Contract Document Preparation

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.

Contract document preparation is the process of assembling the formal legal documents that constitute the building contract. The contract documents define the scope of work, contract sum, programme, risk allocation, payment terms, change procedures, dispute resolution mechanisms, and all other rights and obligations of the parties. Once executed, they are legally binding — any error or omission in the contract documents will be governed by the law of contract, not corrected by the parties' intentions.

This note follows the finalisation of the pricing schedule (GN-TD-11), because the contract documents cannot be properly compiled until the contract sum and pricing breakdown are confirmed and agreed. The pricing document — whether a Bill of Quantities, Contract Sum Analysis or Activity Schedule — is a contract document whose figures flow directly into the Articles of Agreement, Contract Particulars and Schedules. Assembling contract documents before the pricing schedule is finalised risks numerical inconsistencies between documents and post-execution disputes about the contract sum.

RICS Appropriate Contract Selection (2nd edition, 2024) emphasises that standard forms of contract should be used with minimal amendment, and that any amendments should be clearly identified, legally reviewed, and understood by both parties before execution. The QS is responsible for coordinating the compilation of contract documents, confirming all contract particulars are complete and accurate, and liaising with the client's solicitor to arrange execution.

Section 2

Key Principles

RICS Appropriate Contract Selection (2nd edition, 2024), Sections 4.2–4.5: essential elements of a contract; the contract documents list; amending standard forms; executing a contract and duration of liability.
JCT Standard Building Contract with Quantities (SBC/Q 2016): the Contract Documents are a defined term in clause 1.1, identified in the Recitals and Contract Particulars, with their supply and custody dealt with at clause 2.8. They comprise: (i) Contract Drawings; (ii) Contract Bills; (iii) the Agreement (JCT Articles and Conditions); (iv) the Employer's Requirements (if CDP used); (v) the Contractor's Proposals (if CDP used); (vi) the BIM Protocol (if applicable).
Limitation Act 1980: contracts executed as deeds — 12-year limitation period (s.8); contracts executed under hand — 6-year limitation period (s.5). Execution method is a key decision for the client.
Law of Property (Miscellaneous Provisions) Act 1989: requirements for valid execution of a deed by an individual (signed, witnessed, delivered); Companies Act 2006: requirements for execution by a company (two authorised signatories, or one director plus company secretary, or one director plus witness).
Housing Grants, Construction and Regeneration Act 1996 (as amended): payment provisions are implied into all qualifying construction contracts (contracts for 45+ days); the contract must provide for adequate payment mechanisms or the Act's default provisions apply.

Section 3

Practical Application

Step 1

Confirm that the pricing schedule (BQ, CSA or Activity Schedule) has been fully finalised and agreed per GN-TD-11 before assembling the contract documents. The contract sum stated in the Articles of Agreement must match the agreed pricing schedule total exactly. Any discrepancy discovered post-execution requires a formal change instruction to correct.

Step 2

Complete the Contract Particulars: insert all required entries — employer and contractor details; contract administrator/employer's agent; quantity surveyor; principal designer; principal contractor; contract sum (from the finalised pricing schedule); base date; date of possession; date for completion; Rectification Period; retention percentage; liquidated damages rate per week; insurance requirements; adjudication provisions. Every blank in the Contract Particulars must be completed.

Step 3

Prepare the schedule of amendments to the standard form. Each amendment must identify the clause being amended, the deleted text and the replacement text. Amendments should be reviewed by the client's solicitor. Confirm that the amendments schedule is consistent with the version issued to tenderers.

Step 4

Compile the complete contract document bundle. For JCT SBC/Q: (i) Recitals, Articles and Conditions (with amendments); (ii) Contract Particulars; (iii) Contract Bills (signed/initialled); (iv) Contract Drawings (listed and initialled); (v) pre-construction information (CDM); (vi) BIM Protocol (if applicable); (vii) collateral warranty forms; (viii) bond form.

Step 5

Confirm the liquidated and ascertained damages (LAD) rate. RICS Damages for delay to completion (RICS practice information, UK, 2nd edition, April 2024) recommends that the rate be a documented genuine pre-estimate of the employer's likely losses from delay. Since Cavendish Square Holding BV v Talal El Makdessi; ParkingEye Ltd v Beavis [2015] UKSC 67 the penalty rule is no longer the genuine pre-estimate test: a clause is a penalty only if it imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in enforcing the primary obligation. A documented genuine pre-estimate remains the safest basis and is what RICS recommends, but a different figure may be enforceable where it is commercially justified. Confirm the calculation basis with the client (loss of rent, additional finance costs, delayed operations income) and document it.

Step 6

Confirm the Rectification Period: the JCT SBC/Q default stated in the Contract Particulars is 6 months, though 12 months is common market practice and 6–24 months is seen on specialist or complex contracts. The Rectification Period must be inserted in the Contract Particulars. Confirm the rectification period triggers: the contractor's right of access to make good defects during the Rectification Period.

