"To me, to you" – you're probably used to hearing this phrase from the Chuckle brothers, but they're not the only ones who use this. Ask Employers and Contractors, especially where liability for discrepancies and divergences is concerned. Neither wants to be liable, but someone must be, so how do we determine this?
We look at the standard JCT Design and Build Contract 2016.
Before doing so, we first need to understand what discrepancies and divergences are.
A discrepancy is referred to as an inconsistency between the contract documents. Whereas a divergence is when the documents do not comply with the Statutory Requirements.
Clause 2.13 - Notice of discrepancies and divergences – this is what it applies to;
"2.13 If the Contractor becomes aware of any inadequacy as is referred to in clause 2.12 or any other discrepancy or divergence in or between any of the following, namely:
.1 the Employer's Requirements
.2 the Contractor's Proposals and other Contractor's Design Documents; and
.3 any instruction issued by the Employer under these Conditions;
he shall immediately give notice with appropriate details to the Employer, who shall issue instructions in that regard."
This clause imposes a duty on the Contractor to notify the Employer immediately, where the Contractor becomes aware of any inconsistency or non-compliance in or between the Employer's Requirements, the Contractor's Proposals/ Design Documents, and the Employer's instructions.
The importance of this is the imposition of an obligation to give notice when the Contractor becomes aware and that there is no comparable obligation on the Employer; the obligation on the Employer is to issue instructions; also note that the standard wording only applies to a very limited category of documents.
So, if the Employer's Requirements do not contain everything e.g.) the specification or drawings for any reason, then this obligation would not be triggered. Thus, reducing the obligations imposed on the Contractor, by the Employer.
What the Employer wants to know is if the Contractor is going to do something that in simple terms does not "fit" with their original intentions or a later instruction but is something that they have not realised.
So, an example might be an instruction to upgrade a boiler but then the original pipe work will be under sized; or a change to the layout which in turn impacts on drainage e.g.) toilet location changes.
Why? So that the Employer has a chance to re-think or just decide.
Clause 2.14 - Discrepancies in documents – this deals with what to do;
"2.14.1 Where the discrepancy or divergence to be notified under clause 2.13 is within or between the Contractor's Proposals and/or other Contractor's Design Documents, the Contractor shall notify the Employer of his proposed amendment to remove it and (subject to compliance with Statutory Requirements) the Employer shall decide between the discrepant items or otherwise may accept the Contractor's proposed amendment; the Contractor shall be obliged to comply with the decision or acceptance by the Employer without cost to the Employer.
Where there is an inconsistency or non-compliance in or between the Contractor's Proposals and/ or the Contractor's Design Documents, the Contractor is liable to resolve it at their own cost, after the Employer approves the proposed remedy. This means that even if such resolution delays the Contractor from carrying out Works, they will not be entitled to any additional costs.
.2 Where the discrepancy is within the Employer's Requirements (including any Change to them) the Contractor's Proposals shall prevail (subject to compliance with Statutory Requirements), without any adjustment of the Contract Sum. Where the Contractor's Proposals do not deal with the discrepancy, the Contractor shall notify the Employer of his proposed amendment to deal with it and the Employer shall either agree the proposed amendment or decide how the discrepancy is to be dealt with; that agreement or decision shall be notified to the Contractor and treated as a Change.
As for inconsistencies/ non-compliance within the Employer's Requirements, the Contractor is only required to propose amendments to the Employer, if their Proposals do not already address the inconsistency, and this will be treated as a Change to the Contract. A Change is deemed a Relevant Event and is listed in the Contract, along with other events which may affect the completion date. Therefore, if treated as a Change, the Contractor will be entitled to an additional time to complete the Works, but not money.
Our Amendments to 2.14
When acting for an Employer we apply a simpler approach, by deleting the existing clause and imposing stricter obligations on the Contractor, replacing it with:
2.14.1 Where the discrepancy results from an instruction for a Change, the Employer shall issue a further instruction for a Change to resolve the discrepancy.
2.14.2 Nothing in this clause 2.14 shall relieve the Contractor of the obligation to comply with Statutory Requirements nor of his responsibility for the design of the Works".
However, when acting for the Contractor, we amend the clause, so it also imposes an obligation on the Employer to give notice to the Contractor of any inconsistencies/ non-compliance and ensures that the Contractor is entitled to an extension of time and additional money, where they are required to deal with such discrepancies/ divergences.
Clause 2.15 - Divergence from Statutory Requirements - this deals with what to do;
"2.15.1 If the Contractor or Employer becomes aware of a divergence between the Statutory Requirements and
.1 the Employer's Requirements (including any Change); or
.2 the Contractor's Proposals or other Contractor's Design Documents,
he shall immediately give the other notice specifying the divergence and the Contractor shall notify the Employer of his proposed amendment for removing it. With the Employer's consent, the Contractor shall entirely at his own cost, save as provided in clause 2.15.2, complete the design and construction of the Works in accordance with the amendment and the Employer shall note the amendment on the Contract Documents.
2.15.2.1 If after the Base Date there is a change in the Statutory Requirements which necessitates an alteration or modification to the Works, such alteration or modification shall be treated as a Change.
.2 If any amendment to the Contractor's Proposals becomes necessary for conformity with the terms of any permission or approval made by a decision of the relevant authority after the Base Date for the purposes of Development Control Requirements, such amendment shall be treated as a Change provided that such treatment is not precluded in the Employer's Requirements.
.3 If any amendment to the part or parts of the Employer's Requirements to which clause 2.1.2 refers becomes necessary for conformity with Statutory Requirements the Employer shall issue an instruction requiring a Change."
This clause imposes a duty on both the Contractor and the Employer to immediately notify one another, where either the Employer's Requirements, or the Contractor's Proposals/ Design Documents do not comply with Statutory Requirements. However, the risk of cost remains with the Contractor, unless the Employer assumes the risk of this non-compliance because it is required to comply with legal updates or Development Control, or because it arises after the Base Date.
Our Amendments to 2.15
When acting for the Employer, we amend this clause to ensure the Contractor's ability to claim for an extension of time or costs is limited, as shown in our amended wording below. We also increase the difficulty for the Contractor to show that any alterations or modifications constitute a Change, and ensure the Contractor remains responsible. This is because contracts are not always signed, and this benefits the Contractor, as there are more likely to be changes after the Base Date. An example of our amended clause is as follows:
"2.15.2.1 If after the Base Date there is a change in the Statutory Requirements which necessitates an alteration or modification to the Works, and such change would not have been reasonably foreseeable to a competent Contractor at the Base Date, such alteration or modification shall be treated as a Change."
In addition to this we aim to ensure that the Base Date is as close to the execution of the contract as possible.
On the other hand, when acting for the Contractor, we want to ensure that the Contractor is entitled to an extension of time and money, for dealing with the divergence. We also amend the clause so that any modifications or alterations are deemed as a Change.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
