0% found this document useful (0 votes)

330 views

Untitled

Uploaded by

K Osman

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

0% found this document useful (0 votes)

330 views

Untitled

Uploaded by

K Osman

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

You are on page 1/ 598

Copyright © 2019. Juta & Company, Limited. All rights reserved.

Revised and updated by:

stanley h segal
PrArch, MiArch(life), MGifA, MPIA, RIBA, MAcpm, FAArb
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
First edition 1999
Second edition 2005
Reprinted 2007
Reprinted 2008
Reprinted 2009
Reprinted 2010
Reprinted 2011
Reprinted 2012
Reprinted 2013
Reprinted 2014
Second impression 2014
Third impression 2014
Fourth impression 2014
Reprinted 2015
Reprinted 2016
Reprinted 2017
Second impression 2017
Reprinted 2018
Third edition 2018

© Juta and Company (Pty) Ltd 2018

1st floor, Sunclare Building, 21 Dreyer Street
Claremont 7708

This book is copyright under the Berne Convention. In terms of the Copyright Act, No
Copyright © 2019. Juta & Company, Limited. All rights reserved.

98 of 1978, no part of this book may be reproduced or transmitted in any form or by

any means, electronic or mechanical, including photocopying, recording or by any
information storage and retrieval system, without permission in writing from the
publisher.

The author and the publisher believe on the strength of due diligence exercised that
this work does not contain any material that is the subject of copyright held by
another person. In the alternative, they believe that any protected pre-existing

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
material that may be contained in it has been used with appropriate authority or has
been used in circumstances that make such use permissible under the law.

Although every care is taken to ensure the accuracy of this publication, supplements,
updates and replacement material, the authors, editors, publishers and printers do
not accept responsibility for any act, omission, loss, damage or the consequences
thereof occasioned by a reliance by any person upon the contents hereof.

ISBN (print): 978 1 48511 926 5

ISBN (epub): 978 1 48512 898 4

Production Co-ordinator: Fuzlin Toffar

Editors: Robyn Evans & Leila Samodien
Proofreader: Nicky du Preez
Indexer: Lexinfo
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Page v

Preface to 3rd edition

The untimely death of the late Eyvind Finsen in 2007 left a tremendous void in the
architectural profession, the Association of Arbitrators and the Joint Building
Contracts Committee (JBCC).
I had the privilege of working together with Eyvind Finsen on many SAIA, SACAP
and JBCC committees over the past twenty plus years and on my appointment as
chair of the SAIA Practice Committee in April 1996, I was simultaneously appointed
as the second SAIA representative, together with Eyvind, on the JBCC Board of
Management and Technical Committee. The updating of the 3rd Edition of The
Building Contract originally authored by Eyvind, was undertaken at the request of
Juta Publishing after his death and this work is as seen through the eyes of an
experienced practicing architect/principal agent as opposed to a number of works on
building contracts authored by lawyers who naturally, with all due respect, tend to
emphasise the legal aspects of the building contract and readers are referred to
Eyvind’s comments in this regard in the preface to the 2nd Edition of The Building
Contract. In agreement with the publishers, we have decided to change the title of
this edition of the book to Finsen’s The Building Contract.
The task of updating this book was daunting and from the outset it must be made
clear that this work is intended as an update of the second edition of The Building
Contract published in 2005. The JBCC suite of documents endeavours to keep
abreast of the ever changing trends in the building industry in South Africa and as
will be seen, the 4th Edition of the Principal Building Agreement 2004 made way for
the 5th Edition published in July 2007. The publication of this 3rd Edition of Finsen’s
The Building Contract was originally planned to illustrate the differences between the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

JBCC 4th and 5th Editions but was delayed in favour of the anticipated publication
by the JBCC of the 6th Edition of the PBA and its associated NSSA and Edition 5.1
of the MWA in 2013. The PBA 6th Edition published in September 2013 was, due to
technical issues, shortly thereafter replaced by the current PBA Edition 6.1 March
2014. The JBCC Technical Committee formed a task team in 2016 to eliminate
errata and correct some of the wording in the PBA Edition 6.1 and, by the time that
this book is published, the

Page vi

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
JBCC will have published the PBA Edition 6.2 – May 2018 and its associated suite of
documents.
The JBCC has been criticised for continually revising, amending and updating the
PBA and associated documents, but in its defence, the JBCC-developed homegrown
contract documents have had to keep abreast with the changing circumstances
peculiar to the South African building industry and transformation in this industry,
new legislation such as the Occupational Health and Safety Act and the Consumer
Protection Act, the recently published updated National Building Regulations,
Construction Regulations, SANS and the requirements of the Construction Industries
Development Board (CIDB) that the documents be written in plain English. Even
whilst preparing the content of this book, I have been made aware of important
developments that are taking place in the field of dispute resolution, proposed
amendments to the Construction Industry Development Regulations dealing in
particular with Prompt Payment Regulations and the difficulties relating to
Guarantees for Construction and payment reductions in lieu of retention.
Whilst updating the PBA, the JBCC seized the opportunity of revising the setting
out of this agreement in that clauses relating to each other, which were previously
found in different sections of the document, have now, as far as possible, been
grouped together for ease of reference. This has led to reducing the document from
the previous 40 clauses to the present 30 clauses. The other major change in the
PBA is the omission of ‘works completion’ which was found not to have fulfilled its
intended purpose. With the omission of ‘works completion’, users of the PBA will
need to describe in greater detail their requirements for the achievement of practical
completion and tenderers will need to price these requirements accordingly when
submitting their tenders.
The ‘State’ clauses which were included in the PBA Edition 4.1 were removed
from Edition 5 and excluded from Edition 6.1. The JBCC and the National
Department of Public Works, however, engaged in dialogue in an endeavor to
include as many of the ‘Organs of State’ (OoS) requirements as possible in Edition
6.2 which will allow the OoS to use the PBA in conjunction with the new Contract
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Data Form for their building projects.

The JBCC has, as far as possible, furthermore removed references to matters
related specifically to South Africa in its endeavor to ‘internationalise’ the agreements
for use in neighbouring countries and further abroad.
For ease of reference the format of this book has been revised in that the book is
now divided into 5 major sections, dealing with:
1 Introduction
2 Principal Building Agreement (PBA)

Page vii

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
3 Minor Works Agreement (MWA)
4 N/S Subcontract Agreement (NSSA)
5 Standard forms & annexures
Each section has been subdivided into chapters which follow the clause numbering
in the respective building agreements as far as possible.
In each section dealing with the JBCC agreements, the relative agreement
clauses are stated and followed by commentary on the clauses. Wherever possible,
the clause reference numbers have been inserted in the commentary thus obviating
the need to refer to clause numbers in the footnotes. There is obviously a certain
amount of duplication in the commentary particularly where the clauses in the PBA
and the NSSA are concerned.
At the time of proofreading this document during December 2017 and January
2018, a number of clause references and certain wording in the JBCC MWA and
NSSA Agreements were still being finalised by the JBCC, and as such, users of this
book are strongly advised to purchase hard copies of the Agreements dated May
2018 from the JBCC vendors as there are bound to be slight differences between
the clauses contained in this publication and the final JBCC published documents.
I am greatly indebted to the JBCC for its consent to the reproduction in this work
of the PBA, the MWA, the NSSA, the General Preliminaries, the Contract Data and
other related documents for which it holds the copyright, and for its assistance in
making these documents available to me in electronic format.
I would also like to express my gratitude to Anita Kleinsmidt of Juta and Company
for her assistance and understanding during the lengthy process in the updating of
this work, to Fuzlin Toffar of Juta and Company for her assistance, to Professor M J
Maritz, former Head of the Department of Construction Economics at the University
of Pretoria for reading and commenting on my original manuscript and assisting with
proofreading and to my dear wife Lyn for her perseverance, patience and
encouragement throughout this period.

Copyright © 2019. Juta & Company, Limited. All rights reserved.

stanley h segal
[email protected]
July 2018

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Page ix

Preface to 2nd Edition

In 1991 the Joint Building Contracts Committee – JBCC – published the first edition
of the JBCC Principal Building Agreement and its associated suite of documents, the
first entirely new building agreement to be published by the major partners in the
building industry in almost sixty years. In 1998 an extensively revised Principal
Building Agreement and suite of documents was published, designated ‘Series
2000’, and it was hoped that the documents would now meet the needs of all facets
of the building industry and that there would be little or no need for amendments, let
alone new editions, for many years to come. Close on the heels of the publication of
the ‘Series 2000’ documents came the publication of the first edition of this book.
But the building industry, like almost every aspect of modern life, doesn’t stand
still, and in the ensuing seven years JBCC found it necessary to publish four further
editions – in 2000, 2003, 2004 and finally edition 4.1 in 2005, to deal with changing
circumstances.
The most significant changes have been in respect of State requirements. It had
been thought that the Series 2000 published in 1998 would satisfactorily cater for the
State’s particular requirements and that the documents would be adopted by the
State for use in its programme of public works. But that was not to be, and the next
seven years were spent in lengthy negotiations with State officials to fine-tune the
documents so that they met the State’s exacting requirements. Now JBCC may
cautiously start to congratulate itself that it has achieved its objective of producing a
building agreement that is acceptable to the private sector and the State alike. The
Department of Public Works has taken the policy decision that it will use the JBCC
documents for all future State work, and public works officials are attending seminars
Copyright © 2019. Juta & Company, Limited. All rights reserved.

arranged and presented by JBCC to familiarize themselves with the applications of

these documents.
Another significant development has been the introduction into the latest edition
of the Principal Building Agreement of adjudication as a procedure for the

Page x

resolution of disputes. Adjudication was introduced into the UK about nine years ago
as a very quick and cost-effective means of resolving disputes, especially those
concerning interim payments, where a quick decision can be vital in maintaining the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
contractor’s cash flow. The adjudicator’s decision is not final, it may be appealed in a
subsequent arbitration, but experience in the UK indicates that in about 75% of
instances the adjudicator’s decision finally decides the dispute. It is early days to say
how successful the process may be in this country, but there is great enthusiasm to
give it a try.
Perhaps the most important development since the debut of the Series 2000
documents has been the publication in 1999 of the Minor Works Agreement. This
was intended by JBCC to cater for those small scale contracts, principally in the
public sector, where the contractor was a historically disadvantaged individual who
lacked the knowledge and experience to understand and apply the Principal Building
Agreement, which in any event was inappropriate for the technically very simple
projects being undertaken. But the Minor Works Agreement was enthusiastically
greeted by relatively sophisticated principal agents and contractors who wanted, in
place of the Principal Building Agreement, a simpler and less demanding form of
agreement for their modest projects – mainly houses costing up to several million
rand. These developments, coupled with the greatly improved level of activity in the
building industry and the increase in the sales of the JBCC documents, have
underscored the need for a revised edition of this work. This has given me the
opportunity to discuss the new adjudication provisions and to analyse the new Minor
Works Agreement as well as some of the less significant amendments that have
been made to the documents over the past seven years, and to re-visit some of the
comments that I previously made in the light of more recent experience.
This work is primarily intended, as before, for the members of the building
industry who use building contracts frequently and extensively in their daily work:
architects, quantity surveyors, contractors, subcontractors, project managers, client
bodies, and also attorneys and advocates who specialise in the field of construction
arbitration and litigation. It is, of course, also intended for students who are studying
to enter these fields.
As most of the users of this work are likely to be laymen in the field of law, it
seemed to me to be necessary that I include a brief and elementary statement of the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

law of contract, and I trust that members of the legal fraternity will not be offended at
the excessively simplistic manner in which I have treated what is a vast and complex
subject.
The point has already been made that we live in changing times and that JBCC
responds readily to these changes. My comments in this work relate to the
documents current at September 2005, some of which have been reproduced in this
book. Readers who are seeking an answer to a particular problem should

Page xi

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
ensure that, if the documents that they are using are a later edition than September
2005, the wording of the clauses that are relevant to their problem is the same as
that of the corresponding clauses in the documents in this book on which I have
based my comments; if they are not, my comments should be considered critically
and may need adjustment in the light of the changed wording; hopefully my
discussion of the principles underlying these contractual provisions will help an
understanding of the true meaning of the contractual provisions.
I am greatly indebted to JBCC for its consent to the reproduction in this work of
the Principal Building Agreement, the Minor Works Agreement and certain related
documents, for which it holds the copyright, and for its assistance in making these
documents available to me in electronic form, thus vastly simplifying the task of
setting them into print.

Eyvind Finsen
September 2005
Copyright © 2019. Juta & Company, Limited. All rights reserved.

About the author of this revised and updated

edition

Stanley Segal, who has over 56 year’s experience as an architect, commenced

working in the architectural practice of Vlok & vd Westhuizen, Pretoria, in April 1960,
became a partner in the firm on graduating with a Diploma in Architecture from the
University of Pretoria in March 1962 and a director in the merged firm of MV3
Architects (Pty) Ltd in December 1969. After 45 years in this practice, he
commenced his new practice in 2005 and is still practicing under the style of Stanley
H Segal cc t/a Segal Architects. Besides being registered with SACAP, he is a
chartered architect registered with the RIBA since July 1964; was awarded life
membership of SAIA after chairing the SAIA Practice committee between 1996 and
2006; was awarded a SAIA Certificate of Meritorious Service for the work done on
the SAIA C-AA 2008 Working Group; has served on the PROCSA Committee since
its inception in 2000; served on the JBCC Technical Committee and Board of
Management since 1996 and is currently the chairman of this Board and of the newly
formed JBCC Drafting Panel; is a member of the Association of Construction Project
Managers; has been appointed as principal agent on a number of projects and
served on the SACAP Fees and Investigating Committees.
Stanley Segal is registered as a Fellow of the Association of Arbitrators Southern
Africa having received the Higher Diploma from this association in December 1996.
Since 1997, in addition to his architectural practice, he has practiced as an arbitrator,
adjudicator, mediator and expert witness in numerous cases.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Page xv

Table of Contents

Preface to 3rd edition

Preface to 2nd edition
About the author of this revised and updated edition
Table of Contents
Table of Cases
Table of Statutes
Bibliography
Section 1
Introduction
Chapter 1 Brief survey of the law of contract
Chapter 2 Types of building contract
Chapter 3 The role-players in a building contract
Chapter 4 The JBCC building agreements
Chapter 5 The formation of the contract
Section 2
Principal Building Agreement (PBA)
Principle Building Agreement Edition 6.2

Interpretation
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Chapter 1 Definitions and interpretation

Chapter 2 Law, regulations and notices
Chapter 3 Offer and acceptance
Chapter 4 Cession and assignment
Chapter 5 Documents
Chapter 6 Employer’s agents
Chapter 7 Design responsibility

Execution
Chapter 12 Obligations of the parties
Chapter 13 Setting out
Chapter 14 Nominated subcontractors

Page xvi

Chapter 15 Selected subcontractors

Chapter 16 Direct contractors
Chapter 17 Contract instructions

Completion
Chapter 18 Interim completion – n/s subcontract agreement
Chapter 19 Practical completion
Chapter 20 Completion in sections
Chapter 21 Defects liability period and final completion
Chapter 22 Latent defects liability period
Chapter 23 Revision of the date for practical completion
Chapter 24 Penalty for late or non-completion

Payment
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Chapter 25 Payment
Chapter 26 Adjustment of the contract value and final account
Chapter 27 Recovery of expense and/or loss

Suspension and Termination

Chapter 28 Suspension
Chapter 29 Termination

Dispute Resolution

Agreement
PBA Contract Data
Section 3
Minor Works Agreement (MWA)
Minor Works Agreement (MWA)

Interpretation
Chapter 1 Definitions and interpretation
Chapter 2 Law, regulations and notices
Chapter 3 Offer, acceptance and assignment
Chapter 4 Documents
Chapter 5 Employer’s agents
Chapter 6 Principal agent
Chapter 7 Design responsibility

Insurances and Securities

Chapter 8 Risks, indemnities and insurances
Chapter 9 Securities

Execution
Chapter 10 Obligations of the employer
Chapter 11 Obligations of the contractor
Chapter 12 Setting out
Chapter 13 Direct contractors
Chapter 14 Contract instructions
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page xvii

Completion
Chapter 15 Practical completion
Chapter 16 Defects liability period and final completion
Chapter 17 Revision of the date for practical completion
Chapter 18 Penalty for non-completion

Suspension and Termination

Chapter 21 Termination

Dispute Resolution
Chapter 22 Dispute resolution

Agreement
MWA Contract Data
Section 4
Nominated/Selected Subcontract Agreement (NSSA)
The Nominated/Selected subcontract Agreement

Interpretation
Chapter 1 Definitions and interpretation
Chapter 2 Law, regulations and notices
Chapter 3 Offer and acceptance
Chapter 4 Cession and assignment
Chapter 5 Documents
Chapter 6 Employer’s agents
Chapter 7 Design responsibility

Insurances and Securities

Chapter 8 Subcontract works risk
Chapter 9 Indemnities
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Chapter 10 Insurances
Chapter 11 Securities

Execution
Chapter 12 Obligations of the parties
Chapter 13 Setting out
Chapter 14 Nominated subcontractors
Chapter 15 Selected subcontractors

Completion
Chapter 18 Interim completion
Chapter 19 Practical completion
Chapter 20 Completion in sections
Chapter 21 Defects liability period and final completion

Page xviii

Chapter 22 Latent defects liability period

Chapter 23 Revision of the date for interim completion
Chapter 24 Damages for non-performance

Payment
Chapter 25 Payment
Chapter 26 Adjustment of the n/s subcontract value and final account
Chapter 27 Recovery of expense and/or loss

Suspension and Termination

Chapter 28 Suspension by the subcontractor
Chapter 29 Termination

Dispute Resolution
Chapter 30 Dispute Resolution

Agreement
JBCC® N/S Subcontract Agreement
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Section 5
Standard Forms & Annexures
General Preliminaries
Certificate of Site Possession
Waiver of the Contractor’s Lien
Certificate of Completion
Payment certificate (MWA)

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Certificate of Interim Completion
Subcontractor’s Payment Advice
Subcontractor’s Recovery Statement
Recovery Statement
Payment certificate (PBA)
Subcontractor’s Payment Notification
Certificate of Practical Completion
Certificate of Final Completion
JBCC Adjudication Rules
Practical Completion Guidelines
Index
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 1
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Chapter 1
Brief survey of the law of contract
1.1 Fundamental concepts
A building contract is an agreement between two parties, one of whom, the building
contractor, agrees to erect a building, and the other, the employer, [1] agrees to pay
for it. Personal rights and obligations are created by the agreement, the right of one
party being the obligation of the other. The contractor has the obligation to erect the
building and the right to be paid for it, while conversely the employer has the right to
have the building erected and has the obligation to pay for it.
If one of the parties defaults on his obligation, the other, for whom the
performance of this obligation would be a right, may invoke the assistance of the law
to enforce his right. A contract comes into existence on the acceptance of an offer.
‘When a man makes an offer in plain and unambiguous language, which is
understood in its ordinary sense by the person to whom it is addressed, and
accepted by him bona fide in that sense, then there is a concluded contract’. [2] ’The
acceptance of an offer implies an agreement between two or more persons which
gives rise to personal rights and corresponding obligations; in other words, it is an
agreement which is legally binding on the parties’. [3]
In its simplest terms, a building contract is an agreement about what each party
will do for the other and what each can expect the other to do for it. There is a
meeting of minds, a consensus that is the essential element of a contract.
Unless the parties, when they enter into their agreement or contract, agree on any
particular terms that will govern the way the contract is to be carried out, the law

Page 2

will itself presume the existence of certain common-law, [4] terms. It is important to
know what these are because, unless the parties have made their own terms, these
Copyright © 2019. Juta & Company, Limited. All rights reserved.

common-law terms will be the terms that will govern the performance of the contract.
Even where the parties have agreed on certain terms that will create rights and
obligations for them and govern their contract, circumstances may arise which have
not been foreseen and for which provision has not been made. In such instances,
they will have to resort to the common-law rules to establish how the contract is to
be performed, and how the obligations under it are to be discharged.
Often the common-law rules will not be satisfactory to the parties for the
performance of their particular obligations, and so they will make their own particular
rules that will vary the common-law rules. A good example concerns the common-

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
law rule that, where one party undertakes to perform a piece of work for the second
party, and the second party undertakes to pay for it, the second party is not obliged
to pay until the first party has completed his undertaking in all respects. [5] This would
obviously be impractical in a building contract: no builder would be prepared to wait
for payment until he had completed the building in all respects. The parties,
therefore, usually agree that the builder shall receive interim payments from time to
time on account, such interim payments putting him in funds to enable him to finance
the next stage of building operations. [6] Building contracts usually contain a large
number of terms to avoid the rules of the common-law that the parties consider
impractical or inconvenient for their purpose and to suit their convenience and to
ensure that the contract is businesslike and efficient.
In this chapter, we will be looking at the basic legal principles of contract and the
common-law terms that apply in the absence of rules devised by the parties
themselves. This will enable us to appreciate the reason for many of the terms found
in a standard form contract and the consequences that may flow from departing from
them.

