub-contractors with lesser, more routine design
responsibilities maintain only Product Guarantee insurance. In certain cases the cover that the latter will
afford may be adequate and Employers need to take a realistic approach if that alternative is proposed.
118 The need for Third Party Rights and/or Collateral Warranties will in many cases be conditioned by the future
requirements of Funders, Purchasers and Tenants; it is therefore important that professional advice is taken
as to their likely requirements prior to the issue of tender documents.

Section 8 – Termination
119 This section contains provisions for the termination of the Contractor’s employment under the Contract in
circumstances of default or insolvency on the part of either of the Parties, the Contractor having
committed an offence of corruption or where substantially the whole of the Works are suspended for the
period stated in the Contract Particulars by virtue of a range of events that are outside the control of either
Party. Where there is no entry in the Contract Particulars, the period of this suspension is to be 2 months.
120 It should be noted that it is only the Contractor’s employment under the Contract that is terminated, not the
Contract itself. The significance of this is that the Parties remain able to rely upon the terms of the Contract to
deal with the consequences of the termination, whereas if the Contract itself had been terminated the only
remedy might be damages for breach of contract.
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121 Where the right to terminate arises by virtue of default (by either Party) there is a requirement for notice of that
default to be given prior to termination, in order to give an opportunity for the default to be remedied. If it is not
remedied within 14 days of that warning notice, there is a 10 day period for the giving of notice of termination.
Where, having given a notice of default, a notice of termination is not issued but the default is repeated, the
Party not in default may then, within a reasonable time of the repeated default, issue a notice of termination.
122 In the event of either Party becoming insolvent or the Contractor having committed an offence of corruption
then the other Party may terminate without notice. Where the termination is due to the Works having been
suspended then, again, a preliminary notice is required prior to termination.
123 Where Third Party Rights or a Collateral Warranty have been given to a Funder, the Contractor’s right to
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‘step in’ rights.
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terminate will be subject to the provisions of either Part 2 of Schedule 5 or the Collateral Warranty itself
regarding the giving of notices to the Funder in order that the Funder may decide whether to exercise its
The Contract contains detailed provisions as to the consequences of termination, which depend upon the
cause.
Section 9 – Settlement of Disputes
125 The Contract offers four different means for the settlement of disputes:
First, the Parties may agree to attempt to resolve disputes through mediation, whereby a third party is
used to assist the negotiation process.
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Secondly, the Parties have a contractual right to refer disputes to adjudication (Article 7 and clause
9?2). DB 2005 requires any adjudication to be conducted in accordance with Part 1 of the Schedule
to The Scheme for Construction Contracts (England and Wales) Regulations 1998. The adjudicator
may either be named in the Contract Particulars or a nominating body may be identified in the
Contract Particulars. Where the Employer is a residential occupier (as defined by section 106 of the
Housing Grants, Construction and Regeneration Act 1996) then there is no statutory requirement for
the Contract to contain an adjudication provision, and the Employer’s advisers should consider with
their client whether an adjudication provision is desirable.
Thirdly, the Parties may agree to refer disputes to arbitration. This agreement would be recorded in the
Contract Particulars, which would identify that Article 8 and clauses 9?3 to 9?8 were to apply. Unless the
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Contract Particulars are completed in this manner, Article 8 will not apply and arbitration will not
automatically be available to either Party, although they may always subsequently agree to arbitrate.
Any arbitration will be conducted in accordance with the JCT 2005 edition of the Construction
Industry Model Arbitration Rules (CIMAR), and the Contract does not impose any time limits on the
commencement of arbitration.
Fourthly, the Parties may litigate (Article 9). This is always open to the Parties, unless they have
specifically agreed to refer their disputes to arbitration. Again, the Contract does not impose any
time limits on the commencement of litigation.
126 The range of other factors that may be relevant to the choice of forum are, on the one hand, ability to choose
an arbitrator from any relevant profession; greater freedom of choice procedurally; and maintenance of