Step 7

Arrange execution: confirm the execution method (deed or under hand); identify the authorised signatories for both parties; if a deed, arrange for witnesses. For company execution, confirm compliance with Companies Act 2006 requirements. Both parties should execute the same document (or counterparts); confirm the date of execution.

Step 8

After execution, distribute originals and certified copies: the employer and contractor each receive one original signed contract; the QS retains a certified copy; the client's solicitor retains a copy. Confirm that the contract documents archive is complete and securely stored. Proceed to GN-TD-13 (Review Insurances, Bonds & Warranties) before commercial mobilisation.

Section 4

Common Mistakes to Avoid

Assembling contract documents before the pricing schedule is finalised — the contract sum in the Articles of Agreement must match the agreed pricing schedule; any inconsistency creates a contractual dispute from the outset.
Leaving blank entries in the Contract Particulars — blanks are interpreted by the courts as the relevant provision not applying, or the default provision applying; either outcome may be commercially disadvantageous to the employer.
Setting a LAD rate as a round sum without a documented calculation basis — if challenged, an undocumented LAD rate may be deemed a penalty and be unenforceable, leaving the employer without a liquidated remedy for contractor delay.
Using amendments that were not included in the tender documents — contract conditions that differ from those issued at tender create a counter-offer situation and may mean no binding contract has been formed on the amended terms.
Executing a contract under hand where a deed is required — for contracts requiring a 12-year limitation period (most construction contracts), execution under hand provides only 6-year protection; this is a significant client risk.

Section 5

APC Competency & Quick Reference

APC Competencies: Procurement & Tendering (L2) | Legal & Regulatory Compliance (L2) | Contract Administration (L1) | Cost Management (L1)

What are the contract documents for a JCT SBC/Q 2016 contract?

Per JCT SBC/Q 2016 (clause 1.1 definition, read with the Recitals and clause 2.8 — note that Article 7 is the Adjudication article, not a list of documents): (i) the Agreement (Recitals, Articles, Conditions with any amendments); (ii) Contract Particulars; (iii) Contract Bills (initialled by both parties); (iv) Contract Drawings (listed in the Sixth Recital, initialled); (v) Employer's Requirements and Contractor's Proposals (for CDP portions); (vi) BIM Protocol (if used). Any document listed here has equal contractual status; any conflict between documents is resolved by the order of priority stated in the contract.

What is the difference between executing a contract as a deed and under hand?

A deed requires: signing by each party in the presence of a witness (individual) or execution per Companies Act 2006 (company); the word 'deed' must appear; it must be delivered. A deed carries a 12-year limitation period (Limitation Act 1980, s.8). Under hand: normal signature by authorised signatories; 6-year limitation period (s.5). Most building contracts are executed as deeds to provide the longer limitation period for latent defect claims.

What is the test for a valid Liquidated and Ascertained Damages rate?

A LAD rate is safest where it represents a documented genuine pre-estimate of the loss the employer will suffer from contractor delay, assessed at the time the contract is entered into; it does not need to be a precise calculation, and a reasonable estimate is sufficient. The legal test, however, is no longer the genuine pre-estimate test. In Cavendish Square Holding BV v Talal El Makdessi; ParkingEye Ltd v Beavis [2015] UKSC 67 the Supreme Court held that the older Dunlop formulation of an 'extravagant and unconscionable' sum is not the touchstone: a secondary obligation is an unenforceable penalty only if it imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation. A rate that exceeds a strict pre-estimate may therefore still be enforceable where it is commercially justified.

Section 6

Contract Document Preparation Checklist

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Pricing schedule confirmed finalised and agreed per GN-TD-11 before contract document assembly

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Contract form confirmed (JCT SBC/Q / JCT DB / NEC4 / other); correct edition confirmed

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Contract Particulars completed — no blank entries; contract sum matches finalised pricing schedule

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Schedule of amendments prepared; consistent with amendments issued at tender; legally reviewed

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LAD rate confirmed with documented calculation basis

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Rectification Period confirmed and inserted in Contract Particulars

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Complete contract document bundle assembled (Conditions, CP, Bills, Drawings, CDM info, BIM Protocol)

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Execution method confirmed (deed — 12 years; under hand — 6 years)

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Authorised signatories confirmed for both parties (Companies Act 2006 compliance)

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Contract executed and dated; originals distributed (employer, contractor, QS, solicitor)

Section 7

CPD Learning Outcomes

Compile a complete contract document bundle for a JCT SBC/Q 2016 contract, confirming that the contract sum in the Articles of Agreement is consistent with the finalised pricing schedule, and completing all Contract Particulars entries.
Advise clients on the distinction between execution as a deed (12-year limitation) and under hand (6-year limitation), and confirm the legal requirements for valid company execution under the Companies Act 2006.
Confirm a Liquidated and Ascertained Damages rate using a documented genuine pre-estimate methodology, and apply the post-Makdessi legitimate-interest test for distinguishing an enforceable LAD rate from an unenforceable penalty.

Section 8