1.2 The consensual basis of contracts

A contract is an agreement. Both parties are agreed about what they will each do,
how and when they will do it and what should happen if one of them does not do

Page 3

what he promised. Agreement is the basis of the contract and absence of agreement
on any fundamental aspect would be fatal to the contract and would render
performance and enforcement impossible. Lack of agreement on an aspect that is
not fundamental to the contract will usually not render the contract void, and the
courts will endeavour to supply the missing term, generally asking what would be
reasonable or common practice in the circumstances.
The agreement must be freely made, and an agreement which has been induced
by compulsion, threats or fear is not a true agreement, and the courts will generally
Copyright © 2019. Juta & Company, Limited. All rights reserved.

hold such contracts void. [7]

The parties must seriously intend their agreement, and an agreement made
frivolously will not be enforceable. [8] Similarly, an agreement made when one of the
parties is intoxicated, or is suffering from a mental illness, and is not aware of what
he is saying or doing, would not be legally binding on him
What might appear to be an agreement may not be so because of a
misunderstanding or mistake. The purchaser of a picture may believe it to be a
genuine Rembrandt, while the seller believes that it is a competent copy.
Alternatively, both the buyer and seller may believe that the painting is a genuine

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Rembrandt, whereas in truth it is only a competent copy. Whether such
misunderstanding or mistake would render the agreement void or not, would depend
on various circumstances, and is seldom an easy question
Where the mistake is an innocent one and not caused by the willful deception of
one party by the other, the courts will be reluctant to hold that there has been an
absence of agreement unless the mistake goes to the very root of the contract.
Where it does not, the rule caveat emptor, [9] prevails. Where, however, it can be
shown that the mistake or misunderstanding has arisen because of the deliberate
misleading of one party by the other, the courts will generally hold such contract to
be void ab initio and unenforceable. [10]
A contract that has as its purpose some illegal objective will also be
unenforceable, not because of any defect in the agreement, but because, as a
matter of policy, the courts will not assist in an illegal dealing. [11] A party who sold
another prohibited drugs, for example, will not be able to sue for the contract price.

Page 4

1.3 Contractual capacity

Because a contract has as its basis a serious agreement between the parties, the
law requires that the parties are adequately responsible to make such agreement.
As from 1 July 2007, a child who has reached the age of 18 is deemed to have such
responsibility, known as contractual capacity, and therefore has the capacity to enter
into a valid contract. Excluded, for obvious reasons, are persons of unsound mind.
Women who are married in community of property with the marital power reserved to
their husbands, suffer under a similar disability and require their husband’s
assistance to validate their contract. A juvenile requires the assistance of a parent or
legal guardian to contract. The provisions of the Insolvency Act preclude
unrehabilitated insolvents from entering into contracts for understandable
reasons. [12]
The power to enter into a contract is not limited to a natural person. A juristic
Copyright © 2019. Juta & Company, Limited. All rights reserved.

person, such as a company, a close corporation, a town council, a university and a

sporting club can enter into a contract but the act is performed by a natural person
duly authorised acting on its behalf. When entering into a contract with a juristic
person, it is always prudent to require the person holding himself out to be the
representative of such juristic person, to furnish proof of his authority, which usually
takes the form of a certified minute of a meeting of that body at which the
representative was given the necessary authority. However, if a person in good faith
enters into a contract with a juristic body under the reasonable impression that its
representative is properly authorised, even if the representative does not produce
written proof of such authority, the courts will be very slow to find that the contract is

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
void for lack of proper authority and will probably uphold the contract in accordance
with the well-known rule first stated in the case of Royal British Bank v Turquand. [13]

1.4 Offer and acceptance

In order that there may be an agreement between the parties, there must have been
some communication between them. This communication takes the form of an offer
by one party to do, or not to do, something in return for which the other party
generally, but not invariably, is to do, or undertake not to do, something else. In the
commercial world, the offer is very frequently one to deliver certain goods or perform
certain work in return for which the other will pay a certain price. The acceptance of
the offer will conclude the agreement and bring the contract into existence. [14]

Page 5

Sometimes the offer will not be acceptable in all respects and will be met with a
counter-offer in which certain details may be varied, and this in turn, if not accepted,
may be met with another counter-offer. It is the terms of the final offer that is
accepted that constitute the terms of the contract, and all previous offers fall away. In
fact, as soon as a counter-offer is made, the previous offer falls away and is not
open for acceptance unless the offeree renews the offer. An offer is held to be open
for acceptance for a reasonable time and may not be withdrawn until that time has
expired. [15] What constitutes a reasonable time depends on the circumstances of the
case. The circumstances surrounding some offers indicate they are intended to be
accepted almost immediately, whereas, in other instances, the recipient of the offer
may need some time in which to consider it. The recipient of an offer from a building
contractor to perform certain work for a particular price may need several weeks to
decide whether he will accept the offer or not. He may need, for example, to
establish the competence of the offeror, or whether he can raise loan finance or not.
Clearly the uncertainty as to how long a ‘reasonable’ time may be is not
satisfactory in many business transactions, and for this reason many offers,
particularly offers to undertake building work, are coupled with an undertaking by the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

offeror not to withdraw the offer until a certain stipulated period of time has elapsed.
This is known as an option.
There are some popular misconceptions about what constitutes an offer. It has
been held [16] that the display of goods in a shop window, with prices attached, does
not constitute an offer which may be accepted by a party who tenders the purchase
price. It is an invitation to the prospective purchaser to make an offer of purchase,
which the shopkeeper will then be free to accept or reject as he will. The attaching of
a price to the goods has been held to be no more than an indication of the sort of
offer which the shopkeeper would find acceptable. He would be unlikely to accept
the offer of payment of a lower price than that displayed, but doubtless would be

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
delighted to accept the offer of a higher price. Nor can he be obliged to sell goods at
the displayed price to whoever comes into the shop. His stocks may be exhausted,
or the law may preclude him from selling the goods to a particular class of persons,
for example, liquor to someone under the age of 18.
The same rule applies to the invitation of tenders for building contracts. A person
who hands drawings and specifications [17] of intended building work to a number

Page 6

of different builders is not making an offer that may be accepted by the builder who
submits the lowest price, leading to an enforceable contract. In such circumstances
the courts have held that the submission of drawings, specifications and similar
tender documents is no more than an invitation to the builders concerned to make an
offer and the inquirer is free to accept any offer, not necessarily the lowest, and may
reject the whole lot. [18] The law implies that in these circumstances the lowest, or
any, tender will not necessarily be accepted and there is no need for an inquirer to
use these words in his inquiry, although this is frequently done and it is prudent to do
so to avoid possible misunderstanding.
Acceptance of the offer does not take place nor does a binding contract ensue
until the person who made the offer hears of the acceptance of his offer. [19] The
offeree may, for example, convey his acceptance by letter. If the letter is never
delivered to the offeror, the offer is not accepted, no binding contact ensues and the
offeror will, after the lapse of the prescribed period, or a reasonable period, be free
to withdraw his offer.
An offer may only be accepted by the person to whom it was addressed. [20] This
rule is of particular significance to principal agents who frequently invite tenders from
contractors to perform building work for their clients. A principal agent who invites
tenders without making it clear that he does so, not on his own behalf, but as an
agent on behalf of a client, may find that the builder is not prepared to recognise the
purported acceptance of his offer by the client, nor to enter into a contract with him.
Even worse, if the principal agent accepts the offer without making it clear that he
Copyright © 2019. Juta & Company, Limited. All rights reserved.

does so on behalf of a client, he may find that he has unwittingly brought into being a
contract between the builder and himself.
The situation becomes even more fraught with difficulties when a principal agent,
without making clear the capacity in which he acts, invites tenders for a nominated or
selected subcontract which is intended to be entered into with the principal
contractor, whom he cannot be said to represent as an agent. This problem will be
more fully discussed later. [21]

Page 7

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
It would obviously be advisable for the acceptance of any offer to be made clearly
and unequivocally in writing to remove any doubts. Nevertheless, an agreement may
be said to have been reached and the contract to have come to life, even where
there has been no apparent offer nor acceptance of such offer. A person may enter a
supermarket, select groceries and pay for them at the till without speaking a word to
the proprietor. In performing all the essential actions of a contract of sale, the parties,
by their acts, will be taken to have been in agreement and brought about the contract
of sale, and if the goods are later found to be defective, the injured party would be
entitled to rely on the implied condition in the contract that the goods would be free
of defects.

1.5 Written and oral contracts

Despite the oft quoted remark attributed to the late Sam Goldwyn that ‘A verbal
contract isn’t worth the paper it is written on,’ a verbal (or, more correctly, an oral)
contract is perfectly valid and has binding effect. The difficulty, of course, is to prove
the existence of the contract and, even more difficult, what its terms are. The
existence of the contract may be presumed from the conduct of the parties who
performed or partly performed in accordance with the contract, but the terms of the
contract may never have been discussed, and one party’s view of the terms may be
very different from the other’s. This is strong argument for a written contract. In
committing their agreement to writing, the parties are not only leaving a memorial of
their agreement, but the very act of putting the agreement into words tends to focus
their minds on the various terms which ought to be incorporated in it.
The law requires that certain contracts be in writing, most important of which are
contracts for the sale or disposition of land or fixed property. [22] Oral contracts will be
enforced by the courts as far as they are able to interpret the agreement between
the parties, unless it is clear that the parties had intended that their agreement would
only acquire binding force when it had been committed to writing and signed by
them. [23]
Just as an oral agreement is enforceable, so is a written agreement that has not
been signed by the parties, for the same reasons. If it can be shown that the written
Copyright © 2019. Juta & Company, Limited. All rights reserved.

but unsigned agreement was the common intention of the parties and would have
been signed but for some accident or oversight, the courts will rely on the provisions
of the written document in determining the rights and obligations of the parties.

Page 8

1.6 The parol evidence rule

The courts lay great importance on the performance by the parties to a contract of
their obligations under the contract, [24] and will be ready to come to the assistance of

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
a party who has been prejudiced by the other party’s failure to perform his
obligations. To do so, the courts will need to know precisely what the respective
rights and obligations of the parties under the contract are, and to do so will rely
heavily on any written agreement. The courts have therefore evolved a rule, [25]
which holds that, where there is a clear and unambiguous written agreement
between the parties, this will be deemed to be the exclusive record of their
agreement and neither party will be permitted to allege that the terms of the written
agreement bearing his signature are not the true terms, and that he signed the
document believing it to contain other terms or to mean something else. [26] This
principle will be taken very far, and he will not be permitted to say that he had been
mistaken about the meaning of certain terms which he did not understand, or even
that the agreement was in a language he did not speak, [27] because the courts will
hold that he should have clarified all uncertainties before putting his name to the
agreement. Only where he can show that he was fraudulently deceived by the other
party as to the meaning of the agreement or what it contained, and that on the
strength of this misrepresentation he put his name to the agreement, will he be held
not to be bound to the terms of the contract. [28] The onus on him to prove this will be
a heavy one.
Nor will he be permitted to say that, notwithstanding whatever may appear in the
written agreement, the parties had previously agreed on something else. Where the
wording of the agreement is clear and explicit, the parol evidence rule precludes a
party from leading any evidence of anything previously said or done which he
contends varies the unambiguous meaning of the agreement. The rule was
succinctly stated in De Klerk v Old Mutual Insurance Co Ltd, [29] thus—
‘[W]here a contract has been reduced to writing, the written document is regarded as the sole memorial of
the transaction and deprives all previous inconsistent statements of their legal effect. The document
becomes conclusive of the terms of the transaction which it was intended to record. The result is that
previous statements by the parties on the subject can have no legal consequences and are accordingly
irrelevant and evidence to prove them is inadmissible.’

The court will assume that, in committing their agreement to writing, the parties have
said what they meant, without any reservations. There is a sound reason
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 9

for this rule: if the courts are to enforce contractual obligations, there must be no
doubt what these obligations are, and to allow the written agreement to be attacked
would weaken the entire basis of the enforcement of contractual obligations. [30] The
consequence of this may be that in the case of a builder who, in submitting his
tender to carry out certain building work, attached certain conditions to his tender (as
builders frequently do), and thereafter signed a written contract without ensuring that
his conditions were embodied in the document, and in fact they had not been so
embodied, it will probably be held that the conditions have fallen away.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
1.7 Variation of the terms of the contract
Just as a contract comes about by the consent of the parties, so by consent can they
bring it to an end, or vary any aspect of the agreement. [31] Some contracts prudently
contain a provision that no variation to the contract shall have binding effect unless
reduced to writing and signed by the parties [32]. Unless this has been stipulated,
subsequent oral variation to a contract, oral or written, will have binding effect
subject, once again, to the reservation that the proof of an oral variation may be
difficult. A variation may even occur tacitly, as when the parties conduct themselves
as though the variation had been agreed and was binding upon them. This
commonly occurs when one of the parties to a contract does not insist on a particular
right. If this waiver persistently occurs and the other party comes to rely upon it, the
first party may have difficulty later in enforcing this right and may be held by his
silence to have agreed to the modification or waiver of the right. Unless the contract
embodies a so-called non-variation clause which requires all variations to be in
writing and signed by the parties, a party can usually raise the defence that the
written agreement was varied orally or by subsequent conduct.
The situation regarding the use of electronic forms of communication, and in
particular, e-mail correspondence, which fall under the Electronic Communications
and Transactions Act 25 of 2002 (ECTA) needs to be examined in the context of e-
mail contracts and variations thereto.
In a landmark case for electronic signatures and non-variation clauses in South
Africa the Supreme Court of Appeal held that in the case of Spring Forest Trading v
Wilberry [33] that electronic signatures were binding and that the parties had validly
cancelled a contract by email signature in terms of a non-variation clause requiring
any changes to the contract to be in writing and signed.

Page 10

1.8 Interpretation of contracts

It will be clear from the foregoing that inconsistencies or ambiguities in the original
Copyright © 2019. Juta & Company, Limited. All rights reserved.

agreement, or failure properly to record any subsequent variation to the agreement,

may make it difficult to decide what the true intention of the parties was. Building
contracts usually consist of numerous documents—a standard form agreement, bills
of quantities, drawings, schedules and specifications—and frequently
inconsistencies arise between the provisions in one document and another.
The courts follow certain basic rules to assist them in the interpretation of such
contracts and these rules may be of some interest and help to principal agents,
quantity surveyors and others who have to administer building contracts. These rules
may be briefly stated as follows:
1.8.1 The first rule is to determine what the parties intended, and to give effect

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
to it. ‘The golden rule, applicable to the interpretation of all contracts, is to
ascertain and to follow the intention of the parties; and if the contract itself
. . . affords a definite indication of the meaning of the contracting parties,
then it seems to me that a court should always give effect to that
meaning’. [34]
1.8.2 When setting out to interpret a particular word or phrase, it must be
considered in context and not in isolation. ‘Wat natuurlik aanvaar moet
word, is dat, wanneer die betekenis van woorde in ’n kontrak bepaal moet
word, die woorde onmoontlik uitgeknip en op ’n skoon stuk papier geplak
kan word en dan beoordeel moet word om die betekenis daarvan te
bepaal. Dit is vir my vanselfsprekend dat ’n mens na die betrokke woorde
moet kyk met inagneming van die aard en opset van die kontrak, en ook
na die samehang van die woorde in die kontrak as geheel’. [35]
1.8.3 Words should be given their common meaning unless it is obvious that the
parties intended a different meaning, or that the common meaning does
not make sense in the context.

Page 11

1.8.4 Where words in a particular context may have more than one meaning,
the meaning shall be chosen that will make the context sensible and
practicable rather than one that makes it ineffective.
1.8.5 Where a clause is ambiguous, it shall be interpreted so that it is in
harmony with the whole contract. A contract must be interpreted as a
whole.
1.8.6 Where a general word or phrase follows a series of specific words or
phrases, the meaning of the general word or phrase shall be restricted to
the same category as the specific words or phrases. For example, in a
clause referring to damage by fire, storm, flood, earthquake and other
disasters, the words ‘other disasters’ cannot refer to riot damage, because
the former are natural disasters while the latter is due to human action.
This is known as the eiusdem generis, or ‘same class’ rule.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

1.8.7 Words written by hand take precedence over typewritten words, which in
turn take precedence over printed words.
1.8.8 Later written words take precedence over earlier written words. [36]
1.8.9 Where none of these rules assists in resolving the ambiguity, the meaning
is to be adopted which is the less favourable to the author of the words,
because he had the opportunity to avoid the ambiguity. This is known as
the contra proferentem rule.

1.9 The lawful termination of contracts

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
The most natural way in which a contract may come to an end is by the performance
by each party of all his obligations under the contract. There remains nothing to be
done, nothing to enforce, and the contract becomes a spent force and expires.
A contract will terminate while each party still has obligations to discharge, when
the parties mutually agree to bring it to an end. Each agrees that he will not require
the other to discharge his outstanding obligations, and as there will then be nothing
left to be done and nothing to enforce, the contract once again expires. Of course,
there must be complete agreement that neither requires the other to discharge any
further obligation and this will come about only when the obligations that have been
performed are in balance with each other. Where one obligation is to perform work
and the other is to pay, the parties must be in agreement that the payment that has
been made is commensurate with the work that has been done.
A contract may also come to an end when one of the parties, who no longer
wishes to perform his obligations and enjoy his benefits under the contract, finds

Page 12

someone else to step into his shoes, who will take over both his rights and
obligations. Where this happens, the original contract terminates and a new contract
arises from the ashes of the old, in which a new contracting party replaces the one
who has withdrawn, but all the original terms persist unless otherwise decided by the
parties. The consent of the other contracting party will be required and ought not to
be unreasonably withheld. A situation that might justify a party in withholding his
consent might be one in which the work contracted for involved particular personal
skill, such as painting a portrait or designing a building. This arrangement is
sometimes referred to as delegation. [37]
Delegation also covers the arrangement known as subcontracting which is very
widely encountered in the building industry. Properly speaking, this does not bring
the contract to an end, or even modify it in any way. The contractor, having
undertaken to erect the entire building, then enters into arrangements with various
specialist firms to perform certain aspects of the work on his behalf. These
Copyright © 2019. Juta & Company, Limited. All rights reserved.

subcontracts are personal to him and his subcontractor and do not create any privity
of contract or contractual relationship between the subcontractor and the employer
for whom the building is being erected. The contractor remains responsible to the
employer for the full extent of the work to be done under his contract and looks to his
subcontractors to be responsible to him for the proper execution of their work under
their respective subcontracts.
A subcontract is wholly dependent for its existence on the continued existence of
the principal contract and so, if the principal contract is terminated, the subcontract
automatically expires. This is because a contractor can no longer delegate to a

1.10 Breach of contract

As we have seen, contracts, almost without exception, impose various obligations on
the parties. If one of the parties does not carry out any particular obligation, he is
said to be in breach of contract.
The remedies available to the innocent party prejudiced by such breach may be
termination of the contract and a claim for damages, or he may elect to uphold the
contract and claim specific performance together with damages. [38]
The option of termination will not always be available to him; it will depend on the
severity of the breach. The general rule is that a party will only be entitled to
terminate if the breach is so serious that it goes to the very root of the contract. It is
often very difficult to determine, in a given instance, whether the severity of the

Page 13

breach is sufficient to entitle the party to terminate. For this reason, most
construction contracts stipulate types of default that entitle a party to terminate. [39]
It is commonly, but mistakenly, thought that tardy performance is a fundamental
fault that entitles a party to terminate. Some contracts may stipulate that time is the
essence of the contract. However, unless there is specific provision in the contract
entitling one party to terminate in the event of the other’s tardy performance, the
courts will not, other than in exceptional circumstances, uphold the view that tardy
performance goes to the very root of the contract. [40] It has been said that a party will
only be entitled to terminate in circumstances where the late performance renders
the performance no longer of any benefit to him. [41] This can hardly ever be the case
in a building or construction contract.
Before a party may claim his available remedies for the other’s breach of contract,
he is obliged to give notice of such breach, [42] and afford the other reasonable time
Copyright © 2019. Juta & Company, Limited. All rights reserved.

to correct the default. Once again, the difficulty arises of determining what a
reasonable period of notice would be in the absence of an explicit stipulation in the
contract. It would depend on the circumstances of the case. When one of the parties
has breached the contract and the breach has been fundamental and the other party
has terminated, the general rule is that each party must restore the other to the
position he was in at the start of the contract. In most commercial contracts, this
presents little problem. The man who, under a contract of sale, has supplied
defective goods, must, when the contract is terminated by the other, refund the
purchase price to the other and may repossess the goods. This is seldom possible in
a building contract where it would be impossible, or at least highly unreasonable, to

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
require the builder who has breached the contract by performing defective work, to
demolish the building, remove all the material from the site (by which stage it would
be little more than rubble) and refund the contract price. In such case the injured
party would be limited to a claim for damages. The measure of damages would
normally be the cost of rectifying all the defective work and of completing incomplete
work, and any other financial loss he may be able to prove.
The principles governing the award of damages for breach of contract were
expressed by Innes CJ in the leading case, Victoria Falls and Tvl. Power Co. Ltd. v
Consolidated Langlaagte Mines Ltd, [43] as follows:

Page 14

‘The agreement was not one for the sale of goods or of a commodity procurable elsewhere, so that we
must apply the general principles that govern the investigation of that most difficult question of fact – the
assessment of compensation for breach of contract. The sufferer by such a breach should be placed in the
position he would have occupied had the contract been performed, so far as can be done by the payment
of money, and without undue hardship to the defaulting party.’
Many building contracts contain specific procedures for having defective and
incomplete work rectified by someone else after due notice has been given to the
defaulting party, and for the resultant cost to be recovered from him. [44]
The judgment in the B K Tooling [45] case confirmed the view that had generally
been held in the building industry, that a party who accepts work which, although
defective, is substantially usable for its purpose, may be entitled to a reduction of the
contract price. Defects frequently occur in buildings, which may be unsightly, [46] but
which do not really affect the utility of the building, and the cost of rectifying them
may be out of all proportion to the small benefit to be gained from their correction.
Architects and quantity surveyors dealing with such situations have long been
accustomed to negotiating an acceptable price reduction to compensate an owner
who has little choice but to accept such defects. In such circumstances, an
appropriate way of determining such price reduction might be to assess the extent to
which the defect may have adversely affected the market price of the building. This
tends to be a hypothetical and speculative approach and it is perhaps because there
Copyright © 2019. Juta & Company, Limited. All rights reserved.

appears to be no rational and practical way of determining such price reduction that
no construction contracts make provision for the adjustment of the contract price in
this way to compensate for defects, and it is left to the parties to deal with this
situation as best they can.
Perhaps the most common breach of a construction contract lies not in any
shortcoming in the materials or workmanship in the building, but in the time taken to
complete it. The late completion of almost any type of building will cause the owner
financial loss, be he a manufacturer who loses production and profits in his factory,
or the owner of offices or flats who loses rentals, or the home owner who will have to
rent alternative accommodation until his home is ready. In periods of high interest

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
rates, financial losses from such delays can be substantial and they can properly be
claimed from a defaulting builder as damages.
It is sometimes very difficult to quantify damages. The owner of the shop whose
opening is delayed will probably have great difficulty in substantiating the

Page 15

profits he was deprived of making by the late opening of his shop. It is to avoid this
difficulty that parties frequently pre-determine the amount of such damages in their
contract. They may agree that if the contractor is late in completing his work he shall
pay or allow to the employer a certain sum of money for each and every day or week
that the work may remain incomplete.
At one time the courts, under the influence of English law, tended to look askance
at an arrangement of this type and were reluctant to enforce such agreement unless
they could be shown that the amount was a genuine pre-estimate of the damages
likely to be suffered by the owner. Since the enactment of the Conventional Penalties
Act in 1965, however, the requirement that the amount claimed should bear some
relation to the contemplated damages has fallen away, and the amount is now
recognised as a penalty and may be enforced as such. The Conventional Penalties
Act does, however, permit the courts to reduce the amount where they are satisfied
that the penalty is out of all proportion to the prejudice. [47]
Where the employer has reserved for himself the right to claim penalties for the
contractor’s late completion, he cannot also claim damages. Nor can he claim
damages in lieu of penalties if he finds that the penalties do not adequately
compensate him for the damages he suffers. [48] Conversely, the contractor who has
contracted to pay penalties for late completion, cannot escape liability by showing
that the employer’s actual losses are less than the penalty for which he has
stipulated.

