Defects Liability Period Management

Section 1

Purpose

Note on JCT editions: JCT has published the 2024 Edition. This guidance cites JCT SBC/Q 2016 clause references; the commercial and payment mechanisms are substantively unchanged in the 2024 edition, but specific clause references should be verified against the contract edition in use on any given project.

Defects Liability Period Management is the structured process by which the QS and Contract Administrator manage the contractor's obligations to return and rectify defects during the Rectification Period, maintain accurate records of all notifications and responses, and protect the employer's financial position through retention and defect cost assessment. The Rectification Period (the JCT default is 6 months from practical completion, though 12 months is common market practice; the period is stated in the Contract Particulars) is neither an inspection period nor a snagging list — it is a contractual right for the contractor to make good defects notified by the employer. This note uses the current JCT term, Rectification Period, throughout; ‘Defects Liability Period’ is the obsolete JCT 98 label, retained here only in the note title for continuity of reference.

Effective Rectification Period management requires a systematic approach: regular inspection cycles, prompt notification of defects, rigorous tracking of the contractor's rectification programme, escalation where the contractor fails to respond, and preparation for the pre-expiry final inspection. The QS's role is to manage the financial and contractual dimensions of this process, not to inspect the physical works.

Poor Rectification Period management is one of the most common causes of unrecovered defect costs in the construction industry. Clients who fail to notify defects before the Rectification Period expires, release retention prematurely, or fail to engage other contractors correctly forfeit contractual rights that may have been worth significant sums.

Section 2

Key Principles

JCT SBC/Q 2016 Clause 2.38: the CA shall issue instructions for the making good of any defects, shrinkages, or other faults appearing within the Rectification Period; the contractor is obliged to make good at no cost to the employer.
JCT SBC/Q 2016 Clause 2.38: the Architect/Contract Administrator specifies defects in a schedule of defects, delivered as an instruction not later than 14 days after the Rectification Period expires; alternatively the Architect/Contract Administrator may, with the employer's consent, instruct that defects are not made good, in which case an appropriate deduction is made from the Contract Sum.
JCT SBC/Q 2016 clause 2.39: once all instructed defects are made good, the Architect/Contract Administrator issues the Certificate of Making Good; this is the trigger for release of the second moiety of retention under clause 4.19. (Under JCT DB there is no Architect/CA, so the equivalent is the Employer's Notice of Completion of Making Good.)
NEC4 Clause 43: the Supervisor notifies the Contractor of defects; the Contractor corrects each defect within the Defect Correction Period (DCP) agreed in the Contract Data; failure to correct allows the Project Manager to assess the cost of correction and reduce the Prices (clause 45). The Supervisor — not the Project Manager — issues the Defects Certificate under clause 44, at the later of the defects date and the end of the last defect correction period.
RICS Defects and Rectifications (2nd edition, August 2024): contractor must be given the opportunity to rectify before the employer employs others; the right to recover costs from others without following this procedure may be lost.
RICS Retention (GN 90/2012): the second moiety retention is the financial mechanism underpinning the contractor's Rectification Period obligation; it must not be released until the Certificate of Making Good is issued.

Section 3

Practical Application

Step 1

At PC, set up the Rectification Period tracking register: Rectification Period start date (PC date); Rectification Period end date; all sections/phases with their individual Rectification Period end dates if sectional completion applies; first inspection date (typically 3 months after PC); final inspection date (1 month before Rectification Period end).

Step 2

Conduct an initial inspection at 3 months and issue a Defects Notification covering all identified defects; confirm the contractor's programme for making good; set a follow-up inspection date.

Step 3

Mid-Rectification Period (typically 6 months): conduct a review inspection; check that previously notified defects have been made good; issue further notifications for any new defects or uncorrected items; identify any systemic defect patterns requiring design team review.

Step 4

Conduct the pre-expiry final inspection at least 1 month before Rectification Period end; issue the final Defects Notification covering all remaining defects; confirm in writing that the Rectification Period expires on [date] and that this is the last opportunity to notify contractual defects.

Step 5

Monitor the contractor's rectification programme after the final inspection; chase non-compliance in writing with a clear deadline; where the contractor fails to return, the Architect/Contract Administrator must first serve a notice requiring compliance with the instruction; if the contractor still does not comply within 7 days, the employer may employ others under JCT Clause 3.11.