confidentiality as against, on the other hand, the wider interlocutory powers of the court and access,
generally at lower cost, to a courtroom and a TCC judge.
127 With the development of adjudication, the last-mentioned of those factors may be one of importance, since
the adjudication process often serves to put sufficient perspective on factual aspects of the dispute. In the
relatively limited number of cases where a Party does not accept the adjudicator’s decision and wishes to
have the matter finally decided in another forum, the issue to be decided will often be the difficult point of
law. A question to be considered is whether in those circumstances it is better to have the right to go
straight to court than to go through an arbitration procedure, in the course of which it might still prove
necessary to refer the point to the court.
128 The JCT fully recognises that, even with adjudication, there will still be many cases where arbitration is the
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appropriate forum for final resolution. The amendment in DB 2005 merely reflects the view that there should
no longer be a presumption to that effect.
129 It is strongly recommended that any Party take appropriate professional advice prior to initiating any of the
above dispute resolution procedures.
Schedules
Schedule 1 – Contractor’s Design Submission Procedure
130 This Schedule contains a design review procedure that will apply unless otherwise stated in the Contract
Documents (clause 2?8). It is intended to allow the Employer the opportunity to review and comment on
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the compliance of the Contractor’s design with the Contract, as that design develops. The procedure is
not intended to be an opportunity for the Employer to instruct a Change.
Each Design Document prepared by the Contractor is required to be submitted for review and, in undertaking
that review, the Employer is required to mark each document ‘A’, ‘B’ or ‘C’. To ensure compliance with this
procedure, the Contractor is not entitled to be paid for any work unless it is carried out in accordance with
a Design Document that is marked ‘A’ or ‘B’.
132 The only reason that the Employer may mark a Design Document ‘B’ or ‘C’ is that it is not in accordance with
the Contract, and the written comments made must identify why the Employer considers this to be the case.
Where the Employer does not return a Design Document then, after a specified period, it is deemed to have
been marked ‘A’.
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133 Where the Design Document is marked ‘A’ the Contractor may proceed and execute the Works in accordance
with the Design Document. Where the Design Document is marked ‘B’ the Contractor may proceed with the
Works provided that he has regard to the comments made and resubmits a revised copy of the Design
Document reflecting those comments. Where the Design Document is returned marked ‘C’ the Contractor
may not proceed with the Works, but must resubmit the Design Document having regard to the comments
made.
134 If the Contractor disagrees with the Employer’s comment and considers that the Design Document is in
accordance with the Contract he must, within 7 days of receipt of the comment, notify the Employer that
he considers compliance with the comment would give rise to a Change. Upon receipt of such a
notification the Employer may either confirm or withdraw the comment. Unless the Contractor follows this
procedure then compliance with a comment will not be treated as giving rise to a Change. Where the
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Employer confirms a comment, whether or not it actually gives rise to a Change will remain to be
determined by reference to the provisions of the Contract.
135 Even where the Employer has marked a Design Document with an ‘A’, the Contractor remains responsible for
ensuring that the Design Document and the Works are in accordance with the Contract.
Schedule 2 – Supplemental Provisions
136 This Schedule contains five specific provisions and is implemented by the appropriate entry in the Contract
Particulars. Having been implemented, the extent to which the first three provisions become operative will
depend in part upon either a further entry in the Contract Particulars (paragraph 1) or information within