1.11 Repudiation of contract

The final form of breach of contract to be considered is that of repudiation.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Repudiation is the act of a party who says, or indicates by his actions, that he is
no longer prepared to abide by the terms of the contract. [49] At its simplest level this
occurs when a contractor, for whatever reason, gathers up his tools and walks off the
site. It may have a much subtler guise and a party may quite unwittingly commit an
act of repudiation. It occurs, for example, when a party takes a course of action such
as suspending work which he thinks is in accordance with the terms of the contract,
but which in reality is not, and thereby breaches the contract.
Where the action of one party constitutes repudiation of the contract, the contract
does not automatically come to an end. The choice whether or not to terminate the

Page 16

do so by advising the defaulting party accordingly and this will bring the contract to
an end and entitle him to damages. Alternatively, he may decide not to accept the
repudiation but still to claim damages, in which case the contract remains alive and
each party is obliged to discharge its obligations to the other. If the defaulting party
persists with his repudiation, the other party will then have little choice but to accept
the repudiation, bring the contract to an end and attempt to recover damages.

1.12 Building contracts as entire contracts

The conventional building contract, in which the contractor [50] undertakes to supply
all the labour and materials and to erect and complete the building, is a contract for
the letting and hiring of work—locatio conductio operis—and is one of a species of
entire contracts, [51] also known as synallagmatic, reciprocal or bilateral contracts, i.e.
one in which each party undertakes obligations towards the other, and neither is
entitled to enforce the contract unless he has performed or is prepared to perform
his own obligations. Such performance may be simultaneous or sequential, i.e. one
after the other. A contract of sale is a typical contract in which the parties perform
simultaneously, while a building contract is a typical example of one in which one
party performs his complete obligation before the other is required to perform his
side of the bargain [52]—the contractor builds, and once the work is complete, the
employer is obliged to pay for it (this is the common-law position which is invariably
modified contractually). It therefore follows that, unless the parties have agreed to
vary the common law, the contractor has to perform entirely before he becomes
entitled to payment by the employer. In the absence of such agreement, a contractor
who claims payment before he has completed the work in all respects may find his
claim is countered by the exceptio non adimpleti contractus—a response that, in
effect, says ‘Regardless what I may eventually be obliged to pay you, I am not
obliged to pay you one cent until you have finished your work’.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

In locatio conductio operis, the locator—the person who does the work—is an
independent contractor and not an employee of the conductor—the person for whom
he performs the work—and he is free to perform it in his own manner and time,
provided he completes it by the agreed time. He is free to carry out his work

Page 17

in whatever manner he chooses in order to fulfil his side of the bargain. He can work
whatever hours he likes and employ whomsoever he wishes. He can, if it suits him,
perform the work at very slow pace for the first half of the contract period and then

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
put on a great spurt of speed to finish the work within the agreed time. Unless there
are specific conditions to the contrary contained in the agreement, the employer
cannot complain if the contractor does any of these things. [53] His only concern
should be that he gets the building properly constructed with sound materials not
later than the end of the agreed contract period.
The locator accepts the risk of loss or damage to the work until it is completed
and delivered to the conductor. He is delictually liable for any loss or injury to third
parties that may be caused by his execution of the works. The conductor is not
normally vicariously liable for any damage that the locator may cause to such third
party. The locator may employ workmen to assist him in carrying out his contractual
obligations, and he may subcontract portions of the work to subcontractors. In the
absence of special agreement, he is not entitled to any payment until he has
completed the work and delivered it to the conductor.
The rule that the locator is not entitled to be paid until he has completed his work
is a term implied by law. There are several other terms implied by law. One of these
is that the work shall be free of defects, and the locator remains liable for loss or
damage due to defective workmanship for the life of the building, which often
exceeds the life of the locator himself. [54] Another implied term is that the
workmanship, materials and goods incorporated in the works shall be fit for their
purpose, with the consequence that any shortcoming in such workmanship,
materials and goods is required to be made good by the locator at his own cost.
Some of these common-law rules and terms are inconvenient or even intolerable
to one or other of the parties to a building contract, and are usually extensively
modified by the terms of the building contract.

[1] This term is used, in this work as in the JBCC documents, to denote the party who has engaged the
building contractor to erect the building. He will normally be the owner of the land on which the building is to be
erected, and will therefore become the owner of the building, but not necessarily so; it is possible that he might
contract on behalf of a third party who owns the land.
[2] De Villiers C J in Pieters and Co v Salomon 1911 AD 137.
[3] Hutchison et al Wille’s Principles of South African Law 7th edition p 305.
[4] The common law is a body of legal rules that is the result, not of deliberate enactments by a parliament or
Copyright © 2019. Juta & Company, Limited. All rights reserved.

similar law-making body, but of the development and general acceptance over a long period of time of customs
and practices that have been found to enable people to live and work together in communities. The common
law in South Africa originated in ancient Rome and was later developed in Holland and is therefore said to be
Roman-Dutch.
[5] Naude v Kennedy 1909 TS 799. This is the basis of entire or reciprocal contracts, discussed in section
1.12.
[6] Thomas Construction (Pty) Ltd (in liquidation) v Grafton Furniture Manufacturers (Pty) Ltd 1988 (2) SA
546 (A).
[7] Broodryk v Smuts NO 1942 TPD 51.
[8] A party who may say on a hot day ‘I would give a thousand rand for a cold beer’ cannot be held to have
seriously contracted to pay a thousand rand if someone were to thrust a cold beer into his hand. See Gibson J
T R South African Mercantile and Company Law 5th edition p 45.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
[9] ‘Let the buyer beware’.
[10] Estate Schikkerling v Schikkerling 1936 CPD 269.
[11] Jajbhay v Cassim 1939 AD 537.
[12] Gibson J T R South African Mercantile and Company Law 5th edition p 28.
[13] (1856) 6 E & B.
[14] Watermeyer v Murray 1911 AD 61.
[15] Dietrichsen v Dietrichsen 1911 TPD 486.
[16] Crawley v Rex 1909 TS 1105.
[17] A specification is a document describing the types and qualities of materials to be used and fittings,
fixtures and equipment to be installed, the standards and techniques of construction to be employed, and any
particular conditions under which the contract is to be performed. Once commonly found in building contract
documentation, the specification had become largely obsolete, particularly where bills of quantities are used. In
the preambles to the various trades in the bills of quantities reference is usually made to standard
specifications published by organisations such as the SABS, the ISO, etc. Specifications have, in recent times,
once again become the preserve of the architect and are generally issued with the tender documents.
[18] Hudson’s Building and Engineering Contracts 10th edition p 6, G & L Builders CC v McCarthy
Contractors (Pty) Ltd 1988 (2) SA 243 (SE). If he does so for good and proper reasons, the tenderers will have
no claim against him, but if he invites tenders without the intention of accepting any, he may be liable for the
cost of preparation of such tenders: Landless v Wilson (1880) 8R (Ct of Sess) 289, William Lacey (Hounslow) v
Davis (1957) 2 All ER 712.
[19] Dietrichsen v Dietrichsen 1911 TPD 486.
[20] Levin v Dieprok Properties (Pty) Ltd 1975 (2) SA 397 (A); Blew v Snoxell 1931 TPD 226; Bird v
Sumerville and Another 1960 (4) SA 395 (N).
[21] See 14.3.
[22] Alienation of Land Act 68 of 1981.
[23] Goldblatt v Fremantle 1920 AD 123. The JBCC Principal Building Agreement Edition 5.0 makes it clear
in clause 3.5 that formal signature of the agreement is not necessary to render the agreement contractually
binding. This provision has been omitted from Edition 6.2.
[24] The frequently quoted maxim is pacta sunt servanda—agreements must be honoured.
[25] The caveat subscriptor rule—literally ‘let the signatory beware’.
[26] Du Plessis v Nel 1952 (1) SA 513 (A).
[27] Bhikhagee v Southern Aviation (Pty) Ltd 1949 (4) SA 105 (E).
[28] Novick v Comair Holdings Ltd 1979 (2) SA 116 (W).
[29] 1990 (3) SA 34 (E) 39D–E.
[30] This rule may sometimes operate harshly, and it is not without its critics. For a detailed exposition on the
rule, see Christie’s law of contract in South Africa 7th ed 2016 pp 218–232.
[31] Clemens v Russon Brothers (Pty) Ltd 1970 (3) SA 686 (E).
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[32] Clemans v Russon Brothers (Pty) Ltd 1970 (3) SA 686 (E) at 689F. See also AGREEMENT page of the
JBCC Agreements.
[33] Spring Forest Trading 599CC v Wilberry (Pty) Ltd t/a Ecowash and Another (725/13) [2014] ZASCA 178;
2015 (2) SA 118 (SCA) (21 November 2014).
[34] Joubert v Enslin 1910 AD (1910 AD 6)
[35] Rumpff CJ in Swart v Cape Fabrix (Pty) Ltd 1979 (1) SA 195 (A) at 202C.
[36] This rule may be taken further in building contracts, that where there is a discrepancy between one
drawing and another, the provisions of the later prepared or issued drawing take precedence over those of the
earlier.
[37] Wille’s Principles of South African Law by Dale Hutchinson et al 9th edition 2007.
[38] Radiotronics (Pty) Ltd v Scott, Lindberg and Co Ltd 1951 (1) SA 324 (C).
[39] See, for example, clause 29.0 of the JBCC PBA and NSSA Edition 6.2 which replaces the previous

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
cancellation clauses 36.0 and 38.0.
[40] Cowley v Loumeau’s Estate 1925 AD 394.
[41] For example, a bride who has ordered a wedding-dress from a dress-maker which is delivered late, after
the wedding has taken place, may justifiably regard the late delivery as a fundamental breach of the contract.
[42] Referred to as placing the defaulting party in mora.
[43] 1915 AD 1.
[44] For example, clause 17.3 of the JBCC PBA and NSSA.
[45] B K Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk 1979 (1) SA 391 (A).
[46] For example, the colour of the face brickwork may be somewhat inconsistent.
[47] S 3 of the Conventional Penalties Act 15 of 1962. The courts have consistently shown themselves
reluctant to reduce a penalty that had been agreed by the parties.
[48] S 2 of the Conventional Penalties Act.
[49] Street v Dublin 1961 (2) SA 4 (W) at 10.
[50] More properly called ‘the building contractor’, the party which undertakes to carry out the building work.
The other party is usually referred to as ‘the employer’, and occasionally as ‘the client’ or ‘the building owner’;
he is the party for whom the building work is carried out and who pays for it.
[51] ‘A contract is said to be entire when the complete fulfilment of the promise by either party is a condition
precedent to the right to call for the fulfilment of the promise by the other.’ Wessels The Law of Contract in
South Africa 2nd ed vol I para 1612.
[52] See Hauman v Nortje 1914 AD 293, B K Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk
1979 (1) SA 391 (A).
[53] JBCC PBA contains such specific conditions: in clause 12.2.7, it requires the contractor to proceed with
‘due diligence, regularity, expedition, skill and appropriate resources’.
[54] Most construction contracts limit this period of liability for latent defects; see clause 22.0 of the JBCC
PBA and NSSA.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Chapter 2
Types of building contract
2.1 Lump-sum contract
Building contracts are ‘entire’ or ‘reciprocal’ contracts. The builder undertakes, as an
independent contractor, to supply all the necessary labour and materials and to
perform all the work required for the erection and completion of the building in all
respects, while the employer undertakes to pay a predetermined price, [1] for the
finished product.
The employer’s obligation is to pay the agreed contract price and, as this is a
reciprocal contract, he is only required to pay when the builder has completed his
side of the bargain.
In common law the building contract is therefore very simple: the builder
undertakes to erect and complete the building in accordance with certain drawings
together with written descriptions and instructions referred to as a specification, and
the employer undertakes to pay a lump-sum price for the finished product. The
agreement is frequently hedged with a variety of terms and conditions, the most
important of which will probably be the time for completion. But no matter how
involved and far-reaching these terms and conditions may be, the essential concept
of the contract remains the same.
The building contract, like all other contracts, is concluded when an offer is
accepted. What principally distinguishes one type of building contract from another is
the way in which the offer is obtained; in other words, what information is provided to
the offeror, or tenderer, for the purpose of making his offer. [2]

Page 19

The oldest and still the most widely-used system is that in which the tenderer is
supplied with complete drawings and specifications for the works and he estimates
Copyright © 2019. Juta & Company, Limited. All rights reserved.

from these documents the cost of carrying out the work and the price he wishes to
charge. The system has the merit of providing a basis for an agreement in which
each party will clearly understand the nature and extent of his obligations. The
drawings and specification should give the builder a precise idea of the building that
he has undertaken to erect, while the employer will know exactly what he will have to
pay for it. It is a system which is widely used for large contracts in many overseas
countries, [3] where independent professional quantity surveyors are virtually
unknown. In this country, as in England and elsewhere in the Commonwealth
countries, it is widely used for small contracts, particularly for domestic dwellings and
for larger projects of a simple nature. However, because of its inherent

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
disadvantages, contracts based on bills of quantities are far more frequently used for
projects of any appreciable size or degree of complexity.
The principal disadvantage of this manner of tendering is that the resulting
contract tends to be inflexible. There is no convenient basis, as there is in a contract
based on bills of quantities, for valuing variations. [4] Consequently the employer, or
the architect/principal agent on his behalf, will have to negotiate with the builder the
cost of any additional work or variations, and the builder will be in a strong
bargaining position. [5] This is a disincentive to the employer from making any
changes once the contract has been let. From the builder’s point of view this might
be very desirable as he is spared the disruptive effect of changes during the course
of the contract, but it places the employer in a position, which is sometimes very
difficult, of having to make his mind up about all the aspects of the building before
some of his requirements may be fully known or investigated. Preplanning in all
respects is an ideal that is much desired but seldom fully achieved. The economic
reality is that construction work on many projects commences before the design of
the building has been fully worked out and documented by the professional team
and very often before the employer has fully investigated and considered all aspects
of his requirements.
The success of a lump-sum contract depends on complete and comprehensive
documentation of all aspects of the design before tenders are invited. Employers

Page 20

seldom appreciate how much work is entailed in this phase and frequently begrudge
members of the professional team adequate time to complete their documentation.
Depending on the size of the project, tenderers may have anything from two to six
weeks to prepare their tenders. The least sophisticated may base his price on a rate
per unit area of the building, a notoriously unreliable way of predicting the cost of the
project. A more sophisticated approach is to measure and price all the building
materials that will be needed to complete the works and add to that an estimate of
the cost of labour and management that will be involved and the profit that will be
Copyright © 2019. Juta & Company, Limited. All rights reserved.

required. On small projects, building material merchants are generally happy to

provide free estimates for their clients of the materials that will be needed.

2.2 Lump-sum contract with bills of quantities [6]

The most sophisticated technique for estimating building costs is by calculating the
amount of work that will have to be done. Each unit of work in a particular trade
comprises the materials that will be needed, the labour that will be expended and the
ancillary costs that must be charged to every unit measurement of such work. The
entire building operation is reduced by the process of measuring, classifying and

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
compiling into numbers of unit measurement of different types of work, the final
compilation being known as a bill of quantities. These various items of work are
usually classified as to the trade under which they traditionally fall; for example
bricklayer, carpenter, plasterer, plumber. Typically in the category of bricklayer one
may find x square metres of 220 mm thick brickwork, y square metres of 330 mm
thick brickwork and so on. The brickwork will probably be further subdivided between
brickwork executed in burnt clay bricks and brickwork executed in concrete bricks.
Within certain broad limits the cost of supplying the necessary materials, labour,
equipment and supervision for the erection of 1 square metre of a particular type of
brickwork, is much the same whether the project is a factory or an office building, a
school or a power station. Estimators will know from lengthy experience what prices
to employ for each unit. Moreover, if there is an increase in the price of, for example,
bricks, an estimator who knows how many bricks are required for a square metre of
wall, will be able to make the cost adjustment without difficulty.
The same process applies in all the other trades. In the plumbing section of the
bill of quantities there may, for example, be an item for the supply and installation of

Page 21

x number of wash-basins or for the laying of y metres of 110 mm pvc drainage pipe.
The measurement of work and materials and the compilation of bills of quantities
is the work of the quantity surveyor who is an independent professional consultant
employed by the employer. The employer, or his architect, desiring to obtain tenders
for a particular building project, will submit the bills of quantities for that project to
sundry tenderers, who will price out the various items and so arrive at their
respective tenders.
Bills of quantities have now become the accepted basis for inviting tenders for
any building project, other than those of the smallest and simplest nature. The
production of bills of quantities has become an exact science governed by rules
published by the Association of South African Quantity Surveyors (ASAQS) and
known as the ‘Standard System for Measuring Building Work in 7th Edition 2015’. So
Copyright © 2019. Juta & Company, Limited. All rights reserved.

effectively have these rules standardised the production of bills of quantities that any
two quantity surveyors measuring from the same set of drawings, will produce bills of
quantities which, if not identical in all respects, will correspond so closely that, if they
are priced out at compatible rates and prices, will yield total prices which are almost
identical. This goes a long way towards transforming estimating from an art to a
science, and replaces intuitive estimating by a process of logical and scientific
pricing.
There are a number of advantages that accrue from the use of bills of quantities
for tendering:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
• All tenderers tender on the same basis and moreover on a basis capable of
yielding accurate results.
• Because of the accuracy of bills of quantities, information yielded by one set of
bills may be relied upon in pricing another set.
• The information contained in bills of quantities can form the basis of pricing
variations to the contract and valuing work in progress.
• Where the exact nature and extent of work to be done is not known at the time
of compiling the bills, provisional allowances may be made which can later be
adjusted when the completed work can be accurately measured and priced.
Further comment is necessary on the inclusion of provisional items in bills of
quantities. It frequently happens that, at the time of preparing technical drawings, the
architect does not have sufficient accurate information on certain aspects of the
building to be able to determine the requirements with complete precision and to
prepare the necessary technical drawings. A common example of this occurs in the
design of foundations. Although soil tests may have been carried out which give an
indication of what may be encountered when foundation trenches are dug, it is only
when the contractor moves on site and starts to carry out this work that all the
conditions are revealed.

Page 22

It would be very uneconomical to design for the worst conditions likely to be

encountered and so the architect usually designs for the average conditions
revealed by the soil tests, and, when foundation trenches have been excavated,
makes any adjustments that may be necessary to deal with an unexpected
condition. The quantity surveyor is able readily to respond to these changes by
measuring the designed solution and then adjusting the measurements in the bill of
quantities to respond to any changes introduced by the architect.
Despite their apparent advantages and widespread use, bills of quantities are not
without their critics. Because bills of quantities can only be prepared when the
architect’s technical documentation is substantially complete, they tend to extend an
Copyright © 2019. Juta & Company, Limited. All rights reserved.

already lengthy pre-contract period. Moreover, the addition of the quantity surveyor
to the professional team adds further professional fees to be paid by a cost-
conscious developer.