Step 6

Once all defects are confirmed made good by the CA, request issue of the Certificate of Making Good; instruct the second moiety retention release immediately via a HGCRA-compliant payment notice.

Step 7

After the Certificate of Making Good, confirm the position on any latent defects identified after the Rectification Period — these remain recoverable within the limitation period under common law; advise the client accordingly.

Section 4

Common Mistakes to Avoid

Failing to conduct a final inspection before the Rectification Period expires — once the Rectification Period expires and the Certificate of Making Good is issued, the contractor's contractual obligation to rectify at no cost is discharged.
Employing others to rectify without following the JCT Clause 2.38 and 3.11 procedure — the employer's right to deduct the cost of remediation may be lost if the contractor was not given the opportunity to return.
Confusing the Rectification Period with the limitation period — the Rectification Period is a contractual mechanism (6 months by JCT default, commonly extended to 12 months); the limitation period (6 or 12 years) is a common law right to pursue defect claims that survives after the Rectification Period ends.
Allowing multiple sections' Rectification Period dates to become confused — where sectional completion applies, each section has its own Rectification Period end date and its own retention moiety; failure to track these separately leads to premature or missed retention releases.
Issuing a blanket sign-off on defects without the CA confirming each item is made good — the QS must confirm with the CA that every item on the final defects list has been physically inspected and signed off before the Certificate of Making Good is issued.

Section 5

APC Competency & Quick Reference

Contract Practice Level 3 — Rectification Period management, defect notifications, Certificate of Making Good procedure, retention release
Legal and Regulatory Compliance Level 2 — limitation periods, contractor's right to rectify, deduction for non-rectification

What is the contractual basis for the Rectification Period and what does the contractor's obligation entail?

Under JCT SBC/Q 2016 Clause 2.38, the Rectification Period runs from PC for the period stated in the Contract Particulars (the JCT default is 6 months; 12 months is common market practice). The contractor is obliged to make good all defects, shrinkages, and faults appearing during the Rectification Period at no additional cost to the employer. The contractor has the contractual right to rectify — the employer cannot engage others without first allowing the contractor to exercise this right.

What happens if the contractor refuses to return and rectify defects during the Rectification Period?

The QS should advise the CA to issue a formal instruction under JCT Clause 2.38 with a specified deadline. If the contractor does not comply, the CA must serve a notice requiring compliance; only if the contractor still does not comply within 7 days of that notice may the employer employ others under Clause 3.11, and the additional cost is then deducted from the Contract Sum. Separately, the CA may with the employer's consent instruct under Clause 2.38 that defects are not made good at all, with an appropriate deduction in lieu. This deduction must be formally assessed and documented — it is a deduction from the Final Account, not a self-help remedy.

How does sectional completion affect Rectification Period management?

Each section has its own Rectification Period running from its own PC date. The Rectification Period end date, retention release date, and Certificate of Making Good for each section must be tracked independently. The CA issues a Certificate of Making Good for each section separately; the retention for each section is released on the Certificate of Making Good for that section. Conflating sections' Rectification Period dates leads to incorrect retention calculations and potential HGCRA non-compliance.

Section 6

Defects Liability & Post-Occupancy Checklist

☐

Task

☐

Rectification Period tracking register set up at PC with all section end dates

☐

3-month inspection conducted and defect notifications issued

☐

Mid-term Rectification Period review conducted and systemic defects identified

☐

Pre-expiry final inspection conducted at least 1 month before Rectification Period end

☐

Final Defects Notification issued before Rectification Period expiry date

☐

Non-compliant contractor chased in writing with CA instruction issued

☐

Certificate of Making Good received after all defects confirmed made good by CA

☐

Second moiety retention release instructed via HGCRA-compliant payment notice

Section 7

CPD Learning Outcomes

Manage a Rectification Period systematically — setting up a Rectification Period tracking register, conducting scheduled inspections, issuing defect notifications, and escalating non-compliance — in compliance with JCT SBC/Q 2016 Clauses 2.38–2.40.
Advise clients on the contractor's right to rectify, the employer's right to deduct remediation costs for non-rectification, and the distinction between the Rectification Period and the common law limitation period.
Manage sectional completion Rectification Period dates independently, ensuring each section's Certificate of Making Good and retention release are correctly timed and documented.

Section 8