the Employer’s Requirements (paragraphs 2 and 3). Paragraphs 4 and 5, however, will apply whenever this
Schedule applies.
137 Paragraph 1 is an optional provision implemented by an entry in the Contract Particulars whereby the
Contractor is required to appoint and keep on site a Manager who has been approved by the Employer
and who is not to be replaced without the Employer’s consent. This replaces clause 3?2, which requires
the Contractor to keep on the site a ‘‘person-in-charge’’.
138 Paragraph 2 only applies where the Employer states in the Employer’s Requirements that certain works are
to be undertaken by Named Sub-Contractors identified in those Requirements. These Named Sub-
Contractors could include design consultants. The Contractor remains responsible for carrying out and
completing the Works in the manner required by the Contract, but the Employer accepts responsibility in
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the event that the Contractor is unable to enter into sub-contract with the Named Sub-Contractor or if the
Named Sub-Contractor’s employment is terminated due to the sub-contractor’s default.
139 Paragraph 3 applies where the Employer’s Requirements describe the Works by means of Bills of
Quantities, and contains provisions to allow the Contract to be administered on this basis. For example,
the Bills of Quantities replace the Contract Sum Analysis as the basis for the valuation of Changes.
140 Paragraph 4 provides a means whereby the Contractor can be required to provide for the Employer’s
agreement an estimate of the consequences of complying with an instruction requiring a Change, prior to
the implementation of that instruction. The estimate is required to address Valuation (clause 5?2), time
(clauses 2?23 to 2?26) and loss and/or expense (clauses 4?19 to 4?22). Where agreement is not possible
the Employer has the option of proceeding with the Change in any event (in which case the normal
contractual provisions will apply) or withdrawing the instruction and paying the Contractor for any
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additional design work undertaken solely to prepare the estimate.
If the Contractor fails to submit an estimate but the Employer nonetheless instructs that the Change be
implemented, the normal contractual provisions in relation to Valuation and the like will apply, but no
entitlement to payment will arise until the issue of the Final Account.
Paragraph 5 allows the Parties to progressively agree the Contractor’s entitlement to loss and/or expense
during any particular period on the basis of estimates submitted by the Contractor. If agreed, the Contractor
will then have no further entitlement to loss and/or expense in respect of that period. If agreement is not
possible the dispute may be referred to adjudication, or the Employer can direct that the normal
contractual provisions should apply.
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143 If the Contractor fails to submit an estimate he remains entitled to loss and/or expense in accordance with the
Contract, but is not entitled to payment of that sum until the issue of the Final Account.
Schedule 3 – Insurance Options
144 Within this Schedule are the detailed insurance provisions referred to by clause 6?7 and briefly described in
section 6 of this Guide.
145 Whichever option is selected, the Joint Names Policy for All Risks Insurance is required to be kept in place
until the date of issue of the Practical Completion Statement or the date of termination of the Contractor’s
employment (if earlier). Where a Section is taken over, there is no longer any obligation to maintain the
policy in respect of that Section after the date of issue of the Section Completion Statement.
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146 Under Option A the Contractor is responsible for taking out the Joint Names Policy for All Risks Insurance
either by means of a specific policy in relation to the Contract or by means of an annual policy covering other
projects but including the Works.
147 If loss or damage occurs which is covered by the policy then, subject to notifying the Employer and the
insurers, the Contractor is required to restore the damaged works and proceed with the carrying out and
completion of the Works. All monies from the insurers are paid to the Employer who, subject only to the
deduction of amounts in respect of professional fees, must pass those sums to the Contractor in Interim
Payments. The Contractor is not entitled to any payments in excess of the sums paid by the insurers and
so the risk of any shortfall in the insurance cover is carried by the Contractor. This would include any
excess under the policy.

148 Where the premium paid by the Contractor in respect of Terrorism Cover fluctuates from one insurance
renewal to another, the Contract Sum is required to be adjusted by the amount of that fluctuation.
149 Under Option B the Joint Names Policy for All Risks Insurance is required to be taken out by the Employer. If
loss or damage occurs which is covered by the policy then, subject to notifying the Employer and the insurers,
the Contractor is required to restore the damaged works and proceed with the carrying out and completion of
the Works. Sums due under the insurance policy are paid to the Employer, and the Contractor is reimbursed
for the restoration and repair works by the Employer as if they were a Change. As a consequence, the risk of
any shortfall in the insurance cover is carried by the Employer including any excess under the policy.
150 Under Option C the Employer is required to take out both a Joint Names Policy for Specified Perils in respect
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of the existing structures and their contents and a Joint Names Policy for All Risks Insurance in respect of the
Works. The existing structures policy is required to be maintained until the date of issue of the Practical
Completion Statement or the date of termination of the Contractor’s employment (if earlier).
151 If loss or damage occurs which is covered by the Joint Names Policy for All Risks Insurance then, subject to
notifying the Employer and the insurers, the Contractor is required to restore the damaged works and
proceed with the carrying out and completion of the Works. Sums due under the insurance policy are paid
to the Employer and the Contractor is reimbursed for the restoration and repair works by the Employer as
if they were a Change. Again, the risk of any shortfall in the insurance cover is carried by the Employer.
152 Because of the possible consequences for the Employer of the existing structures having been damaged, the
Employer may, if it is just and equitable to do so, terminate the Contractor’s employment under the Contract
within 28 days of the occurrence of such loss or damage.
153
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Schedule 4 – Code of Practice
This Schedule contains the Code of Practice referred to in clause 3?13?3. The Code is for use where defective
work, materials or goods have been identified and the question arises as to whether (or how far) it is
reasonable to instruct opening up and testing in order to identify further non-compliance.
Schedule 5 – Third Party Rights
154 Schedule 5 is relevant only where Part 2 of the Contract Particulars states that clauses 7A and/or 7B apply.
Part 1 of Schedule 5 sets out the Third Party Rights for Purchasers and Tenants, whilst Part 2 consists of the
Third Party Rights for a Funder.
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155 The rights acquired by a Purchaser or Tenant are a warranty from the Contractor that, as at and with effect
from practical completion, he has carried out the Works in accordance with the Contract. If the Contractor is in
breach of this warranty then he will be liable to the Purchaser or Tenant for the reasonable costs of repair/
renewal/reinstatement, to the extent that the Purchaser or Tenant incurs or becomes liable for such costs.
Additionally, if paragraph 1?1?2 of Schedule 5 is stated to apply in Part 2 of the Contract Particulars, the
Contractor will be liable in respect of other losses incurred by a Purchaser or Tenant up to the maximum
liability stated in the Contract Particulars. Where Part 2 of the Contract Particulars does not identify any
limit on liability, the Contractor will have no liability in respect of such other losses, even where the
Contract Particulars state that paragraph 1?1?2 of Schedule 5 is to apply.
156 The rights acquired by a Funder are more extensive and amount to a warranty from the Contractor that he has
complied and will continue to comply with the Contract. The Contractor’s liability in respect of this warranty is
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unlimited.
157 The Funder also gains ‘step in’ rights whereby, if the Funder terminates the Finance Agreement or if the
Contractor seeks to terminate his employment under the Contract, the Funder has the opportunity to take
over the Contract and require the Contractor to accept the Funder’s instructions in place of those of the
Employer. To give the Funder the opportunity to exercise this right the Contractor is required to give notice
to the Funder prior to exercising any right he may have to terminate or repudiate the Contract. The
exercise of this right by the Funder is conditional upon the Funder accepting liability for the payment of
any sums due to the Contractor, whether that liability arises before or after the ‘step in’.