2.3 Lump-sum contract based on provisional bills of quantities

Quantity surveyors have met the criticism that the production of bills of quantities
extends the pre-contract period by introducing the provisional bill of quantities.
These bills are produced, not from an architect’s technical documentation, but from
his preliminary sketches. The measurements are therefore only approximate and the
entire bills are regarded as provisional and subject to adjustment when the final

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
drawings have been produced and the work has been remeasured. The bills
therefore are no longer an exact measurement of all the work needed to be done to
produce the building which, when priced, yields a contract price. It becomes a basis
for obtaining a series of unit rates for work which, when the drawings have been
completed and measured, can be used to price the final bills and obtain an accurate
price.
This technique achieves a dramatic saving in time: bills of provisional quantities
can often be produced within a few weeks of the employer’s approval of the
architect’s conceptual sketches of the project. Tenders can be invited and the
contract placed while technical drawings are still to be prepared, and the contractor
is usually able to move onto site some months earlier than would have been the
case with the conventional tendering procedure.
An added advantage is that the contractor’s prices are known for a variety of
materials and items proposed to be used in the building before a final decision need
be made about their use and before they have been incorporated in detail drawings
and specifications. Consequently it is possible to review such provisional decisions
and make cost-effective substitutions with minimum disruption to technical
documentation.
The obvious disadvantage is that the tendered amount is not an accurate forecast
of the ultimate cost of the building. The accuracy of this figure, of course, depends
on the accuracy of the preliminary and provisional information given to the

Page 23

quantity surveyor, as well as on his ability to make intelligent forecasts and

predictions of what will need to be included in the provisional bills. Particularly where
the building is of fairly conventional form and construction, quantity surveyors often
achieve astonishingly accurate provisional bills, and the element of chance that
creeps in is often a very small price to pay for the considerable saving in time in
getting a contractor on site.
A further disadvantage is that the contractor, in commencing work before all the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

drawings have been completed, may have difficulty in pre-planning his work properly.
In some cases, the contractor’s rate of progress may be impeded by the inability of
the architect and the other agents to produce drawings sufficiently rapidly to keep
pace with his progress. Great pressure is often placed on the members of the
professional team to meet a very tight schedule, with the consequence that ill-
considered decisions may be made and mistakes may creep into hurriedly prepared
drawings.
For the employer, the major advantage is that the saving in time means a
corresponding saving on interest on capital tied up in the project, and, as far as he is

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
concerned, the advantages of the process so far outweigh the disadvantages that at
the present time, the vast majority of building contracts in the private sector are
being let on the basis of provisional bills of quantities. Contracts where the State is
the employer, however, continue to be let on conventional bills of quantities.

2.4 Cost-plus contract

A cost-plus contract is one in which the contractor is reimbursed for the actual cost of
all labour and all materials together with an agreed fee for his management services
and profit.
The amount of the fee and profit is usually expressed as a percentage of the
direct labour and material costs. What this percentage will be is a matter for
negotiation and could vary considerably depending on the size and nature of the
project, among many other considerations.
A serious disadvantage of this type of contract is that the gearing of the
contractor’s profit to his expenditure on labour and materials is an incentive to work
wastefully, for the greater the cost of labour and materials, the greater will be his
profit. For this reason, an alternative approach is sometimes adopted, that of
negotiating a fixed fee for management and a fixed profit. In more sophisticated
applications tenders may be invited on the basis only of the management fee and
profit. The management fee would cover the provision of plant and scaffolding,
insurances, guarantees and administrative services.
Increases in the anticipated cost of labour and materials are not always the fault
of the contractor. These may come about as a result of additional work being
included during the course of the project that had not originally been contemplated.
They can also come about due to the choice of more expensive

Page 24

materials and methods of construction and more sophisticated equipment adopted

during the preparation of technical documentation. Generally it would be
unreasonable to hold the contractor to his original management fee and profit where
Copyright © 2019. Juta & Company, Limited. All rights reserved.

these increases become substantial. There is no satisfactory formula for adjusting

these amounts other than on a percentage basis which we have already had good
reason to reject.
The particular attraction of the cost-plus contract is that it enables a building
contract to be placed at a very early stage, possibly even before the architect has
put pencil to paper. It has its attraction where it is less important to select the
contractor on the basis of competitive tender, [7] than to choose one that is known to
be reliable and trustworthy, who has the particular skills that the project calls for, and
where the cost and delays of the conventional process of calling for tenders on the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
basis of bills of quantities is unappealing.
The building industry has not succeeded in producing a standard form agreement
for the cost-plus contract, partly no doubt because it is infrequently used and partly
because of the difficulties in establishing acceptable means of determining the
contractor’s management fee and profit. Where the parties wish to enter into this
form of contract they will have to draw up their own form of agreement, although
some of the provisions of the standard form of agreement might be applicable.

2.5 Labour-only contract

All of the foregoing contracts are ‘entire’ contracts in that the contractor undertakes
to erect and complete the entire building for a lump-sum price. Where these
contracts differ one from the other is in the manner in which this price is determined.
Even the contract based on bills of provisional quantities and the cost-plus contract
are lump-sum contracts, although the amount of the lump sum can only be
calculated when the work is complete.
Sometimes, more especially in the unsophisticated market, or where the
contractor is under-capitalised, a contract may be let on a labour-only basis. The
contractor undertakes to erect and complete the building with materials supplied by
the employer, and he is paid a lump-sum price for performing the work. This is still
an ‘entire contract’ and the contractor is an independent contractor who manages his
own affairs in undertaking and completing the contract.
A clear distinction needs to be drawn between this form of contract and one in
which the contractor undertakes to carry out the work for a remuneration of an
agreed sum of money per day, week or month. If it has been agreed that he be paid

Page 25

on a time basis for performing the work instead of an amount for the total quantity of
work involved in the project, he becomes an employee and not an independent
contractor.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The difference is significant. The employee carries out the instructions of his
master who will lay down the conditions under which the work is to be carried out,
including working hours which may not exceed the statutory limit, together with
certain paid holidays. The independent contractor, however, carries out the work in
his own time to suit his own convenience, provided of course that he completes the
contract within the agreed period. The employer is obliged to provide his employees
with the necessary plant, scaffolding and special tools, and protective clothing if this
is necessary, while the independent contractor provides these for himself if he needs
them.
Perhaps the most important difference lies in the area of risks. The employer of

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
workmen is responsible for any accident that may befall his employees while at work
and he is obliged to effect insurance in terms of the Compensation for Occupational
Injuries and Diseases Act 130 of 1993. The independent contractor, however, carries
these risks himself and must carry the required insurance. The independent
contractor is also responsible for any loss or damage to the works while he is
executing them, and will be liable to make good such loss or damage at his own
expense. Very likely the labour-only contractor will not have the financial resources
to meet any claims for compensation for loss or damage to the works, and the
employer should ensure that the works are adequately insured.

2.6 Building by direct subcontract or ‘management contract’

This is a confused term that is often used to describe a confused arrangement. It is
used to describe the arrangement in which the employer dispenses with the services
of a general contractor and instead employs a variety of tradesmen or small
specialist contracting organisations to perform portions of the work such as
bricklaying, carpentry, plumbing and tiling on a contract basis. These tradesmen
would normally be subcontractors to a general contractor, but as there is neither
general contractor nor general contract, they are in fact independent contractors and
the term ‘subcontractors’ in this context is a misnomer.
The employer, who sees the general contractor as one who engages a number of
subcontractors and who charges the employer a management fee for co-ordinating
their services and adds his profit on their work, believes that he can do this himself
and achieve a substantial saving.
Perhaps he can, although many general contractors will claim that their
management fee and profit is hard earned. Probably very few employers who
indulge in this arrangement set the cost of their own time and efforts in co-ordinating
the various independent tradesmen against the savings they think they have made.
Nor is it easy to determine the cost of rectifying the various

Page 26
Copyright © 2019. Juta & Company, Limited. All rights reserved.

mistakes which occur as a result of inadequate co-ordination. There are no standard

form contracts which are suitable for these arrangements, although the JBCC MWA
or the MBSA domestic subcontract, if altered and adjusted, might be adequate. Such
amendments would need to make adequate provision for harmonising and co-
ordinating the various activities under the different contracts.
The problems inherent in undertaking a building project in this manner are so
great, particularly in the hands of the inexperienced, that it is an option that should
be considered only for the simplest and least complicated projects.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
2.7 Turnkey contract
In all the forms of contract hitherto discussed, the contractor has undertaken to
construct the building works in accordance with a design and drawings prepared by
the employer or his agents, and the contractor’s obligation has been to carry out fully
and accurately the instructions that he has been given. He is not responsible for the
design, [8] only for carrying it out faithfully.
Some employers do not wish to be bothered with employing architects, engineers
and quantity surveyors and prefer an arrangement in which the contractor assumes
responsibility for producing the design as well as building the building. The
contractor takes the employer’s instructions regarding his requirements, produces
initial conceptual drawings illustrating his proposals for approval and thereafter all
the documentation needed to build the building, after which he erects and completes
the project. This arrangement is often referred to as a packaged deal or design and
build contract.
The advantages to the employer are frequently illusory. He saves little on
professional fees, because the cost of fees will now be included in the contractor’s
contract price. He has no professional consultants retained to safeguard his
interests, and as the contractor can be expected to draft the contract documentation
to suit his own advantage, the employer will be unlikely to have an adequate means
of defining the standard of what he is paying for, nor for securing his interests.
Although such contracts are fairly popular overseas, they are increasingly being
used in this country, and the JBCC is considering preparing standard contract
documentation that can be used for such contracts.

2.8 Public private partnership (PPP)

South African law defines a PPP as a contract between a public sector
institution/municipality and a private party, in which the private party assumes
substantial financial, technical and operational risk in the design, financing, building
and operation of a project.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 27

Two types of PPPs are specifically defined:

• where the private party performs an institutional/municipal function; and
• where the private party acquires the use of state/municipal property for its own
commercial purposes. A PPP may also be a hybrid of these types.
Payment in any scenario involves one of three mechanisms:
• the institution/municipality paying the private party for the delivery of the
service, or
• the private party collecting fees or charges from users of the service, or

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
• a combination of these.
Further detail on this type of contract may be obtained from the National Treasury
and is not covered further in this book.

[1] The price may also be capable of being determined by measuring the completed work and valuing it by
applying agreed rates, as is the case with contracts based on provisional bills of quantities—see section 2.3
below.
[2] The supply of such information to a builder does not constitute an offer on the part of the employer to the
builder to engage him to build the project, nor does the submission of a price by the builder constitute an
acceptance of such offer bringing about a contract. This approach to the builder is no more than an invitation to
him to submit an offer for consideration, and brings about no legal consequences. See section 1.4 above.
[3] Notably the United States of America, where enormous building contracts are let on this basis.
[4] In such instances the contractor is often required to provide a schedule of rates which would be used to
value variations and work in progress. This is not necessarily a satisfactory expedient; the rates may be
unrealistically high and unrelated to the rates which would have been used if the work had been priced on the
basis of bills of quantities.
[5] The JBCC agreements attempt to overcome this difficulty by requiring the contractor in such instances to
provide a schedule of rates.
[6] It is a common misconception that the term ‘lump-sum contract’ refers only to those contracts where bills
of quantities are not employed. This is not so; the term applies to all contracts where the tenderer quotes an
all-inclusive price for carrying out the full extent of the works, regardless whether he was provided with bills of
quantities for pricing the work or not, as distinct from cost-plus contracts or contracts based on schedules of
rates, where the cost is only capable of being determined when the work is complete.
[7] It is generally fallacious to believe that building work may be obtained at a lower cost by using the cost-
plus contract than by using the conventional contracting system.
[8] JBCC PBA states expressly in clause 7.1 that the contractor is not responsible for the design of the
works.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Chapter 3
The role-players in a building contract
The parties to a building contract are, on the one hand, the person who wishes to
have a building built for himself and who employs a builder to do so, and who is
generally referred to in building contracts as the employer, and, on the other hand,
the builder who carries out the work and who is generally referred to as the
contractor.
Architects, project managers, principal agents, quantity surveyors, engineering
consultants, etc. are not parties to a contract in that they do not acquire legal rights
or obligations, but they are nevertheless charged with many duties as agents of the
employer and so it will be essential to include them in a discussion on the role-
players to a contract.
In a subcontract, of course, the contractor who engages the subcontractor to
carry out work on his behalf, becomes an employer, although he continues in
building subcontracts to be referred to as the contractor. The other party is the
subcontractor.

3.1 The employer

Employers, [1] may be divided into two categories: those who erect buildings for their
own ownership and use, whether they intend to inhabit and use the buildings
themselves or let them to others, and those whose intention is to sell the buildings

Page 29

as soon as they can, possibly even during the construction phase, so that they can
recoup their capital, with a profit, and embark on further building projects. This latter
type of employer is generally referred to as a property developer.
Employers may also be divided into those who build infrequently to satisfy their
need and who may have little or no previous experience of building and who require
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the services of architects, quantity surveyors and other consultants to attend to all
the technical and legal aspects of the undertaking, and those who are thoroughly
familiar with the process, who have built many times before, and who may even be
wholly in the business of arranging for the erection of buildings. Their business may
be to erect buildings to sell at a profit, part of the profit being devoted to financing
further building projects, or they may be part of organisations that require a large
number of buildings. The State and para-statal organisations and mining houses are
good examples of this latter group. Building contractors who set about the business
of erecting buildings and selling them at the earliest opportunity in order to ensure a

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
steady turnover of profitable building work, are examples of the first category.
The need that these different types of employer have for the professional services
of architects, quantity surveyors and other consultants varies very considerably. On
the one hand there is the prospective home owner who needs advice and assistance
every inch of the way through a project which is seldom technically complex, while
on the other hand, there is the employer who is thoroughly familiar with all aspects of
the undertaking and who may have within his own organisation architects and other
specialists to carry out the work for him, or who may engage independent
consultants appointed for specific projects.
Most of the major employers with large ongoing building programmes are
members of the South African Property Owners’ Association (SAPOA) which was
formed to co-ordinate their views and to provide a representative body for
negotiating with other representative bodies in the building industry. Its views have
exercised a considerable influence on the JBCC contracts.

3.2 The building contractor

A building contractor usually undertakes to build the entire project, moving onto a
vacant site at the inception of the contract and, at its completion, delivers a building
that is complete in all respects and ready for occupation and use by the employer.
The building industry is traditionally divided into a number of crafts or trades:
bricklaying, carpentry, plumbing, plastering and painting are typical examples. A
master builder is one who employs workmen from the various trades to carry out the
various parts of building projects.
In medieval times tradesmen would belong to guilds which acted in many ways as
prototype trade unions regulating the manner in which work was done, hours of

Page 30

employment, wages, and so on. The guilds also exercised strict control over those
entering the trades, and prospective tradesmen were required to serve a period of
Copyright © 2019. Juta & Company, Limited. All rights reserved.

apprenticeship before being admitted to membership of the guild. A form of

apprenticeship survives to this day although the guilds have long since disappeared.
Apprentices, having completed their period of training, undertake trade tests and
those who pass are considered to be qualified tradesmen or journeymen. A
journeyman was one who would journey from place to place, working wherever he
could find work and then moving on. Even today, building contractors recruit much of
the skilled labour they require at the beginning of a contract and discharge the men
when the work is done, retaining only a small nucleus of permanent employees. This
policy of hiring and firing artisans for each project tends to make the building industry
a very unstable employer.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
In certain trades, notably electrical and plumbing, tradesmen have to be
registered before they can carry out work. This is principally because their
installations are connected to those of local authorities or public utility companies
and some form of control is therefore necessary. But a building contractor,
particularly a small builder working in the private sector, needs no specific
qualification, nor registration, [2] in order to commence business and start building.
Many building contractors are members of their local Master Builders’ Association,
but membership of such associations is no particular guarantee of competence or
integrity. Master Builders’ Associations serve primarily to protect their members’
interests and only incidentally to serve the public’s interest. Master Builders’
Associations are co-ordinated by Master Builders South Africa (MBSA—formerly the
Building Industries Federation South Africa (BIFSA)) which is a powerful
representative body which negotiates strongly on behalf of its constituent members.
At one time building contractors employed most, if not all, of the tradesmen that
might be required for any particular project. With the growing complexity of building
techniques and installations, however, there has been very rapid growth of the
subcontracting industry and there are now numerous subcontractors specialising in
various aspects of building construction and installations. Indeed, there are many
building contracts in which all of the work is handled by subcontractors and the
general contractor’s role is limited to the co-ordination of such subcontractors.

Page 31

3.3 The architect and principal agent

An architect is a person who designs buildings and administers the erection thereof.
He is both advisor to, and agent of, his client.
The architect is an independent professional who is not in any way involved in
contracting for the erection of buildings, and his allegiance is solely to his client. This
is the position not only in this country, but also in England, all the Commonwealth
countries and in America. In contrast, however, in many of the European countries
there is no sharp distinction between the architect and the building contractor and
Copyright © 2019. Juta & Company, Limited. All rights reserved.

both functions are frequently found in the same professional or firm.

It is within the last few hundred years that the architect has emerged as an
independent professional. In medieval times, and up to the eighteenth century, the
architect was often also a builder, carpenter or stone mason, and very much involved
in the execution of the projects he designed. He acquired full professional status at
approximately the same time as the establishment of formal training schools for
architects which replaced the apprenticeship system that had previously prevailed.
The architectural profession in South Africa is governed by the Architectural
Profession Act 44 of 2000, which requires practising architects to be registered with

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
the South African Council for the Architectural Profession (SACAP) and provides
four categories of registration: Professional Architect, Professional Senior
Architectural Technologist, Professional Architectural Technologist and Professional
Architectural Draughtsperson. Further categories of registration include: Candidate
Architect, Candidate Senior Architectural Technologist, Candidate Architectural
Technologist and Candidate Architectural Draughtsperson. No-one who is not so
registered may perform the duties of an architect nor hold himself out to be an
architect, [3] unless he is so registered. [4] In terms of the aforementioned Act, the
SACAP is required to identify the extent of architectural work that the different
categories of registered persons may undertake, but to date, this ID of Work has not
yet been completed.
Many registered architects are also members of the South African Institute of
Architects (SAIA), and/or members of South African Institute of Architectural

Page 32

Technologists NPC (SAIAT) which is a voluntary learned society which, among other
things, advances the art, science and practice of architecture and represents its
members as a profession. As a negotiating body it co-operated with other interested
bodies in drafting the JBCC building contracts as a constituent member of the JBCC.
When providing a standard service (full service) the architect is the architect
(consultant), principal consultant, and principal agent of the prospective building
owner and in many projects provides all the services which the client may need in
order to have the building designed and built. On larger projects, where the services
of a quantity surveyor, structural engineer and other specialist consultants may be
needed, he acts as coordinator or leader of the professional team (principal
consultant) to ensure that these services are all satisfactorily integrated. Where such
other specialists are necessary, [5] they are normally engaged by the employer on the
advice of the architect, but occasionally they are engaged by the architect himself,
who then offers his client a composite professional service. In the latter case, the
architect would need to contract with such other consultants in a very carefully
Copyright © 2019. Juta & Company, Limited. All rights reserved.

constructed manner so as not to compromise his professional indemnity insurance

cover.
Professional consultants, be they the architect, quantity surveyor, structural
engineer, electrical or mechanical engineers, wet services consultant, fire consultant,
health and safety consultant or project manager, are required under the various Acts
which govern their professions, to enter into professional service agreements with
their clients to define the scope of work, scope of service, professional fees, limit of
liability, professional indemnity insurance and dispute resolution. The Professional
Consultants Services Agreement Committee (PROCSA) has developed a suite of
Client/Consultant Professional Services Agreements to regulate client/professional

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
consultant’s appointments.
While it is generally said that an architect is the agent of his client, it is probably
more correct to say that, up to the time that the building contract is let, he acts as
advisor rather than as agent. He advises his client on the most suitable design of
building for his requirements, including the most appropriate form of construction and
materials and the most suitable electrical, mechanical and wet service installations.
He is required to be familiar with, or at least to inform himself about, all the
statutory and other legal requirements or limitations on the design of his client’s
building and to ensure that his design complies with them. Plans for buildings that
are intended to be erected are required to be submitted to the relevant local authority
for approval in terms of town planning regulations and the National

Page 33

Building Regulations (NBR), and if approval is refused because the design does not
comply with any particular statutory or other legal requirement, he is obliged to
amend his drawings to the extent necessary to ensure such compliance at no
additional fee. If his design is such that it cannot be brought into compliance with
such requirements, he would not be entitled to any professional fee on the grounds
that he has failed to comply with an implied, or even express, term of his mandate
that the design should comply with all such requirements.
Likewise, he would not be entitled to any fee if, when tenders have been received,
it were found that the building could not be erected for the amount stipulated by the
client or for the amount for which the architect estimated it could be built. [6] In the
absence of any contrary agreement, a margin of error of 10% is generally
considered permissible.
In nearly all building contracts, and where so appointed, the architect acts as his
client’s agent in the administration of the contract and is referred to in the JBCC
building contracts as the ‘principal agent’.
The JBCC building contract places a large number of duties, responsibilities and
Copyright © 2019. Juta & Company, Limited. All rights reserved.

obligations on the principal agent, [7] and in discharging these, and in inspecting work
being performed under the contract, he acts as his client’s agent. His power under
the contract to instruct the contractor to undertake additional work has the effect of
committing his client to additional expenditure. It is unlikely that his client would give
him carte blanche to incur unlimited additional expenditure; the extent to which he
would be free to order extra work without first obtaining his client’s consent would be
a matter for agreement between himself and his client. [8]
Even when he is exercising a function involving a personal judgment, such as the
issue of a certificate of final completion, it has been held that he is the agent of his
client. [9]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
An agent is generally liable to his principal for any loss or damage which the
principal may sustain due to the negligence of his agent, and an architect who is

Page 34

careless or inattentive to any aspect of his professional duties and who thereby
causes financial loss to his client may be called upon to make good this loss. [10] But
such liability is not absolute; an architect is not expected to be omniscient, and he
will not be held liable for the consequences of an eventuality that the average
conscientious architect would not have foreseen.
It is in the discharge of the duty of inspecting the work in progress and satisfying
himself that it complies with the terms of the agreement, that the architect/principal
agent is at greatest risk. He is not expected to carry out continuous supervision, and
any defect in the work which he does not detect is nevertheless the liability of the
contractor rather than his; his inspections are for the benefit of the employer, not the
contractor, and do not relieve the latter of any of his contractual obligations. [11] But if
the architect/principal agent certifies that work is complete and is to be paid for when
it contains defects which he could have and ought to have seen, he might himself
face a claim for damages from a client who believes that he engaged an
architect/principal agent to avoid this sort of problem arising. [12]
Most architects/principal agents carry professional indemnity insurance not only to
cover any claims that may be successful against them, but also to meet the cost of
defending themselves against such claims. While such insurance is expensive, it is
generally considered to be an essential safeguard. [13]
Architects operate under a strict code of professional conduct prescribed by
regulation in terms of the Architectural Profession Act 44 of 2000. At one time this
code prohibited architects from charging fees less than a prescribed minimum, from
touting for work or advertising their services. These rules have been somewhat
relaxed and architects are now permitted to negotiate their fees, advertise their
services, provided they do so in a manner that is factual and not self-praising, and
they may solicit work from prospective clients.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 35

