Anna Smyth, associate, Pinsent Masons LLP:
On Tuesday evening, Kings College London hosted the KCCLA and Sweet & Maxwell Twelfth Annual Lecture: NEC v JCT – Same problems different solutions.
The lecture was delivered debate style, with Mr Justice Ramsey chairing speakers on behalf of the JCT (Peter Hibberd and Peter Aeberli) and NEC (David Thomas QC and Dr Jon Broome). The speakers battled it out to convince the audience which was the better contract, covering a variety of issues.
The arguments for each form
The speakers cited the usual suspects for NEC, such as ease of use; clarity and flexibility; and a useful stimulus to better project management. On the JCT side, Peter Hibberd extolled the virtues of the JCT‘s history; proven track record; and the fact that its drafting is based on the consensus of many industry parties.
Mutual trust and co-operation: what does it mean?
One of the debated issues I found interesting was that of the “mutual trust and co-operation” wording in NEC versus the new optional Schedule 8 wording in JCT, which says the parties must work with each other and the project team in “good faith and a spirit of trust and respect“.
What does it all mean I wondered? Can the parties successfully claim for breach of this obligation? If so what would the remedies be?
NEC: Australian authority
The NEC team argued that a “mutual trust and co-operation” obligation would be enforceable, and referred to the wealth of Australian authority on this point. It may seem obvious, but David Thomas explained that he sees mutual trust as acting in a trustworthy way, being able to trust the other party and having regard to the other party’s interests, but not having to put them above your own.
He explained that as the NEC wasn’t as detailed in some place as it might be, the overarching mutual trust obligation was well suited to that form.
JCT response: box ticking?
The JCT team’s response was that the NEC, by including the mutual trust obligation, had merely carried out a “box ticking” exercise as a nod to the Latham report. They argued that all it does is create uncertainty.
JCT’s approach was to clearly set out the obligations in relation to each matter. So, for example, JCT clearly states that notice of termination should not be given “unreasonably or vexatiously” so there’s no need for any overarching “mutual trust” wording.
But wait just one minute…
Hang on though. Haven’t the JCT introduced some wording along very similar lines as that in the NEC? Optional Schedule 8 says the parties must work with each other and the project team in “good faith and a spirit of trust and respect”.
Surely this takes us back to the same question of what does it all mean? Why did JCT feel the need to include this if their contracts already deal with each obligation clearly?
Well, we may all be left considering the meaning of it all, but the wording is in both the JCT (albeit optional) and the NEC, and there to stay for now at least.
I’m still left wondering though whether a party could successfully claim for breach of these “good faith” type obligations, and if so, what might the remedy be…