158 In respect of both Purchasers/Tenants and the Funder:

. the Contractor warrants that he has not used materials other than in accordance with ‘Good Practice in
Selection of Construction Materials’ (Ove Arup & Partners).
. the Contractor warrants that he has, and will maintain, Professional Indemnity insurance in accordance
with clause 6?11 of the Contract. The Purchaser/Tenant or Funder has the right to inspect evidence that
such insurance is being maintained and to be notified and consulted should it cease to be available at
commercially reasonable rates.
. subject to the Contractor having been paid by the Employer, a licence is granted in respect of the
Contractor’s Design Documents in similar terms to that given to the Employer under clause 2?38.
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. the rights acquired may be assigned twice, subject to written notice having been given to the Contractor.
Schedule 6 – Forms of Bonds
159 This Schedule contains the form of wording for the Advance Payment Bond and Bond in respect of payment
for off-site materials and/or goods, as referred to by clauses 4?6 and 4?15 (respectively).
160 The use of these bonds requires appropriate entries to be made in the Contract Particulars and the surety is
subject to the Employer’s approval.
Schedule 7 – Fluctuations Options
161 The three options offered by Schedule 7 are:
162
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. Option A – Contribution, levy and tax fluctuations;
. Option B – Labour and materials cost and tax fluctuations;
. Option C – Formula adjustment.
The selection of the desired option is made in the Contract Particulars and, if no selection is made, Option A
will apply. The detailed provisions relating to fluctuations are substantially identical to those in WCD 98.
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Appendix A – Table of Destinations
WCD 98 numbering DB 2005 numbering

Recitals
First First
Second Second
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Third Third
Fourth Fourth
Fifth deleted
Sixth deleted
Articles
Article 1 Article 1
Article 2
Article 3
Article 4
Article 5
im Article 2
Article 3
Article 4
Article 7
Article 6A Article 8
Article 6B Article 9
Article 7?1 Article 5

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Article 7?2 Article 6
Article 8 Fifth Recital

Conditions
(Clauses)
1?1 1?2
1?2 1?3
1?3 1?1
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1?4 3?19
1?5 1?7
1?6 1?5
1?7 1?11
1?8 1?8
1?9 1?6


2?1 2?1
2?2 1?3
2?3 2?10
2?4?1 2?14?2
2?4?2 2?14?1
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2?4?3 2?13
2?5 2?17
3 4?3
4?1 3?5 and 3?6
4?2 3?8
4?3 3?7
5?1 2?7?1
5?2
5?3
5?4
5?5
im 2?7?2
2?8
2?7?3
2?37
5?6 2?7?4
6?1?1?1 2?1?2
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6?1?1?2 2?1?1 and 2?1?3
6?1?2 2?15?1
6?1?3 2?16
6?2 2?18
6?3 2?15?2
6A?1 to 6A?3 and 6A?5 3?18
6A?4 3?19
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7 2?9
8?1 (except 8?1?3) 2?2?1, 2?2?2 and 2?2?5
8?1?3 2?1?1
8?2 2?2?4
8?3 3?12
8?4 3?13