It must be noted that there is currently no prescribed qualification for persons

undertaking the role of principal agent who is described in the PBA definitions as ‘the
entity [CD] appointed by the employer with full authority and obligation to act in terms
of this agreement’. The principal agent’s role is normally undertaken by an architect,
quantity surveyor, engineer or project manager and it would be foolhardy of an
employer to appoint an inexperienced person to carry out this role.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
3.4 The quantity surveyor
The quantity surveyor arrived on the scene as an independent professional only
within the last century. He is a person who calculates the quantity of labour and
materials that are required to erect the building and compiles this information in a
document known as bills of quantities, which is used by tenderers as a basis for
estimating the cost of the project and formulating their tenders.
Formerly, contractors when tendering used to make their own rough calculations
of the quantities of material and labour they would require. [14] These estimates
tended to be somewhat inaccurate, and as they were prepared by each tenderer,
there was much duplication of work. This led to the emergence of the independent
surveyor who would be engaged jointly by all the builders tendering on the project to
estimate quantities for them; and his fee would usually be paid by the successful
tenderer.
Employers were not slow to perceive the advantages of employing this expert for
themselves; they were, in any event, already paying his fee as part of the contract
price. As their agent, he was therefore available for services other than merely the
preparation of bills of quantities; he could prepare preliminary estimates of cost, he
could advise on the value of interim payment certificates and he could evaluate
claims for extras and determine the proper value of the final account.
The acceptance of the quantity surveyor as a professional consultant had the
consequence that formal courses in quantity surveying were instituted at the
universities in place of the former apprenticeship system, and quantity surveyors
received an academic training leading to a degree.
In recent years the quantity surveyor’s professional services have extended far
beyond the mere preparation of bills of quantities for tendering. He has become
expert in the field of property economics and will be able to advise a client not only
upon the likely initial cost of the proposed project but also on its future running and
maintenance costs and, where relevant, the income it may be expected to generate
by way of rentals, and can therefore advise on the relative viability of alternative
proposals. During the preparation of technical documentation he can advise the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

architect of the financial consequences of alternative

Page 36

choices of architectural design, methods of construction, choice of materials and

types of mechanical and electrical installations. During the course of the contract, he
can predict the employer’s cash flow in respect of monthly payments to the
contractor, and keep the employer continuously informed on variations to the
contract price caused either by cost fluctuations or changes to the design or
specification. Finally, his specialised knowledge of contract procedure and building

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
law enables him to offer valuable advice on the resolution of contractual disputes.
Impressed with this wide range of managerial skills, some clients are now appointing
quantity surveyors as their principal agents, or project managers, to whom the other
members of the professional team, including the architect, are required to report and
who is charged with the obligation to ensure that the project is built on time and
within budget.
The quantity surveyor is the client’s mandatory and acts as his consultant, but is
not his agent in the sense that he has no power to create contractual obligations that
bind his client. [15] Like the architect, he may be liable to his client for any damages
occasioned by his negligence in the course of his professional duties. But the nature
of his duties exposes him to a far lesser degree of risk than the architect’s.
The profession of quantity surveying is governed by the South African Council for
the Quantity Surveying Profession (SACQSP), a statutory body established in terms
of the Quantity Surveying Profession Act 49 of 2000, which supervises the education
of quantity surveyors, administers their registration and deals with infringements of
the rules of professional conduct. Quantity surveyors are required to register in
various categories as Professional Quantity Surveyor, Candidate Quantity Surveyor
or specified categories as prescribed by the Council. The Association of South
African Quantity Surveyors (ASAQS), of which many quantity surveyors are
members, is a voluntary organisation which deals with aspects of the practice of
quantity surveying, has published a number of documents for use in connection with
building contracts, and collaborated in the production of the JBCC agreements as a
constituent member of the JBCC.

3.5 Engineering consultants

The structural design of contemporary buildings, and the design of their mechanical,
electrical, fire protection and wet services installations, has become so sophisticated
and complex that it is beyond the technical knowledge and expertise of architects,
and is therefore undertaken by engineers trained and experienced in this type of
work. Indeed, even if they possessed these skills, architects would be precluded
from performing this type of work by the NBRs and
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 37

the OHS Act, which require that the design for such work is to be undertaken by
registered engineers.
The Engineering Council of South Africa (ECSA) was established in terms of the
Engineering Profession Act 46 of 2000 which requires practising engineers to be
registered and provides four categories of registration: Professional Engineer,
Professional Engineering Technologist, Professional Certificated Engineer and

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Professional Engineering Technician. The Act further makes provision for the
registration of Candidate Engineer, Candidate Engineering Technologist, Candidate
Certificated Engineer, Candidate Engineering Technician or other specified
categories prescribed by the Council. The work that may be performed by these
different categories of registered engineers is defined and no-one who is not so
registered may perform such work.
While the NBRs require that a structural engineer supervises the execution of the
work he has designed, and ensures that it complies with his design and all
applicable aspects of the Regulations and Codes of Practice, the JBCC agreements
give him no authority to issue instructions to perform any additional work, vary the
work, or rectify defective work, [16] unless that authority has been delegated to him by
the principal agent. Moreover, although the NBR require the engineer to approve the
work executed under his direction, such approval has no contractual validity under
the JBCC agreements unless confirmed by the principal agent, who issues the
certificate of final completion that certifies that the contractor has complied with his
contractual obligations in all respects.
Like the other members of the professional team, the engineer is normally
engaged by the employer of the building, [17] and is liable to his client for any
negligence in the execution of his professional duties.
The South African Association of Consulting Engineers (SAACE), now known as
ECSA, a voluntary body, is a constituent member of the JBCC and collaborated in
the production of the JBCC agreements.

3.6 The project manager

Traditionally, the architect managed the building project and controlled all aspects of
its design and construction as the principal consultant and principal agent and in the
vast majority of building projects today he still does so.

Page 38

But in recent decades the size and complexity of building projects has greatly
Copyright © 2019. Juta & Company, Limited. All rights reserved.

increased and extends beyond the capability of the average architect to manage,
and a new professional, the project manager (principal consultant and principal
agent), has made his appearance on the scene. The project manager originated in
undertakings involving numerous highly specialised professional disciplines and
activities in complex projects such as nuclear power stations, chemical processing
plants, etc., where there is a need for someone to co-ordinate these disciplines in
order to bring the various elements together and to facilitate the timeous and
harmonious completion of the project.
One of the essential attributes of a project manager in such circumstances is the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
ability to integrate and programme the various disparate activities. Thus a project
manager performs functions that usually are additional to the normal functions of the
architect, quantity surveyor and the other consultants, although he sometimes
performs some of their functions.
The ability of project managers to programme such complex projects, and to
monitor progress to ensure that the requirements of the program are not exceeded,
was quickly recognised by property developers who, wishing to complete large, if not
complicated, commercial projects in the shortest possible time and within budget,
were not slow in enlisting their services. Today, project managers are often
appointed on such projects where their prime responsibility is to facilitate the
achievement of the programme and the budget.
In so doing the project manager often becomes the principal agent in the building
contract, with the responsibility for the contract administration duties that would
otherwise devolve upon the architect.
The Project and Construction Management Professions Act 48 of 2000 requires
construction project managers to register with the South African Council for the
Project and Construction Management Professions (SACPCMP) which prescribes
the nature of work that may only be performed by persons so registered (PrPCM).
There appears to be an overlap between such work and the project management
aspect of the work which has traditionally been done by professional architects,
quantity surveyors and engineers in respect of projects for which they have been
appointed as principal agents, and while this is in the process of being finally
resolved, it is unlikely that it is intended to restrict such professionals from continuing
to perform the basic aspects of such work.
The roles of the various professional consultants have been co-ordinated by the
PROCSA Committee.

3.7 The occupational health and safety consultant

Since the publication of edition 2 of The Building Contract, a new professional
consultant has come into being as a result of the Occupational Health and Safety
Copyright © 2019. Juta & Company, Limited. All rights reserved.

(OHS) Act 85 of 1993, which requires the employer to bring about and maintain,

Page 39

as far as reasonably practicable, a work environment that is safe and without risk to
the health of the workers. To ensure that the terms of the Act and the Construction
Regulations are carried out in relation to construction projects, a health and safety
consultant is to be appointed by the employer at an early stage of a project. The
PROCSA Committee, which has prepared the various agreements for the
appointment of professional consultants by the client, has recently published an

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
agreement for use when appointing the health and safety consultant. This
agreement, besides setting out the terms and conditions, establishes the scope of
service to be performed by this consultant. The role and duties of an OHS officer
were first outlined in the OHS Act (85 of 1993) and its attendant regulations. The
most recent of these regulations are the Construction Regulations of 2014. While the
1993 OHS Act was focused more on mines and on work within factories than on
construction sites, it did force employers to consider health and safety in all
workplaces. The 2014 Construction Regulations represent the next step in
employers taking responsibility for the working conditions of their employees. The
2014 Regulations have the effect of forcing health and safety considerations to be
taken on board at every stage of the project, from design to finish. Regulations 3 and
4 require the Department of Labour to be notified of any substantial work before that
work begins, while regulations 5 and 6 now place new duties on the client and
designer to include health and safety considerations in the design phase of the
project.
The OHS officer’s duties are many and varied, and while on a smaller site the job
could be done by one employee, on larger sites the duties will have to be divided
amongst several employees. Generally, the tasks can be split into three distinct
categories: Risk Assessment (CR 2014, reg 9(1)), Training (CR 2014, reg 9(3)) and
organising/consolidating of paperwork (CR 2014, reg 7(1)).
The risk assessment’s purpose is to identify all hazards and dangers on site and
to quantify them in order to attempt to eliminate or minimise those risks. The training
involves the communication of these hazards to any person who may face them, as
well as communication of proper, safe ways to perform their work. The organising
component includes the assembly of all OHS related documentation (for contractors
and subcontractors) and ensuring that every person on the site is:
a) capable of doing the work for which they are employed (legally) and;
b) medically healthy enough to perform the work (CR2014 reg 7(1)(g)).
The table below displays the OHS officer’s possible contributions at various stages
in the project:
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 40

Stage of Project OHS Officer Roles

Design • Input as to the changing hazards of the construction process as the
contemplated project develops, with a view to including the extra costs in the
contract and ‘designing out’ as many risks as possible
Pre-Construction • Developing a Safety Specification, a Safety Plan and performing a
Baseline Risk Assessment for the project
• Ensuring all contractors and subcontractors comply with the project’s
health and safety specifications and training requirements before they are
allowed onto the site, as well as ensuring that a comprehensive Safety File is
kept on site for all contractors and subcontractors
Construction • Scheduled visits and audits to ascertain compliance levels on site

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
• Assistance in rectifying any deficiencies in the project’s health and safety
performance
• Assistance in the investigation of any accidents or incidents on site
Completion • Handing over all health and safety documentation to the client

As well as these duties, s 24 of the OHS Act details the incidents that must be
reported to the Chief Inspector at the Department of Labour, and can open any
negligent party to criminal and civil liability. These incidents must be investigated,
and the OHS officer should form a part of that team.

[1] Although sometimes referred to as the ‘owner’, ‘building owner’ or ‘client’, the party who contracts with the
builder is most frequently referred to as the ‘employer’. It must be understood, however, that the employer’s
relationship with the builder is not the conventional master/servant relationship of the conventional employer to
his employees. He cannot dictate to the builder the hours he must work nor the manner and order in which he
should carry out his work, nor is he vicariously liable for acts of the builder in carrying out his work, as would be
the case with a conventional employee.
[2] Except in the case of building contractors who contract to build houses for the general public, who are
required by the Housing Consumers Protection Measures Act 95 of 1998 to register as home builders with the
National Home Builders Registration Council. Contractors who contract in the Public Sector are required to
register in terms of the Construction Industry Development Board Act 38 of 2000.
[3] The Architects’ Act 35 of 1970 and the preceding Architects and Quantity Surveyors (Private) Act 18 of
1927 explicitly prohibited anyone who was not registered as an architect in terms of the Act from using the title
‘architect’. No such explicit prohibition appears in the current Act, which does not refer to an ‘architect’, but it is
likely that any unregistered person who styled himself as architect would be held to be in contravention of s
26(3) of the Act. Conversely, it would appear that any person registered in any of the categories mentioned
above would be entitled to use the title ‘architect’.
[4] Sections 18(2) and 26(3) of the Act.
[5] Not only do architects lack the specialised training to enable them to perform quantity surveying,
structural engineering design and the design of specialised installations, they are prohibited by legislation from
doing so unless appropriately qualified and registered in the disciplines concerned.
[6] Nicolaides v Skordis 1973 (2) SA 730 (N), Du Plessis v Strydom 1985 (2) 142 (T), Wilkens Nel Argitekte v
Stephenson 1987 (2) SA 628 (O).
[7] Traditionally the architect was the employer’s principal agent under the building contract and was referred
to in the agreement as the architect. This is not automatically the case under the JBCC PBA and MWA, which
instead uses the term ‘principal agent’, but it will probably nevertheless be so in the vast majority of cases.
[8] If the architect/principal agent instructs the contractor to perform additional work beyond the limit of the
authority given him by the employer, the employer cannot refuse to pay the contractor for having carried it out.
The contractor is entitled to believe that a principal agent, when issuing a contract instruction for extra work,
has due authority to do so.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[9] Hoffman v Meyer 1956 (2) SA 752 (C), Sutcliffe v Thackrah [1974] AC 727; 4 BLR 16. The client may not
attempt to influence his judgment, and such conduct is specifically prohibited by clause 6.6 of the JBCC PBA
and NSSA.
[10] Van Wyk v Lewis 1924 AD 438, Randaree and Others NNO v W H Dixon and Associates and Another
1983 (2) SA 1 (A).
[11] Strijdom Park Extension 6 (Pty) Ltd v Abcon (Pty) Ltd 1998 (4) SA 844 (SCA).
[12] In Van Immerzeel and Pohl and Cocciante Construction v Samancor Ltd 2001 (2) SA 90 (SCA); [2001] 2
All SA 235 (A) the court found the defendant consulting engineers jointly liable with the defendant contractor
for defects in a pipeline. The contractor’s liability arose from a breach of a contractual obligation to install the
pipeline without defects and the engineers’ liability arose from a breach of a contractual obligation to inspect
the works with due care and diligence and to refrain from certifying defective work as complete. The lesson to
be learnt from this significant judgment is as important for architects as it is for engineers.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
[13] An architect who practises is required to inform his client in writing of the details of his professional
indemnity insurance in terms of Rule 4.1.7 of the Code of Professional Conduct as per Board Notice 154 of
2009 promulgated in terms of the Architectural Profession Act 44 of 2000.
[14] They still do in tendering for lump-sum contracts without bills of quantities.
[15] Consequently, the use of the term ‘agent’ in the JBCC agreements to describe the quantity surveyor, or
the engineer for that matter, is strictly speaking a misnomer.
[16] Unless he has been designated this authority by the principal agent in terms of clause 6.2 of the JBCC
PBA.
[17] The Housing Consumers Protection Measures Act 95 of 1998 requires the contractor building a house to
appoint a ‘responsible person’ who shall be registered in terms of the Engineering Profession Act 46 of 2000 to
design, supervise and be responsible for the structural aspects of the house. Generally, however, where an
architect has been engaged by the employer to design the house, he will also have engaged an engineer to
design the structural aspects before a contractor is engaged.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Chapter 4
The JBCC building agreements
4.1 Short historical review
The business of building contracting as we know it today, in which the building
contractor undertakes to supply all the labour and materials and be responsible for
erecting and completing the entire building, is a comparatively modern phenomenon.
Up until a couple of centuries ago, the owner, who wished to have a building erected,
would himself engage various workmen and purchase the necessary materials, often
with a building surveyor to oversee the work, who hired the labour and bought the
materials on his behalf, and supervised the work and certified payments. Work
proceeded at a fairly slow and leisurely tempo. All the risks of delays, loss or
damage to the works, structural failure and so on, were borne by the owner.
The latter half of the eighteenth century saw the emergence of speculative
builders who bought up tracts of undeveloped land in and around London and other
major English cities and built speculative housing on an unprecedented scale.
Having developed the organisational structure to carry such projects for themselves,
it was a small and logical step to offer such services to others. The emergence of the
building contractor gave rise to the need of a building agreement to regulate his
contractual relationship with his employer. Initially the agreement was drawn up by
the building surveyor or architect, and tended to be heavily biased towards the
employer’s interests. Various organisations started to draw up standard form building
agreements that were intended to be more even-handed and to set a standard, and
these were largely replaced by one issued by the Royal Institute of British
Architects [1] in 1909.
Architects practising in South Africa in the early years of the twentieth century had
for the most part received their training in England, and had brought the RIBA
building agreement with them. It became widely used, particularly in the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 42

Cape, where the Cape Institute of Architects took over the printing of the document
for local use. For reasons that are not apparent, it was printed on blue paper, and
hence was popularly referred to as the ‘blue form’.
This building agreement was issued in one version only. While one of the clauses
referred to the Bills of Quantities, it was provided that this should be regarded as non
scripto where the contract was ‘lump-sum’. [2] At this time the quantity surveyor had
not yet fully emerged as an independent professional consultant. A clause required
the contractor to allow in his tender a provisional sum for the quantity surveyor’s

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
fees, and these were included in the first payment certificate for payment by the
contractor to the quantity surveyor. [3]
In 1931 the RIBA published a substantially amended edition of its agreement, and
this formed the basis for a building agreement prepared jointly by the Institute of
South African Architects, [4] and the National Federation of Building Trade
Employers, [5] entitled ‘Agreement and Schedule of Conditions of Building Contract’.
This cumbersome name required a nickname. As the ‘with quantities’ version was
printed on white paper and the ‘without quantities’ on blue, the two versions became
known as the ‘white form’ and the ‘blue form’ respectively.
This agreement was amended from time to time as the building industry
developed and became more sophisticated, and a permanent review committee was
appointed for this purpose, known as the Joint Study Committee, constituted of
representatives of the Institute of Architects, the Chapter of Quantity Surveyors and
BIFSA. The last amendment of this agreement was published in 1981; shortly
thereafter the Joint Study Committee, rent asunder by internal dissent, was
dissolved.
It became apparent that not only was a new organisation needed to carry on the
work of revising the contract, but that a radical redraft of the agreement was
necessary; the old form had been patched on an ad hoc basis, but this patching
could not cure some deep-seated problems.

Page 43

In 1984 a new committee was established, the Joint Building Contracts

Committee, or JBCC for short, which was far more representative of the construction
industry. [6] It began at once on the task of drafting a new agreement. [7] The process
was slow, as it was the committee’s cardinal principle that all decisions were to be
made by consensus, but by 1991 it had completed its work, and had published the
first edition of the JBCC PBA, [8] and associated documents. [9]
Not only was the Agreement well received by the private sector, but the
Department of Public Works, which had its own forms of agreement, started to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

display a guarded interest in the JBCC agreements, perceiving the advantages of a

single suite of building agreements that could be used in both the private and public
sectors. However, there were aspects of the JBCC agreements that were
inconsistent with State policy, and in particular, with the requirements of the State
Treasury. If these could be brought into line with the State’s requirements and policy,
the chances of the Agreement being used by the State would be greatly improved.
This led to an intensive re-examination and re-drafting of the documents, and in
1998 the new documents, designated JBCC Series 2000, were published. These
replaced all the documents published in 1991.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
However, acceptance by the State was slow in coming, and further editions were
published in July 2000, January 2003 and March 2004 to bring the agreements more
closely into line with the State’s requirements.
At the same time the documents were ‘internationalised’ in order to enable the
documents to be used in other countries, particularly the neighbouring states. Terms
and references that were peculiarly South African were replaced with terms and
references that have equal validity elsewhere. [10]

Page 44

The Central Government’s Department of Public Works has now taken a policy
decision to use the JBCC agreements on all future work for the State, and the
departments of public works of the various provinces and municipalities may be
expected to fall into line. However, it must be admitted that, to date, there has been
little adoption of the agreements by neighbouring states which for the most part
continue to use forms of agreement based on the old ‘white form’.
At the insistence of the Construction Industry Development Board (CIDB) to bring
the PBA in line with international best practice and in consultation with
representatives of the National Department of Public Works (NDPW), the PBA was
revised in 2007 to firstly, replace the ‘schedule’ with contract data EC and contract
data CE; secondly to incorporate as many of the Preliminaries items as possible in
the PBA, thus eliminating the need for a separate Preliminaries document; and
thirdly, to remove the State clauses from the document altogether. By agreement
with the NDPW, the State would produce its own contract data (CD) containing the
State conditions.