8?5 3?14
8?6 2?2?3
9?1 2?19
9?2 2?20
10 3?2
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11 3?1
12?1 5?1
12?2 3?9
12?3 3?11
12?4?1 5?2 and 5?4?1
12?4?2 Alternative A deleted
12?4?2 Alternative B 5?2
12?5?1 to 12?5?3
12?5?4
12?5?5
12?5?6
im 5?4
5?5
5?6
5?7
12?6 5?3
13 4?1
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14?1 deleted (refers to VAT Agreement, also deleted)
14?2 Article 2 and clause 4?4?1
14?3 4?4?2
15?1 2?21
15?2 4?15
15?3 2?22
16?1 2?27
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16?2 and 16?3 2?35
16?4 2?36
17 2?30 to 2?34
18?1 7?1 and 7?2
18?2 3?3?1 and 3?3?2
18?3 3?4


19 [Number not used] –
20 6?1 to 6?3
21 6?4 to 6?6
22 6?7 to 6?10 and Schedule 3 (Insurance Options A, B

and C)
22D deleted
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22FC 6?13 to 6?16
23?1 2?3 and 2?4
23?2 3?10
23?3?1 2?3
23?3?2 and 23?3?3 2?5
24 2?28 and 2?29
25
26
27, 28 and 28A
29
im 2?23 to 2?26
4?19 to 4?22
section 8
2?6
30A 4?5
30?1?1?1 4?7
30?1?1?2 4?6
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30?1?2 4?8
30?2A 4?13
30?2B 4?14
30?3?1 and 30?3?2 4?9
30?3?3 to 30?3?7 4?10 (except 4?10?2)
30?3?8 4?11
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30?4?1 4?17
30?4?2 4?16
30?4?3 4?10?2
30?5?1 4?12?1
30?5?2 4?2?1 and 4?12?2
30?5?3 4?2?2 and 4?2?3


30?5?4 to 30?5?8 4?12?3 to 4?12?7
30?6 4?12?8 to 4?12?12
30?7 [Number not used] –
30?8 1?9
30?9 1?10
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31 deleted
34 3?15 to 3?17
35 4?18
36 to 38 Schedule 7 (Fluctuations Options A, B and C)
39 section 9
Code of Practice
Appendix 1
(Entries)
Fourth Recital
im
Supplementary Provisions
Schedule 4
Schedule 2
Contract Particulars
Fourth Recital
Fifth Recital deleted
Article 1 Schedule 2
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Articles 6A and 6B Article 8
1?3 (both entries) 1?1
1?8 1?8
2?5?2 deleted
2?5?3 2?17?3
14?2 deleted
15?2?1 4?15?4
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15?2?2 4?15?5
16?2, 17 and 30 2?35
18?1?2 7?2
21?1?1 6?4?1?2
21?2?1 6?5?1
22?1 6?7 and Schedule 3


22A, 22B?1, 22C?2 6?7 and Schedule 3
22A?3?1 6?7 and Schedule 3
22D (both entries) deleted
22FC (both entries) 6?13 and 6?16
23?1?1 2?3
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23?1?2, 25?4?14, 26?1 2?4 and 2?26?3
24?2?1 2?29?2
28?2?2 8?9?2
28A?1(both entries) 8?11?1?1 to 8?11?1?6
30?1?1?2 4?6
30?4?1?1 4?17?1
35 to 38 (all entries) 4?18 and Schedule 7
39A?2
39B?1
Annexes
Annex 1 to Appendix 1
im 9?2?1
9?4?1
Schedule 6
Appendix 2 Contract Particulars: 4?7
Appendix 3 Contract Particulars: Article 4
Supplemental Provisions Schedule 2

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Annex 2 to Conditions deleted
Modifications (Sectional Completion) integrated – see Part 1 – A Brief Overview