4.2 The JBCC Series 2000 suite of documents

The JBCC Series 2000 is a suite of documents that comprise the PBA and the MWA,
which define the legal rights and obligations of the employer and the contractor, the
NSSA, which regulates the relationship between the contractor and a nominated or
selected subcontractor, and a variety of ancillary documents which facilitate the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

administration of the contract. Each of these agreements have contract data

addendums to be populated by the principal agent prior to calling for tenders to be
completed and returned by the tenderer with his tender compilation. The JBCC
supporting documents and forms are listed under 4.2.6 on page 49.
These documents are intended to be used in conjunction with each other. On no
account should they be used in conjunction with any of the previous generation of
JBCC documents because the various provisions will be mismatched and
ambiguities and confusion will ensue.
4.2.1 The Principal Building Agreement (PBA)

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
The first edition of the PBA was offered in two alternative versions; a ‘with quantities’
document and a ‘without quantities’ document. Later editions, by dint of careful
editing, managed to embody the two alternatives in a single document, which may
be used for all contracts, whether with bills of quantities or without.
The document records the terms of the agreement between the employer and the
contractor, in which the employer is represented by a principal agent, on whom

Page 45

nearly all of the employer’s rights and obligations devolve. [11] Other agents [12] may
be appointed to whom some of the principal agent’s duties may be delegated.
The document commences with a comprehensive list of definitions. In the text of
the document, certain words are printed in bold typeface, and in such cases the
words bear the particular meaning assigned to them by definition. Where they are
printed in normal typeface, they have the normal dictionary meaning consistent with
the context. Some words appear both in bold and normal typeface; the word ‘interest’
in clause 25 is a case in point. Where it appears in bold, it means the rate of interest
which is applicable from time to time to registered banks when borrowing money
from the Central or Reserve Bank. [13] Where it appears in normal type, it means
‘money paid for the use of money lent’, [14] and the rate of interest is then stated.
Periods of time are generally counted in days, and these may be either calendar
days or working days. A calendar day would be any day of the year and would start
and end at midnight. Working days are defined as calendar days excluding
Saturdays, Sundays, proclaimed public holidays and recorded contractor’s annual
holiday periods.
The annual contractor’s holiday, which usually falls over the Christmas period, is
traditional and at one time was governed by legislation and was therefore uniform
throughout the country. That is no longer the case, and for this reason is to be
recorded in the contract data. If the construction period is particularly long, it is
possible that a second annual contractor’s holiday would occur, and it would be
logical to presume that the starting and ending dates of this would be proximate to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

those of the first contractor’s holiday. These dates may assume particular
importance when revising the date for practical completion in terms of clause 23. A
contractor may, if he wishes, elect not to take the annual contractor’s holiday.
Clause 1.2.1 stipulates that, unless inconsistent with the context, the words
‘accept, allow, appoint, approve, authorise, certify, decide, demand, designate, grant,
inform, instruct, issue, list, notice, notify, object, record, reduce, refuse, request,
state and their derivatives require such acts to be in writing’. The implication of this is
that instructions given for additional work to be done, for example, or notices that
may be required to be given, or requests that might be

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Page 46

made, must be given or made in writing if they are to have legal consequences; if
they are made orally they may be disregarded with impunity.
The document concludes with the agreement containing information relative to
the contracting parties and which is to be signed by the contracting parties and their
witnesses. The agreement, the completed contract data and the list of documents
identified in the contract data comprise the entire agreement between the parties.
The contract data (CD) which forms an integral part of the contract contains the
tender information to be completed by the principal agent informing the tenderers of
all of the information relevant to them when they price their tenders. The tenderer is
to complete and return the sections indicating the tender sum compilation and the
tenderer’s details which form his tender. The JBCC Form of Tender previously used
is now incorporated in the CD.
With the omission of works completion from Edition 6.2, greater emphasis is now
placed on the requirements for practical completion to enable tenderers to
understand what is required and to price accordingly. The criteria to achieve practical
completion is to be described in the contract data.
4.2.2 Minor Works Agreement (MWA)
JBCC recognised the need for a much simplified version of the building agreement,
particularly for use in smaller, less complex building projects which are intended to
be let to historically disadvantaged or emerging contractors who have little
knowledge or experience of contractual matters. The first edition was published in
1999, but it found little favour with the State as some of its provisions were contrary
to State policy, particularly in respect of financial issues. The third edition was
published in September 2005 and was extensively revised in close consultation with
State officials in the expectation that it would be widely used for small Organs of
State projects.
This document was replaced with the fourth edition in 2007.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

In keeping with the updating format of Edition 6.2 of the PBA, the JBCC has also
updated and revised the fifth edition of the MWA Edition 5.2 dated May 2018. It is
discussed in detail in section 3.
4.2.3 The Nominated/Selected Subcontract Agreement (NSSA)
This is the form of agreement to be entered into between the contractor and a
subcontractor who has been nominated or selected in terms of clause 14.0 or 15.0 of
the PBA as the case may be. [15] Whether the subcontractor is nominated or

Page 47

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
selected, the form of agreement with the principal contractor remains the same. The
difference between these types of subcontractor appears from clauses 14.0 and 15.0
of the PBA and is principally concerned with the placing of the risk of the
subcontractor’s malperformance.
The provisions of the NSSA are substantially the same as those in the PBA, with
the necessary changes made, and for ease of reference, corresponding clauses in
the two forms of agreement bear the same number; for example, the clause
concerning Works Risk is numbered 8.0 in both forms. [16] It sometimes happens that
a clause in one form has no counterpart in the other; for example, clause 18.0,
Interim Completion, in the NSSA, has no counterpart in the PBA, and in that
document is marked accordingly in order to maintain consistent numbering.
The format of the NSSA is identical to that of the PBA; it starts with a set of
definitions and concludes with the JBCC NSS Agreement and words that are printed
in bold typeface bear the meanings assigned to them by definition.
4.2.4 Preliminaries
The Preliminaries, formerly known as the ‘P and G’ or ‘Preliminary and General’, is
referred to in the first section of the bills of quantities (Bill no. 1) or the specification,
in which management requirements for the contract are set out. [17] This has always
provided an opportunity for the quantity surveyor, developer or the architect to
modify some of the standard contractual terms of the PBA, usually to the
disadvantage of the contractor. The unilateral amending of contractual terms in this
fashion became so prevalent that the JBCC, when drafting an earlier edition of its
contract documents, resolved to prepare a standard form of Preliminaries in an
attempt to eradicate this practice.
The provisions of this document were intended to be adopted by reference in the
bills of quantities, the clauses being referred to by their respective headings and
numbers in the preliminaries section of the bills of quantities, to enable the tenderer
to set a price against each item. Where a clause was not applicable in a particular
instance, this was indicated as was the choice between alternatives where so
provided.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The original Preliminaries document was withdrawn by the JBCC at the request of
the CIDB who required the Preliminaries clauses to be incorporated into the PBA.

Page 48

In practice, however, it was found that a number of Preliminary clauses still

needed to be listed apart from those contained in the PBA, which then resulted in the
preparation of a new Preliminaries document by the ASAQS. The publication of the
Preliminaries has now been taken over by the JBCC. This document is separately

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
identified and it is now referenced as the JBCC General Preliminaries Edition 6.2 for
use with the May 2018 edition of the JBCC agreements (PBA and NSSA Edition 6.2,
MWA Edition 5.2).
The ASAQS prepared and released a new Bill No. 1 (November/December 2014)
soon after the PBA Edition 6.1 was released and has now updated a new Bill no. 1
which will be incorporated into the bills of quantities containing the variables and any
matters which have a bearing on the specific agreement which will need to be priced
by tenderers.
When Lump Sum contract documents are being prepared, the author of such
documents, usually the architect, would be well advised to include a copy of the
JBCC General Preliminaries document in his specification which will form part of his
tender documents.
Where reference to Preliminaries is made in the text of this Edition 3 of Finsen’s
The Building Contract, specific clause reference numbers relate to the General
Preliminaries May 2018 document.
4.2.5 Guarantee for construction
The JBCC Guarantee for Construction form is a form of agreement between the
guarantor (the financial institution providing the guarantee) and the contractor whose
performance is being guaranteed, and it sets out the terms of the guarantee and the
manner in which it may be called up. It may be used either for the variable
construction guarantee [clause 11.1.2] or the fixed construction guarantee [clause
11.1.3]. The JBCC N/S Guarantee for Construction form as well as the MWA
Guarantee for Construction form is the corresponding form for use where a
nominated or selected subcontractor provides the contractor with a variable or fixed
construction guarantee or where such guarantee is required in a Minor Works
contract.
4.2.6 Other JBCC documents
The JBCC has published standard forms of Guarantee for Payment, both in respect
of the employer’s obligation to pay the contractor and the contractor’s obligation to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

pay the subcontractor. It has also published a variety of forms for use with the JBCC
Agreements, such as the:
• General Preliminaries
• Certificate of Site Possession (PBA and MWA)
• Guarantee for Construction (PBA)
• Guarantee for Payment

Page 49

• Waiver of Contractor’s Lien (PBA and MWA)

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
• Guarantee for Advance Payment (PBA and NSSA)
• Recovery Statement (PBA)
• Certificate for Payment (PBA)
• Certificate of Practical Completion (PBA)
• Certificate of Final Completion (PBA)
• NSSA Guarantee for Construction (NSSA Subcontract Agreement)
• NSSA Guarantee for Payment
• Subcontractor’s Payment Certificate Notification (PBA)
• Subcontractor’s Recovery Statement (NSSA Subcontract Agreement)
• Subcontractor’s Payment Advice (NSSA Subcontract Agreement)
• Certificate of Interim Completion (NSSA Subcontract Agreement)
• N/S Recovery Statement
• MWA Guarantee for Construction (variable)
• MWA Guarantee for Deposit (MWA)
• MWA Guarantee for Payment (MWA)
• Certificate for Payment (MWA)
• Recovery Statement (MWA)
• Payment Certificate Notification (PBA & NSSA)
• Payment Advice Statement (NSSA)
• Adjudication Rules.
The JBCC has not prepared a form of agreement for use between contractors and
their domestic subcontractors, [18] leaving it to contractors to regulate their
contractual relationships with their subcontractors in whatever manner suits them
best, [19] including the use of the MBSA form of contract for domestic subcontractors.
4.2.7 Use of JBCC Agreement in Organs of State (OoS) contracts (Public
Sector works)
The operations of the National Department of Public Works (NDPW) and other
Organs of State are governed by the Public Finance Management Act 1 of 1999
(PFMA) as amended from time to time, which required specific changes to the
private sector JBCC Agreements where these are used for OoS contracts.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Some of the specific changes to the JBCC Agreements are:

(a) the State is now prepared to allow the principal agent the degree of authority
conferred on him by the Agreements but requires to be consulted before the

Page 50

revision of the date for practical completion and the acceptance of the final
account is notified to the contractor.
The State does not:
(a) favour arbitration as a means of resolving disputes arising out of the contract

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
and insists that such disputes be determined by mediation, adjudication or
litigation
(b) insure its buildings which requires the contractor to insure new and existing
buildings in the joint names of the State entity and the contractor for the value
defined in the CD as a reimbursable cost to the project. The Public Investment
Corporation does insure its buildings—their insurance policy requires
notification of the insurer of the extent and value of new or alteration works
. . . . . naming the state as the beneficiary of claims paid by the insurer
(c) provide a guarantee for payment (conflicts with the PFMA)
(d) recognise nominated or selected subcontractors. The contract is between the
State as the employer and the contractor to produce the final product using his
own subcontractors as needed. By exception, in certain instances, nominated
subcontractors may be appointed but these would need to be described in the
CD at tender stage.
The Public Sector does:
(a) define the period for construction to commence from the date of possession of
the site stated in months, excluding non-working days, to determine the
intended date for practical completion
(b) now define the defects liability period to commence on the date of possession
of the site/works and to end 90 calendar days from the date of practical
completion
(c) now define the latent defects liability period to commence on the date of
possession of the site/works and to end five years from the date of final
completion
(d) pay default interest on late payments. This also applies where the contractor
owes the employer money or vice versa in terms of the Agreement
(e) now allow a period of 90 calendar days for the final account to be agreed
(f) follow the private sector provisions for termination of the Agreement
(g) accept mediation and adjudication as alternative dispute resolution
procedures in addition to litigation.
The public sector is bound by the PFMA to make payments within thirty (30)
Copyright © 2019. Juta & Company, Limited. All rights reserved.

calendar days.
The above State conditions necessitated the provision of substitute clauses in a
number of instances in Edition 4.1 of the JBCC PBA. These substitute clauses

Page 51

were omitted from Edition 5.0 of the JBCC PBA and have similarly been omitted from
this Edition 6.2 of the JBCC PBA.
4.2.8 The internationalisation of the JBCC Agreements

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
The JBCC Agreements were originally drawn up for use in South Africa. They
referred to South African legislation, [20] and certain South African institutions. [21] But
the process for which they are designed varies little from one country to another, and
there seemed to be no reason why, if they proved to be effective in one country, they
would be any less effective in another.
The success of the 1991 edition of the Agreements persuaded JBCC to venture
into the process of adapting the Agreements for use outside South Africa. The
Agreements have been carefully edited to remove reference to peculiarly South
African concepts, institutions and legislation and to replace them with appropriate
terminology that would be as valid outside South Africa as within it. For example,
while the earlier editions of the JBCC Agreements referred to ‘VAT’, from 2000
onwards the term had been replaced with ‘tax’ and which has now been defined in
clause 1.1 as ‘value-added tax or any other tax, duty or levy applicable by law’ in
order to suit places where sales tax has not yet been replaced by value-added tax.
The use of the JBCC Agreements in the neighbouring states is on the increase
and some of these states have, or are, considering preparing their own specific CD
suited to their specific circumstances which process has been encouraged by the
JBCC. Provision has been made in the CD for the law of the country and the
currency applicable to the agreement to be stated. While the penalty provision is
applicable to South Africa and Namibia, other countries normally provide for
damages to be levied for late completion and this item will need to be addressed
where applicable.
4.2.9 Errata
Edition 6.1 of the PBA published in March 2014 has been in use for some three
years since it was published and with use in the construction industry it was
inevitable that a number of errors, particularly in cross-referencing, became
apparent, which resulted in the JBCC publishing an Errata document which has now
been withdrawn as the errata have been corrected in the new Edition 6.2
documents.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[1] Commonly referred to as RIBA.

[2] Strictly speaking, the term ‘lump-sum’ refers to the whole genus of building contracts, entire contracts in
which the performance of each party is complete and indivisible, the employer’s obligation being to pay the
agreed price in a ‘lump-sum’ on completion of the works. Thus, whether the price tendered by the contractor
has been based on a set of drawings or on bills of quantities, the contract is a ‘lump-sum’ contract. However,
the somewhat confusing custom has arisen of referring to contracts where there are no bills of quantities as
‘lump-sum’ contracts, as distinct from ‘with quantities’ contracts in which bills of quantities are used.
[3] Although this clause disappeared from the building contract in the 1930s, the practice persisted until the
1950s.
[4] Now known as the South African Institute of Architects (SAIA). At that time it incorporated the Chapter of
South African Quantity Surveyors, now the Association of South African Quantity Surveyors (ASAQS).
[5] Now known as Master Builders South Africa (MBSA), and previously, the Building Industries Federation

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
South Africa (BIFSA).
[6] It comprised representatives of the ASAQS, BIFSA, SAACE, SAIA, SAPOA and SECC. The Department
of Public Works was invited to participate but declined to be a member of the Committee, although it sent an
observer.
[7] Although it was generally considered to be a ‘new’ agreement, most of the basic principles of the previous
contract were retained. The changes were in matters of detail and in language. The order of the clauses was
changed, and they were now presented in a logical sequence of events.
[8] This was published in two alternative forms: the Agreement ‘with quantities’ and the Agreement ‘without
quantities’.
[9] These comprised, inter alia, the Nominated/Selected Subcontract Agreement, the Preliminaries, the
Construction Guarantee, the Transfer of Ownership of Materials Stored Off Site form, the payment certificate,
and sundry other documents.
[10] For example, ‘VAT’ (Value-Added Tax) has been replaced with ‘tax’ which is then defined as ‘value-
added tax, sales tax or any other statutory tax, duty or levy applicable by law’.
[11] The employer retains the fundamental right to have the building built for himself, and the fundamental
obligation to pay for it. The principal agent acquires the right, inter alia, to order additional work, to extend time
for completion and to approve or reject work, and the obligation to certify completion and to certify payments
from time to time.
[12] Such as a quantity surveyor, a structural engineer, mechanical engineer, electrical engineer, wet
services engineer and fire protection engineer.
[13] As defined in clause 1.1.
[14] As defined in the Shorter Oxford English Dictionary.
[15] For a discussion on the difference between a nominated subcontractor and a selected subcontractor see
commentary in Section 2 at clause 14.
[16] It follows that in most instances, the comments that are made in this work concerning provisions in the
PBA are equally applicable, with the necessary changes made, to the NSSA, and separate references are
made to the NSSA only where the respective provisions differ.
[17] This may include specific information regarding the site and adjacent buildings, the temporary enclosure
of the site, the provision of water, electricity, temporary offices, storage sheds and sanitary facilities for the
duration of the construction period, the adjustment of the allowance for preliminaries in the contract sum,
insurances, etc.
[18] Sometimes referred to as ‘non-nominated subcontractors’.
[19] The JBCC PBA no longer makes reference to the contractual arrangements between a contractor and
his domestic subcontractor.
[20] For example, the Conventional Penalties Act 15 of 1962 and the Arbitration Act 42 of 1965.
[21] For example, the Central Bureau of Statistics and the Association of Arbitrators (Southern Africa).
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Chapter 5
The formation of the contract
5.1 Tender procedures
A building contract, like any form of contract, comes into existence when an offer is
accepted. Such offers are, in this context, referred to as tenders. Offers are generally
solicited by the employer or his principal agent on his behalf, and may be solicited
from one particular building contractor, or from a selected list of building contractors,
or from the entire building industry.
Where an employer, or his principal agent, approaches a single contractor to
submit a price, a process of negotiation usually commences, in which an offer from
the contractor is followed by a succession of counter-offers from one party to the
other until an offer emerges which is acceptable to both parties or the process is
abandoned. The principal disadvantage of the process is that it lacks the competitive
element that is the principal feature of the alternative processes, and consequently it
is little used. It is most commonly used where cost is less important than quality,
where it is desired to engage a building contractor who has particular expertise, as,
for example, where the contract is for restoration of an historic building.
By far the most popular way of securing tenders for a building project, at least in
the private sector, is for the employer or his principal agent to approach a short list of
six or eight building contractors who have been chosen because of their suitability
for the particular type of project and satisfactory past performance. To preserve the
competitive element and to avoid collusive tendering, care is usually taken to ensure
that tenderers are unaware of the identity of the other tenderers against whom they
are competing. This procedure may not always be possible especially in
circumstances where the attendance by tenderers at a pre-tender meeting or site
inspection is compulsory. While there is no implied undertaking by the employer to
accept the lowest tender, there is an implication that the employer has satisfied
himself that all of the contractors that have been invited to tender are of acceptable
Copyright © 2019. Juta & Company, Limited. All rights reserved.

competence. To reject a tender on the grounds that a tenderer was

Page 53

considered to lack competence would be an act of bad faith but in all probability
would not entitle the prejudiced tenderer to any legal redress.
When a project is put out to open tendering, it will often attract a large number of
tenders, and the wasted costs incurred by the unsuccessful tenderers will be
substantial. Because the chances of success are often statistically small, the
process is unattractive to well-established successful contractors who have difficulty

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
in competing against chancers who are desperate for work and who are tempted to
tender at unrealistically low prices. It is frequently difficult for the employer’s
professional advisers, tasked with evaluating tenders, to identify the chancer who
stands a poor chance of completing the contract to the required standard and to
persuade the employer that it would be in his interest to reject his tender in favour of
one submitted by a more reputable contractor at a less favourable price.
In major projects a tendering process is sometimes adopted that combines
features of both selective tendering and open tendering. The employer advertises his
intention of inviting tenders and requests interested contractors to submit their
names, together with relevant information regarding their capabilities, B-BBEE
ratings where applicable, current workload etc. for consideration. The responses are
carefully evaluated and a short list of suitable tenderers is drawn up to whom tender
documents will be furnished. This process is often referred to as ‘pre-qualification of
tenderers’.

5.2 Tender documents

The tender submitted by the contractor is his offer to erect and complete a building
for the employer to the employer’s stated requirements. In a design-and-build or
turnkey contract, the employer’s requirements would be a statement of his
accommodation requirements and the specific attributes of the intended building. But
in the more conventional situation, where the JBCC agreements would be used, the
employer’s architect would design the building and the contractor would tender to
erect the building in accordance with the design.
The architect’s design would be depicted in a series of drawings, often
supplemented with schedules and a specification conveying information that cannot
readily be shown on drawings. These drawings, schedules and specification would
be used by the contractor to build the building, and logically they should be supplied
to a tenderer for the purpose of preparing a tender.
In a building project of any consequence it is customary and advisable to engage
a quantity surveyor to prepare bills of quantities for the project, in which all materials,
Copyright © 2019. Juta & Company, Limited. All rights reserved.

labour, and anything else that should have a bearing on the cost of executing the
work, is measured and scheduled, so that an accurate estimate of the cost of the
building can be arrived at merely by pricing out and totalling all the

Page 54

various items in the bills. Thus, where bills of quantities have been produced, the
tenderer requires nothing further for the preparation of his tender. It would, however,
be advisable to issue a copy of the site plan and general layout drawings to
tenderers to illustrate the extent of the project on which they are tendering. Where

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
there are no bills of quantities, tenderers must be provided with copies of all the
drawings, schedules and specification. The specification should include the
preliminaries as appropriate for the project concerned, compiled by the architect or
principal agent, or the JBCC General Preliminaries document as part of the tender
documentation.
In almost any project that is being put out to tender, whether on the basis of
drawings or whether on the basis of bills of quantities, there will be aspects about
which final decisions have not yet been made and for which the tenderer is required
to make a monetary allowance in his tender, to be expended as directed once the
relevant decisions have been made. These comprise the following:
(a) Prime cost or pc amounts: These are amounts to be allowed for goods and
materials, the general nature of which is known at the time that the tender
documents are being compiled but whose exact characteristics have yet to be
determined. In tender documents for a house, for example, pc allowances
might be made for sanitaryware, ceramic tiles, light fittings, ironmongery, etc,
which the contractor would purchase and install on the instructions of the
principal agent once a choice has been made.
(b) Provisional sums: These would be amounts to be included in the tenderer’s
tender for the supply and installation of work by a subcontractor. The
subcontractor would either be nominated or selected in terms of the NSSA by
the contractor in accordance with a contract instruction and would, for
example, be for the construction of a swimming pool, supply and installation of
kitchen fittings, aluminium windows, etc.
(c) Budgetary allowances: These would be amounts to be allowed for work
intended to be carried out by the contractor himself, the need for which has
been identified but the extent of which has not yet been detailed.
(d) Contingency sum: This is a rather arbitrary allowance of a sum of money that
may be needed to be expended on work that could not be anticipated and
provided for at the time of tendering. For example, rock in excavations where
the nature of the ground is believed to be free of rock and large boulders. The
term, contingency sum is not defined in the PBA Edition 6.2 and the difference
Copyright © 2019. Juta & Company, Limited. All rights reserved.

between a contingency sum and a budgetary allowance is that the former is

for work that possibly may need to be done, while the budgetary allowance is
for work which definitely will need to be done. The contingency amount will be
deducted in full from the contract value if not expended or in part, if only partly
used.
(e) CPAP allowance: This is not a defined term in the PBA Edition 6.2 but is an
allowance which is sometimes provided for increases in the cost of

Page 55

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
labour, goods and materials as the contractor may become entitled to where
the tender is not for a fixed amount and is subject to CPAP adjustment.
On acceptance of the tender these amounts would form part of the contract sum and
be adjusted in due course in accordance with clause 26.0.

5.3 Period of validity of tenders

An employer, having received tenders, may need time to assess the offers before
accepting one of them. For this reason, tenderers are required to hold their tenders
valid for a period of normally 45 calendar days as stated in the CD. This constitutes
a separate and independent contract with the employer; an undertaking by the
tenderer not to withdraw or amend its tender until the period of validity has elapsed.
If the employer has not accepted a particular tender before the validity period has
expired, all the offers lapse. Thereafter the employer, if he does not want to incur the
wastage of time and expense of calling for fresh tenders, may negotiate with any
particular tenderer, but the tenderer is not obliged to renew his offer. If he is an
astute businessman, he will negotiate his offer at a higher price.
If a tenderer withdraws his tender or amends it within the period of validity, the
employer cannot compel him to enter into a contract at his originally tendered price,
but he can claim damages from him for breaching his undertaking not to amend or
withdraw his tender within the validity period as stipulated in the form of tender in the
CD. Such damages might compromise the financial loss to the employer of
accepting another tender at a higher price or the cost of calling for new tenders.

5.4 Qualification of tenders

A qualification attached to a tender does not automatically render that tender invalid
unless the conditions under which the tenders had been invited had stipulated that
qualified tenders would not be accepted, but the receipt of qualified and unqualified
tenders makes the comparison of such tenders often very difficult. Any qualification
to an accepted tender must be incorporated into the contract documents that are
subsequently signed, otherwise the qualifications would fall away.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

5.5 Reception and acceptance of tenders

Tenders are usually required to be submitted by a particular date and time and place
as contained in the CD. They are usually opened in the presence of those tenderers
who wish to be present. Late tenders are usually returned unopened.
A tender is accepted and a contract comes into legal force, when the tenderer
receives the information that his offer is accepted by the employer. Unless a specific
mode of acceptance has been specified in the tender, it may be accepted in

Page 56

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
any one of a number of ways: orally or by letter, facsimile, e-mail, etc. The tender
must be accepted by the person to whom it was addressed or his duly authorised
representative. Usually the principal agent will prepare the tender inquiry documents
and will direct tenderers to submit their tenders to him: he should make it clear that
he receives tenders on behalf of the employer. Likewise the duty will fall on him to
accept one of the tenders, and again he should make it clear that he acts as an
agent on behalf of the employer in doing so.
Some principal agents accept a tender on condition that the contractor furnishes
his priced bills of quantities, the chosen form of security and a waiver of lien. This
practice is to be deprecated. The furnishing of these things is a requirement of the
JBCC PBA and failure by the contractor to do so would be a breach that would
entitle the employer to terminate the contract and recover damages from the
contractor. This conditional acceptance provides the contractor, who has changed
his mind about the offer, with a means to escape without consequences other than a
possible claim for damages simply by failing to comply with this condition. It must,
however, be noted that as the suspensive condition has not been met, no contract
exists and the employer would not be able to terminate the contract nor to claim
damages for breach of contract
Great care needs to be taken in cases where the acceptance of the second
lowest or any other tender is considered over and above the lowest bone fide tender
and the seminal case in this regard is Trencon Construction (Pty) Ltd v Industrial
Development Corporation of South Africa Ltd and Another 2015 (5) SA 245 (CC) that
ended at the Constitutional Court.

5.6 Letter of intent

It sometimes happens that an employer would like to ensure that a tenderer does not
withdraw his offer and will proceed and make arrangements to commence work, but,
for whatever reason, is not yet ready formally to accept the tender, and so by means
of a letter of intent he advises the contractor of his intention to accept the tender at
some proximate future date. A letter of intent is not an acceptance of a tender and
creates no legal obligations. It is no more than a statement by the employer that he
Copyright © 2019. Juta & Company, Limited. All rights reserved.

might (not will) accept the tender at some future date. The contractor who proceeds
to do work and incur expense on the basis of a letter of intent does so at his own risk
and will have no claim for recompense should the employer fail to accept his tender.
The position is the same vis-a-vis a contractor and a subcontractor. A tender may
be conditionally accepted, subject to the happening of some future event, such as
the granting of a home-loan for the project, and will automatically come into effect
when that condition is fulfilled. A tender submitted by a subcontractor to a principal
contractor who is preparing a tender might be accepted subject to the principal
contractor succeeding in his tender for the principal contract. Once the suspensive

Page 57

and acquires full legal effect. Usually there is a stipulation that the suspensive
condition must be fulfilled within an agreed time period, failing which the conditional
acceptance falls away.

5.7 Signing the agreement

The acceptance of the tender brings the contract to life and creates legal rights and
obligations for the parties; the employer is obliged in terms of the JBCC PBA to hand
over the site to the contractor within a stipulated time as stated in the CD so that the
contractor may commence work. There is no requirement that the insurances be
effected and surety be provided before the agreement is signed, nor that the
agreement be signed before the site is handed over to the contractor, but either the
bills of quantities or the priced document must have been submitted and the
contractor’s rates checked and adjusted if necessary before the agreement may be
signed.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 61

Principal Building Agreement (PBA)

Edition 6.2 of the PBA has been reformatted with the various clauses dealing with
specific aspects of the contract grouped together. This has resulted in eight sections
including the Contract Agreement and each of these sections is set out below
following the sequence as found in the PBA. Changes to Edition 6.2 have been
brought about in some measure as a result of the Consumer Protection Act 68 of
2008 (CPA), revised construction regulations and revisions to the Occupational
Health and Safety Act 1993.
The previous Contract Data EC and CE used with Edition 5 of the PBA
documents has been consolidated into one document, reformatted into a single
electronic document used to obtain bids from tenderers and when completed
becomes the tender, and on acceptance by the employer, forms part of the
agreement. Clause 12.0 of the PBA describes the obligations of the parties and
clause 28.0 makes provision for the contractor to suspend the works under certain
circumstances.
Items omitted from the Edition 6 of the PBA include reference to domestic
subcontractors who are employed directly by the contractor under a separate
contract and works completion which was found not to achieve its intended purpose.
A new requirement in the CD is for the employer/principal agent to describe in detail
the requirements for practical completion to enable tenderers to price accordingly.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 62

Principal Building Agreement Edition 6.2

The Joint Building Contracts Committee®—NPC

©Copyright reserved: JBCC® Principal Building Agreement, Edition 6.2—May 2018

This page does not form part of the JBCC® Principal Building Agreement, Edition 6.2—May 2018

JBCC®
The Joint Building Contracts Committee® NPC (JBCC®) is representative of building
owners and developers, professional consultants and general and specialist
contractors who contribute their knowledge and experience to the compilation of the
JBCC® documents. The JBCC® documents portray the consensus view of the
constituent members and are published in the interests of standardisation and good
practice with an equitable distribution of contractual risk
For more information about the JBCC®, frequently asked questions, where
documents may be purchased as well as training courses visit www.jbcc.co.za. The
JBCC® does not sell directly to users but may be contacted at [email protected]
Principal Building Agreement structure
The agreement clauses follow the project execution sequence. The documents aim
to set out clear, balanced and enforceable procedures, rights and obligations which,
when competently managed and administered, protect the employer, contractor and
subcontractors alike. The following additional documents form part of the suite of
contract agreements:
• The JBCC® Principal Building Agreement—Contract Data that incorporates
specific employer and contractor requirements;
• The JBCC® General Preliminaries that generally covers all aspects of
preliminaries for most types of projects;
• The JBCC® Nominated/Selected Subcontract Agreement that replicates the
JBCC® Principal Building Agreement with common clauses retaining the same
Copyright © 2019. Juta & Company, Limited. All rights reserved.

numbering; and
• A comprehensive set of certificate forms and support documents for use in the
administration of the agreement
Warning!
The JBCC® Principal Building Agreement Edition 6.2 has been coordinated with the
JBCC® Nominated/Selected Subcontract Agreement Edition 6.2, the JBCC® General
Preliminaries and the JBCC® certificate forms and support documents. Forms from
previous editions are not compatible with the JBCC® Principal Building Agreement
Edition 6.2

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Page 63

Persons entering into or preparing contracts using the JBCC® suite of contract
agreements and support documents are warned of the dangers inherent in modifying
any part of it.
Experience has shown that changes drafted by others, including members of the
building professions, often have unintended results that may be prejudicial to either,
or both, parties
Disclaimer
While the Joint Building Contracts Committee JBCC® aims to ensure that its
publications represent best practice, it does not accept or assume any liability or
responsibility for any events or consequences which derive from the use of the
JBCC® documents
Copyright reserved
The name ‘The Joint Building Contracts Committee® NPC’, the abbreviation JBCC®,
the electronic version e- JBCC® and the JBCC® logo are registered trademarks. The
JBCC® claims authorship of this work. All rights are reserved. No part of this
publication may be reproduced, stored in any retrieval system or transmitted in any
form or by any means, electronic, mechanical, photocopying, scanning, recording, or
otherwise, without the prior permission in writing of the JBCC®.
Unauthorised reproduction of the work is an infringement of the copyright. Judicial
proceedings can and will be instituted to obtain relief and recovery of damages.

Page 64

Actions by the parties/principal agent within a given time

Clause Time period Party Purpose

2.4 1–7 CD parties or principal agent notices deemed to be received
Copyright © 2019. Juta & Company, Limited. All rights reserved.

6.4 5 WD contractor > non-performance of an agent i.t.o. this agreement

principal agent
6.5 10 WD employer appoint another agent/contractor may object
10.6 10 WD notice contractor > failure to insure – notice – insure + recover
employer expense
11.1 15 WD contractor provide guarantee for construction
11.2.1 20 WD contractor replace securities
11.5.1–2 15/20 WD employer provide/replace guarantee for payment
11.6 10 WD notice contractor > no security, contractor notice to suspend works
employer
11.8 10 WD parties return original/replacement security forms
12.2.2 15 WD contractor submit priced document

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
12.2.6 15 WD contractor submit programme
14.4.2 15 WD guarantee contractor > provide guarantee for payment to nominated
subcontractor subcontractor
14.5 5 WD proof payment employer (principal agent) pay nominated subcontractor on default by
contractor
14.6 5 WD notice contractor + termination of subcontractor appointment on default
subcontractor
15.4.2 15 WD guarantee contractor > provide guarantee for payment to selected
subcontractor subcontractor
15.5 5 WD proof payment employer (principal agent) pay selected subcontractor on default by contractor
17.3 5 WD contractor proceed with a contract instruction, where practical
19.2.2 5 WD contractor > works ready for inspection
principal agent
19.4 5 + 5 WD contractor > no ‘list’ > notice > deemed practically complete
principal agent
19.6 5 + agreed WD principal agent > employer occupies portion of the works, list for
contractor completion, fix defects
21.3.1 10 WD contractor inspect before expiry of defects liability period
21.3.2 5 WD contractor > invite PA to inspect list for completion
principal agent
21.5 5 WD notice contractor > inspect > list for final completion > certificate
principal agent

Page 65

Clause Time period Party Purpose

21.6 10 WD notice principal agent > no list for final completion > notice > complete
contractor
21.7.3 5 WD notice principal agent > inspect > list for final completion > certificate
contractor
21.9 5 + 5 WD contractor > no list for final completion/ deemed final completion
principal agent
23.4.2* 20 WD notice contractor > notice of a possible delay, no details yet
principal agent
23.5 40 WD claim contractor > delay ceased, details of delay and expenses
principal agent
Copyright © 2019. Juta & Company, Limited. All rights reserved.

23.7 20 WD award principal agent > assess claim – accept/reduce/reject

contractor
25.2 date [CD] principal agent > issue payment certificate and support forms
contr/empl
25.10 14 CD payment employer pay contractor make payment from date of payment certificate
25.11 21 CD contractor pay employer make payment i.t.o. schedule from principal agent
25.13 7 CD payment contractor pay pay subcontractors i.t.o. schedule from principal
subcontractor agent
25.14 5 WD notice contractor > no/partial payment > suspend etc
employer
25.15 7 CD payment principal agent > final payment certificate after acceptance of final

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
contractor account
26.5* 20 WD notice contractor > notice of possible expense and loss
principal agent
26.6 40 WD claim contractor > substantiated claim
principal agent
26.7 20 WD award principal agent > assess claim = accept/reduce/reject
contractor
26.10 60 WD issue FA principal agent > issue final account
contractor
26.11 30 WD accept FA contractor > accept final account
principal agent
26.12 10 WD notice contractor + agree final account or deemed acceptance
principal agent
27.2.9 5 WD notice notice to contractor remedy default before next recovery statement
28.1 10 WD notice contractor > list of defaults to be remedied > suspend works
employer
28.2 notice contractor > suspension of works where defaults not remedied
employer
29.2 10 WD employer > intention to terminate if defaults not remedied
contractor
29.3 notice employer > default not remedied, termination forthwith
contractor

Page 66

Clause Time period Party Purpose

29.14 notice contractor > intention to terminate if guarantee for payment not
employer provided/maintained
29.15 10 WD notice contractor > intention to terminate if defaults not remedied
employer
29.16 forthwith contractor > default not remedied, termination forthwith
employer
29.17.1 forthwith contractor > termination where PBA terminated
subcontractor
29.17.2 10 WD notice contractor remove construction equipment, temporary works,
etc
Copyright © 2019. Juta & Company, Limited. All rights reserved.

29.21 10 WD either party intention to terminate > impossible to complete

29.24.3 10 WD contractor remove construction equipment
29.25.2 20 WD principal agent prepare status report
29.25.4 60 WD principal agent complete final account
30.2 10 WD either party disagreement not resolved > dispute
30.3 10 WD aggrieved party refer to adjudication
30.6.4 10 WD aggrieved party dissatisfied with adjudication
30.6.5 10 WD aggrieved party no adjudication/not accept adjudication ruling >
arbitration

Abbreviations: WD = working days CD = calendar days, *No notice, forfeits the opportunity to claim

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.

Page 67

Principal Building Agreement

Table of Contents

Section Clause No Description

INTERPRETATION 1.0 Definitions and interpretation

2.0 Law, regulations and notices

3.0 Offer and acceptance

4.0 Cession and assignment

5.0 Documents

6.0 Employer’s agents

7.0 Design responsibility

INSURANCES AND SECURITIES 8.0 Works risk

9.0 Indemnities

10.0 Insurances

11.0 Securities

EXECUTION 12.0 Obligations of the parties

13.0 Setting out

14.0 Nominated subcontractors

15.0 Selected subcontractors

16.0 Direct contractors

17.0 Contract instructions

COMPLETION 18.0 (Interim completion = n/s subcontract agreement)

19.0 Practical completion

20.0 Completion in sections

21.0 Defects liability period and final completion

22.0 Latent defects liability period
Copyright © 2019. Juta & Company, Limited. All rights reserved.

23.0 Revision of the date for practical completion

24.0 Penalty for late or non-completion

PAYMENT 25.0 Payment

26.0 Adjustment of the contract value and final account

27.0 Recovery of expense and/or loss

SUSPENSION AND TERMINATION 28.0 Suspension by the contractor

29.0 Termination

DISPUTE RESOLUTION 30.0 Dispute resolution

AGREEMENT PBA Contract Data

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.

Page 68

Interpretation
Chapter 1
Definitions and interpretation

1.1 Definitions
A word or phrase in bold type in this agreement shall have the meaning assigned to
it in these definitions. A word or phrase not in bold type shall be interpreted in the
context of its usage
AGENT: An entity [CD] appointed by the employer to deal with specific aspects
of the works
AGREEMENT: The completed JBCC® Principal Building Agreement and JBCC®
contract data, the contract drawings, the priced document and any other
documents reduced to writing and signed by the authorised representatives of the
parties
BILLS OF QUANTITIES: The document drawn up in accordance with the
measuring system [CD]
BUDGETARY ALLOWANCE: An amount included in the contract sum for work
intended for execution by the contractor, the extent of which is identified but not
detailed
CALENDAR DAYS: Twenty four (24) hour days commencing at midnight (00:00)
which include Saturdays, Sundays, proclaimed public holidays and recorded
contractor’s annual holiday periods [CD]
CERTIFICATE OF FINAL COMPLETION: A certificate issued by the principal
agent to the contractor with a copy to the employer stating the date on which final
Copyright © 2019. Juta & Company, Limited. All rights reserved.

completion of the works, or of a section thereof, was achieved

CERTIFICATE OF PRACTICAL COMPLETION: A certificate issued by the
principal agent to the contractor with a copy to the employer stating the date on
which practical completion of the works, or of a section thereof, was achieved
COMPENSATORY INTEREST: Interest due to the contractor at the ruling rate
of interest on amounts certified after thirty-one (31) calendar days of the date of
practical completion, compounded monthly until the date of payment

Page 69

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
CONSTRUCTION EQUIPMENT: Equipment and/or plant provided by or
belonging to the contractor and/or subcontractors and used during the
construction period
CONSTRUCTION INFORMATION: All information issued by the principal agent
and/or agents including this agreement, specifications, drawings, schedules,
notices and contract instructions required for the execution of the works
CONSTRUCTION PERIOD: The period commencing on the intended date [CD]
of possession of the site by the contractor and ending on the date of practical
completion
CONTRACT DATA: The document listing the project specific information
[CD]: The notation used where project specific information is recorded in the
contract data
CONTRACT DRAWINGS: The drawings listed [CD]
CONTRACT INSTRUCTION: A written instruction issued by or under the
authority of the principal agent to the contractor that may include drawings,
photographs and other construction information
CONTRACT SUM: The accepted tender amount inclusive of tax [CD], not subject
to adjustment
CONTRACT VALUE: A monetary value initially equal to the contract sum,
subject to adjustment in terms of this agreement
CONTRACTOR: The party [CD] contracting with the employer for the execution
of the works
DEFAULT INTEREST: Interest at six (6) percentage points per annum above the
ruling rate of interest where payment has not been received within the stipulated
period, compounded monthly from the due date for payment until the date of
payment
DEFECT: Any aspect of materials and workmanship forming part of the works
that does not conform to the agreement and/or construction information
Copyright © 2019. Juta & Company, Limited. All rights reserved.

DIRECT CONTRACTOR: An entity appointed under separate agreement by the

employer to do work on site prior to practical completion [CD]
EMPLOYER: The party [CD] contracting with the contractor

Page 70

FINAL ACCOUNT: The document prepared by the principal agent that reflects
the final contract value of the works at final completion or termination
FINAL COMPLETION: The stage of completion as certified by the principal

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
agent where the works, or a section thereof, has been completed and is free of
defects
FINAL PAYMENT CERTIFICATE: The certificate issued by the principal agent
after the issue of the certificate of final completion and after the final account has
been agreed
FORCE MAJEURE: An exceptional event or circumstance that:
• Could not have been reasonably foreseen
• Is beyond the control of the parties, and
• Could not reasonably have been avoided or overcome
Such an event may include but is not limited to:
• Acts of war (declared or not), invasion or hostile acts of foreign enemies
• Insurrection, rebellion, revolution, military or usurped power and terrorism
• Civil commotion, disorder, riots, strike, lockout by persons other than the
contractor’s employees or his subcontractors
• Sonic shock waves caused by aircraft or other aerial devices and ionising or
radioactive contamination
• Explosive materials, except where attributable to the contractor’s use of such
technology
• Natural catastrophes including earthquakes, floods, hurricanes or volcanic
activity
FREE ISSUE: Materials and goods provided at no cost to the contractor by the
employer for inclusion in the works [CD]
GUARANTEE FOR ADVANCE PAYMENT: A security in terms of the JBCC®
Guarantee for Advance Payment form, obtained by the contractor from an
institution approved by the employer
GUARANTEE FOR CONSTRUCTION: A security in terms of the JBCC®
Guarantee for Construction form, obtained by the contractor from an institution
approved by the employer [CD]
GUARANTEE FOR PAYMENT: A security in terms of the JBCC® Guarantee for
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Payment form, obtained by the employer from an institution approved by the

contractor [CD]

Page 71

INTEREST: The bank rate applicable from time to time to registered banks
borrowing money from the Central or Reserve Bank of the country [CD]. The ruling
bank rate on the first calendar day of each month shall be used in calculating the
interest due for such month
JBCC®: The Joint Building Contracts Committee® NPC

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
LATENT DEFECT: A defect that an inspection of the works by the principal
agent and/or agents would not reasonably have revealed
LAW: The law of the country [CD]
LIST FOR COMPLETION: A list that may include marked up drawings and
photographs issued by the principal agent where practical completion has been
certified, listing defects and/or outstanding work to be completed
LIST FOR FINAL COMPLETION: A list for completion that may include marked
up drawings and photographs issued by the principal agent after the inspection of
the works for final completion, where final completion has not been achieved,
listing defects and/or outstanding work to be completed to achieve final completion
LIST FOR PRACTICAL COMPLETION: A comprehensive and conclusive list that
may include marked up drawings and photographs issued by the principal agent
after the inspection of the works for practical completion, where practical
completion has not been achieved, listing the defects and/or outstanding work to
be completed to achieve practical completion
MATERIALS AND GOODS: Unfixed materials, goods and/or items fabricated for
inclusion in the works whether stored on or off the site or in transit
NOTICE: A written communication, excluding social media, issued by either
party, the principal agent and/or agents to the other party, the principal agent
and/or agents to, inter alia, record an event, request outstanding construction
information, or where suspension or resumption of the works and/or termination
of this agreement is contemplated
N/S SUBCONTRACT AGREEMENT: The completed JBCC® Nominated/Selected
Subcontract Agreement (NSSA) and JBCC® NSSA contract data, the subcontract
drawings, the subcontract priced document and any other documents reduced to
writing and signed by the authorised representatives of the contractor and of the
subcontractor

Page 72
Copyright © 2019. Juta & Company, Limited. All rights reserved.