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Appendix B – Related Publications
The 2005 editions of the following documents have been or will shortly be issued by the JCT for use with DB
2005, where required:
. Design and Build Sub-Contract comprising:
. Agreement (DBSub/A), and
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. Conditions (DBSub/C)
. Design and Build Sub-Contract Guide (DBSub/G)
. Short Form of Sub-Contract (ShortSub)
. Sub-subcontract (SubSub)
. Partnering Charter (Non-binding)
. Framework Agreement (FA),
Framework Agreement (Non-binding) (FA/N) and
Framework Agreement Guide (FA/G)
. Collateral Warranties
. Contractor Collateral Warranty for a Purchaser or Tenant (CWa/P&T)
.
.
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Contractor Collateral Warranty for a Funder (CWa/F)
Sub-Contractor Collateral Warranty for a Purchaser or Tenant (SCWa/P&T)
Sub-Contractor Collateral Warranty for a Funder (SCWa/F)
Sub-Contractor Collateral Warranty for Employer (SCWa/E)
. Adjudication Agreement (Adj) and
Adjudication Agreement (Named Adjudicator) (Adj/N)
. JCT 2005 edition of the Construction Industry Model Arbitration Rules (CIMAR)
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Design and Build Contract Guide (DB/G)

Published September 2005 by Sweet and Maxwell Limited

# The Joint Contracts Tribunal Limited 2005

Part 2 – Specific Provisions 5

Section 6 – Injury, Damage and Insurance

Appendix A – Table of Destinations 22

Appendix B – Related Publications 28

f The Joint Contracts Tribunal Limited 2005 DB/G Page i

Page ii DB/G f The Joint Contracts Tribunal Limited 2005

f The Joint Contracts Tribunal Limited 2005 DB/G Page 1

Part 1 – A Brief Overview

(i) DB 2005 now includes, as integrated options, provisions for:

Page 2 DB/G f The Joint Contracts Tribunal Limited 2005

(ix) Certain other provisions have also been revised, notably:

14 The Conditions consist of nine sections and seven Schedules:

Schedule 1 Contractor’s Design Submission Procedure

f The Joint Contracts Tribunal Limited 2005 DB/G Page 3

Schedule 3 Insurance Options – Insurance Options A, B and C.

Origins and Destinations

Page 4 DB/G f The Joint Contracts Tribunal Limited 2005

Part 2 – Specific Provisions

f The Joint Contracts Tribunal Limited 2005 DB/G Page 5

Section 1 – Definitions and Interpretation

Page 6 DB/G f The Joint Contracts Tribunal Limited 2005

Section 2 – Carrying out the Works

Progress and completion

f The Joint Contracts Tribunal Limited 2005 DB/G Page 7

Section 3 – Control of the Works

Page 8 DB/G f The Joint Contracts Tribunal Limited 2005

Payment and withholding notices

f The Joint Contracts Tribunal Limited 2005 DB/G Page 9

Loss and expense

VAT and CIS

Final Account and Final Statement

Page 10 DB/G f The Joint Contracts Tribunal Limited 2005

76 DB 2005 recognises two types of Change:

Section 6 – Injury, Damage and Insurance

f The Joint Contracts Tribunal Limited 2005 DB/G Page 11

Terrorism and Terrorism Cover

Page 12 DB/G f The Joint Contracts Tribunal Limited 2005

Reinstatement and other costs

Professional Indemnity insurance

f The Joint Contracts Tribunal Limited 2005 DB/G Page 13

Financial Services regulation

Section 7 – Assignment, Third Party Rights and Collateral Warranties

Third Party Rights and Collateral Warranties

110 DB 2005 offers the following options:

Page 14 DB/G f The Joint Contracts Tribunal Limited 2005

f The Joint Contracts Tribunal Limited 2005 DB/G Page 15

Section 9 – Settlement of Disputes

Page 16 DB/G f The Joint Contracts Tribunal Limited 2005

Schedule 2 – Supplemental Provisions

f The Joint Contracts Tribunal Limited 2005 DB/G Page 17

Schedule 3 – Insurance Options

Page 18 DB/G f The Joint Contracts Tribunal Limited 2005

Schedule 5 – Third Party Rights

f The Joint Contracts Tribunal Limited 2005 DB/G Page 19

158 In respect of both Purchasers/Tenants and the Funder:

Schedule 6 – Forms of Bonds

Schedule 7 – Fluctuations Options

161 The three options offered by Schedule 7 are:

Page 20 DB/G f The Joint Contracts Tribunal Limited 2005

Appendix A – Table of Destinations

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D&B Gulde