PARTY: The employer or the contractor and ‘parties’ shall refer to both of them
PAYMENT CERTIFICATE: A certificate issued at regular agreed intervals [CD] by
the principal agent to the parties certifying the amount due and payable in terms of
the JBCC® Payment Certificate format
PENALTY: The stipulated amount per calendar day [CD] payable by the
contractor to the employer where the date or the revised date for practical
completion, whichever is the later, has not been met
PRACTICAL COMPLETION: The stage of completion as certified by the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
principal agent where the works, or a section thereof, has been completed and is
free of patent defects other than minor defects identified in the list for completion
and can be used for the intended purpose [CD]
PRELIMINARIES: The JBCC® General Preliminaries and/or the items listed in
the preliminaries section of the priced document
PRICED DOCUMENT: The document incorporating quantities and/or rates used
in the compilation of the contract sum such as bills of quantities, preliminaries
and schedules of rates
PRIME COST AMOUNT: An amount included in the contract sum for the
delivered cost of materials and goods obtained from a supplier as instructed by the
principal agent
PRINCIPAL AGENT: The entity [CD] appointed by the employer with full
authority and obligation to act in terms of this agreement
PROGRAMME: A diagrammatic representation of the planned execution of units
of work or activities by the contractor and subcontractors indicating the dates for
commencement and completion prepared and maintained by the contractor
PROVISIONAL SUM: An amount included in the contract sum for the supply
and installation of work by a subcontractor
RECOVERY STATEMENT: The statement prepared and issued in conjunction
with each payment certificate by the principal agent in terms of the JBCC®
Recovery Statement format
SECTION: An identified portion of the works for which practical completion is
required by a date earlier than that required for the works as a whole [CD]

Page 73

SECURITY: A monetary guarantee [CD] provided by the employer to the

contractor, or the vice versa, in terms of this agreement from which either party
may recover expense and loss in the event of default
Copyright © 2019. Juta & Company, Limited. All rights reserved.

SITE: The land or place where the works is to be executed [CD]

STATUS REPORT: A report compiled by the principal agent and/or agents in
the event of termination of the agreement, or where the works has been suspended
due to a force majeure event, or in the event of termination of a n/s subcontract
agreement by the contractor, to record the state of completion or otherwise of the
works or the n/s subcontract works. Such status report may include marked up
drawings and photographs
SUBCONTRACTOR: A nominated or a selected subcontractor appointed in terms
of the n/s subcontract agreement by the contractor in accordance with a contract

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
instruction for the supply and installation of work for which a provisional sum has
been included in the contract sum
SUSPENSION: The temporary cessation of the works by the contractor
TAX: Value-added tax, general sales tax or similar consumption tax applicable by
law
WORKING DAYS: Calendar days which exclude Saturdays, Sundays,
proclaimed public holidays and recorded contractor’s annual holiday periods [CD]
WORKS: The extent of work to be executed by the contractor described in the
agreement and contract instructions, which includes free issue and materials
and goods. Work or installations to be executed by direct contractors and others
responsible to the employer are excluded [CD]

Commentary
1.1 Definitions
A number of new definitions have been introduced while some of the existing
definitions have either been reworded or omitted altogether. As an example, Works
completion, Contract documents, Mora interest and Domestic subcontractor have
been omitted and the previous definition for Construction Guarantee is now defined
under the heading of Guarantee for Construction and has been grouped with
definitions for Guarantee for Payment and Guarantee for Advance Payment.
Similarly, the previous definition for Practical Completion Certificate is

Page 74

now defined under the heading of Certificate for Practical Completion and grouped
with Certificate for Final Completion.
New definitions include Construction equipment, Construction information, [CD],
Final Payment Certificate, Force Majeure, Free Issue, Guarantee for Advanced
Payment, Guarantee for Construction, Guarantee for Payment, List for Completion,
Copyright © 2019. Juta & Company, Limited. All rights reserved.

List for Final Completion, List for Practical Completion, Interest, Notice,
Preliminaries, Provisional Sum, Status Report, Subcontractor and Suspension.
The definition for Practical Completion has been revised in that the words ‘in the
opinion of the principal agent’ have been omitted and a detailed description as to the
stage of practical completion required for the specific building type and employer’s
requirements is to be described in the CD to enable tenderers to price for such stage
of completion in their tenders—recommended examples of the description for
practical completion for various building types are included in Section 5 — Standard
Forms and Annexures.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
1.2 Interpretation
1.2.1 In this document, unless inconsistent with the context, the words ‘accept,
allow, appoint, approve, authorise, certify, decide, demand, designate,
grant, inform, instruct, issue, list, notice, notify, object, record, reduce,
refuse, request, state’ and their derivatives require such acts to be in
writing
1.2.2 The masculine gender includes the feminine and neuter genders and vice
versa, the singular includes the plural and vice versa, and a person
includes juristic or artificial persons
1.2.3 The headings of clauses are for information only and shall not be used in
interpretation
1.2.4 Reference to a clause number written as clause [54.3.2] means that
specific clause; or clause [54.3.2–4] means sub-clauses 2 to 4 inclusively;
or clause [54.3.2 & 4] means sub-clauses 2 and 4 only
1.2.5 The word ‘deemed’ shall be conclusive that something is fact, regardless
of the objective truth

Commentary
1.2 Interpretation
It is extremely important for the parties and the principal agent to execute the actions
listed under 1.2.1 in writing as a written record of such action will avoid the possibility
of a dispute arising at some later stage of the contract where such action is not
recorded in writing.

Page 75

Chapter 2
Law, regulations and notices
2.1 The contractor shall comply with the law [CD], obtain permits, licenses
and approvals required and pay related charges for the execution of the
works [17.1.4]. The employer shall comply with the law [CD], obtain
Copyright © 2019. Juta & Company, Limited. All rights reserved.

permits, planning, building or similar permissions and pay charges for the
works other than those which are the responsibility of the contractor
[26.4.1]
2.2 All communication or notices between the parties shall be in the
language of this agreement and in a format that can be read, copied and
recorded
2.3 Legal processes arising out of or concerning this agreement may validly
be delivered to and served on the parties at the physical address of the
parties recorded in this agreement. Either party may, at any time, by

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
notice to the other, change his physical address provided it is in the same
country as the original address
2.4 Notices given in terms of this agreement shall be deemed to have been
received where:
2.4.1 Delivered by hand – on the day of delivery
2.4.2 Sent by electronic mail, excluding social media – within one
(1) working day
2.4.3 Sent by registered post—within seven (7) calendar days
after posting

Commentary
2.0 The obligation to comply with statutory requirements
In carrying out the works, the contractor is required to comply with all statutory
requirements that might affect building and construction works, such as the NBRs
and the requirements of relevant town planning regulations. [1] It may happen that the
drawings may require the contractor to carry out work which does not comply with
such regulations in one or other respect. In such case, the contractor must depart
from the drawings to the extent necessary to comply with the statutory requirements
—he cannot be compelled by contract to break the law. While the contractor, as an
expert in building, is expected to be conversant with the applicable regulations, the
onus is on the employer to furnish drawings and

Page 76

specifications of work that conform to the regulations, [2] and if it does not, to amend
them to the extent necessary.
When the contractor becomes aware that the work as shown on the drawings
does not conform to a particular statutory regulation, he must request a contract
instruction as to how to proceed [clause 17.1.4]. If this is not forthcoming he must
proceed in accordance with what the regulation requires.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The contractor and the subcontractors indemnify the employer against loss in
respect of any claims or proceedings arising from their non-compliance with any Act
of Parliament or regulation or bylaw of any local authority in carrying out the works or
occupying the site [clause 9.1.2].
Contractors who contract for the erection of residential units are required by the
Housing Consumers Protection Measures Act, [3] to register as home builders with
the National Home Builders’ Registration Council (NHBRC), to enrol each house that
they contract to build, and to build in conformity with good building practice as set
out in the NHBRC Home Building Manual. This legislation is intended to safeguard
the interests of home owners, more particularly those who do not employ architects

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
as principal agents and do not use the JBCC documents but deal directly with the
contractor on his own terms.
It may also happen that during the course of construction over an extended
period, regulations or bylaws are changed or revised from those applicable at the
time the contractor submitted his offer, which may affect the work under construction
and which may impact on the construction period and contract value. The PBA
attempts to clarify the position by including the wording ‘Documents referred to in
this agreement shall mean the current edition thereof with all amendments thereto
as at the date of submission of the contractor’s tender’ [clause 5.1]. In such a case,
it is the opinion of the revising author that the contractor would need to obtain an
instruction from the principal agent as to how to proceed. The principal agent would
be required to issue a contract instruction to the contractor to comply with the
changed circumstance and the contractor would be entitled to a revision of the date
of practical completion and an adjustment to the contract value should such changes
impact on the contractor’s programme and result in additional costs.

Page 77

Clause 2.4 above deals with notices given in terms of this agreement which may
be sent by hand delivery, electronic mail (excluding social media) or registered post.
The provision for notices issued by telefax in Edition 5 of the PBA has been omitted
from Edition 6.2. Electronic mail was given legal certainty by the promulgation of the
Electronic Communications and Transactions Act 25 of 2002.

Page 78

Chapter 3
Offer and acceptance
3.1 The objective of this agreement is the execution of and payment for the
works for which there has been an offer by the contractor and an
acceptance by the employer
Copyright © 2019. Juta & Company, Limited. All rights reserved.

3.2 The currency applicable to this agreement is as recorded [CD]

3.3 This agreement shall come into force on the date of acceptance by the
employer and continue to be of force and effect until the end of the latent
defects liability period [22.0] notwithstanding termination [29.0], or the
certification of final completion [21.0] and final payment [25.0]
3.4 Should any provision of this agreement be unenforceable the parties
shall act in good faith to agree alternative provisions in terms of this
agreement
3.5 Failure or omission by a party to enforce any provision of this agreement
shall not constitute a waiver of such provision or affect such party’s rights

Commentary
3.0 Offer and acceptance
A detailed commentary regarding the offer by a contractor and the acceptance of
that offer by an employer which brings about a binding contract is covered in Section
1 chapter 1.4 of this book and will not be repeated here.

Page 79

Chapter 4
Cession and assignment
4.1 Neither party shall cede rights or assign rights and obligations under this
agreement without the prior written consent of the other party, which
consent shall not be unreasonably withheld
4.2 The contractor shall not consent to a nominated subcontractor ceding
rights or assigning rights and obligations under this agreement without
obtaining the prior written consent of the principal agent
4.3 Notwithstanding the above, where a party cedes any right to any monies
due or to become due under this agreement as security in favour of a
financial institution, consent shall not be required provided notice of such
cession is timeously given to the other party

Commentary
4.0 Prohibition against cession and assignment
Clause 4.1 prohibits either party from ceding or assigning his rights or obligations
without the written consent of the other party.
Cession involves the transfer of certain rights enjoyed by one of the parties to a
contract to a third party. Frequently it is the contractor who wishes to cede his rights
to receive payment from the employer, to some third party, often a merchant who
Copyright © 2019. Juta & Company, Limited. All rights reserved.

allows the contractor to purchase materials and goods for the works on credit and
who wishes to cover his risks in so doing.
Assignment involves the complete substitution of one party, usually the contractor,
with a third party. In effect, a new contractor steps into the shoes of the previous
contractor and takes on all his obligations to carry out and complete the works in all
respects and he acquires the former contractor’s right to payment. The original
contract remains in full force, and none of its terms are changed.
The party from whom consent must be sought for cession or assignment may not
withhold such consent except for good reason. What would constitute good reason

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
would depend very much on the particular circumstances of each case, and no
general rule can be given.
A similar prohibition against cession and assignment is also to be found in the
NSSA. Where the contract is for work in the private sector, it is the contractor whose
consent must be sought by the subcontractor, but where the State is the employer,
such consent must be sought from the employer.
This arrangement has the potential for creating a very unsatisfactory situation in a
private sector contract. A nominated or selected subcontractor, having been carefully
hand-picked by the employer or his principal agent, might wish to

Page 80

delegate all his rights and obligations under the subcontract to a third party. Such
nominated subcontractor would be required to obtain the contractor’s consent which
consent, in turn, would be required in writing from the principal agent, and only if the
contractor saw no good reason for withholding his consent. It is submitted that the
principal agent would need to discuss the cession of a nominated subcontractor with
the employer prior to the principal agent agreeing to any cession.

Page 81

Chapter 5
Documents
5.1 Documents referred to in this agreement shall mean the current edition
thereof with all amendments thereto as at the date of submission of the
contractor’s tender
5.2 The parties shall sign the original agreement and shall each be issued
with a copy thereof by the principal agent. The original signed
agreement shall be held by the principal agent [CD]
5.3 Persons authorised to act on behalf of the parties and/or agents
appointed by the employer shall be identified in the construction
Copyright © 2019. Juta & Company, Limited. All rights reserved.

information. Such authorised persons may be changed by notice to the

other party
5.4 The priced document shall not be used as a specification of materials
and goods or methods
5.5 The content of this agreement shall not be published or disclosed or used
for any purpose other than that specified in this agreement by one party
without the prior written consent of the other party
5.6 The principal agent and/or agents shall timeously provide the number of
copies [CD] of drawings, un-priced bills of quantities and other
construction information at no cost to the contractor

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Commentary
5.0 Documents
5.1 Signing the agreement
The acceptance of the tender brings the contract to life and creates legal rights and
obligations for the parties and the employer is obliged in terms of the JBCC PBA to
hand over the site to the contractor within a stipulated time [clause 12.1.5] and CD
that the contractor may commence work. There is no requirement that the
insurances be effected and the surety be provided before the agreement is signed,
nor that the agreement be signed before the site is handed over to the contractor,
but either the bills of quantities or the priced document must have been submitted
and the contractor’s rates duly checked and adjusted if necessary before the
agreement may be signed.

Page 82

The agreement will be the PBA itself, with the CD duly completed by the principal
agent, the drawings, [4] and either the bills of quantities or the priced document and
the preliminaries. There is no requirement that the construction guarantee or the
insurance policies be included in the contract documents, nor the Waiver of
Contractor’s Lien if applicable, and it is quite possible that these documents may not
yet have been issued when the agreement is signed.
These documents, and any others which the parties may elect to include as the
agreement, should be identified with an appropriate mark and recorded in the CD.
The principal agent shall also record in the CD in detail any changes made to the
provisions of the JBCC standard documentation. [5] Failure to do so which causes the
contractor expense or loss shall entitle the contractor to compensation [clause 26.5].
The parties shall sign [6] a set of original agreement documents which shall
thereafter be held by the principal agent as stated in the CD [clause 5.2].
The contractor shall be entitled to receive, at no cost to himself, one set of the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

signed agreement and the number of sets of construction information, drawings, bills
of quantities/specifications and other documents as per the CD.
The contractor is further entitled to receive from the principal agent the number of
copies of all drawings, unpriced bills of quantities or priced document and
documents stated in the CD at no cost to him. Any additional copies of drawings,
schedules, bills of quantities, etc., that the contractor may require shall be supplied
to him by the principal agent at cost. The contractor is required to keep on site a
complete set of all drawings, schedules, unpriced bills of quantities or priced
document and contract instructions and the employer, the principal agent and other

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
agents shall have access to them at all times as per clause 12.2.15.
The parties may use the information contained in the agreement, and in any other
documents prepared for the purpose of the agreement, only for the purpose of the

Page 83

agreement as per clauses 5.4 and 5.5. In particular, the prices inserted by the
contractor in the bills of quantities are to be regarded as confidential.
The Agreement states in clause 5.4 that the priced document shall not be used as
a specification of materials and goods or methods. The definition of priced document
includes the bills of quantities and in the event of a contractor ordering materials and
goods from the bills of quantities, schedule of rates or other documents appropriate
to the agreement, such action will be entirely at the risk of the contractor.
Once both parties have signed the agreement, no variation to its terms may be
made except in writing signed by both of them. [7]

Page 84

Chapter 6
Employer’s agents
6.1 The employer warrants that the principal agent has full authority and
obligation to act on behalf of and bind the employer in terms of this
agreement. The principal agent has no authority to amend this
agreement
6.2 The employer may appoint agents to deal with specific aspects of the
works in terms of this agreement [CD]. The principal agent shall give
notice to the contractor where such authority is delegated to agents to
issue contract instructions and perform duties for specific aspects of the
works. An agent appointed in terms of this clause shall not be entitled to
subdelegate his authority without the prior written consent of the employer
and notice to the contractor
Copyright © 2019. Juta & Company, Limited. All rights reserved.

6.3 The principal agent and/or agents shall declare any interest or
involvement in the works other than a professional interest, where
applicable [CD]
6.4 Where the principal agent fails to act in terms of this agreement and/or
an agent fails to act in terms of delegated authority, the contractor shall
give notice to the principal agent with a copy to the employer, to rectify
such default within five (5) working days. Where such default has not
been rectified, the contractor may give notice to suspend the works
[28.0]
6.5 Where the principal agent or any agent fails to act or is unable to act or

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
ceases to be the principal agent or an agent in terms of this agreement,
the employer shall appoint another principal agent and/or an agent
within ten (10) working days of the date of such notice from the
contractor. The employer shall not appoint a principal agent and/or an
agent against whom the contractor makes reasonable objection within
five (5) working days of receipt of notice of intention to make such an
appointment
6.6 The employer shall not interfere with or prevent the principal agent
and/or agents from exercising fair and reasonable judgement when
performing their obligations in terms of this agreement

Commentary
6.0 Employer’s agents
The prime obligations of the employer under the agreement are to appoint agents, to
hand over the site to the contractor, to provide drawings and instructions as

Page 85

required, to make payments in accordance with the agreement and to provide a

payment guarantee if so required.
6.1 The obligation to appoint a principal agent and other agents
In the first edition of the JBCC PBA, as in its predecessor the ‘white form’, [8] and in
almost all other building agreements, the employer’s principal agent is the architect,
and lesser roles are assigned to the quantity surveyor and the engineering
consultants. In the Series 2000 edition of this document no mention is made either of
the architect or of the quantity surveyor or any of the engineers. Instead there is a
principal agent who assumes all these roles. [9] He may be an architect (in most
instances he probably will be) or anyone else, even a project manager. He is not
expected to fulfil all of these roles, as he will probably be specialised in only one of
them. Provision is made in clause 6.2 for the employer to appoint other agents as
Copyright © 2019. Juta & Company, Limited. All rights reserved.

appropriate, and so the architect, the quantity surveyor and the engineers will
continue to play their traditional roles. The parties to the building contract are, of
course, the employer and the contractor, and under the contract they acquire rights
and obligations.
6.2 The principal agent
Although he is frequently mentioned in the PBA and for that matter, in the MWA, the
principal agent is not a party to the contract and does not acquire any contractual
rights and obligations. He acts on behalf of the employer in respect of a great
number of his obligations which, for lack of training and expertise, the employer

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
cannot perform himself. The duty to certify payments, for example, is a function that
the employer cannot perform—partly for lack of the appropriate expertise and partly
because to do so would make him judge in a matter in which he has a great interest.
So the principal agent performs this duty on his behalf, for the proper performance of
which the employer is vicariously responsible to the contractor.
The duties of the principal agent under a construction contract are, firstly, to carry
out his duties with reasonable skill and care [6.1], [10] independently exercising
reasonable professional judgment, and secondly, to protect the employer’s

Page 86

interests. [11] The employer may not attempt to influence his judgment; interference
by the employer in the independent exercise of his duties may found a claim by the
contractor against the employer for damages, or even entitle the contractor to
terminate the contract [clause 29.14.4].
In performing these duties, the principal agent shall not wrongfully harm or
prejudice the contractor. The principal agent has no contract with the contractor, so
that this duty is not contractual but delictual. The basis of this obligation not to
wrongfully harm or prejudice the contractor is an aspect of the principal agent’s
professional duty to act ‘fairly’ towards both parties. [12] Acting fairly does not
necessarily imply that he must dispense justice evenly to both parties according to
his concept of fairness. He must at all times act in accordance with the terms of the
contract, even where the result appears to favour one party and prejudice the other.
Even though this may offend his sense of justice, this was the agreement that the
parties had reached; he must apply its terms and he has no right to vary them.
Acting fairly implies that, where he is required to exercise his discretion, he must
do so without favouring one party at the expense of the other. He exercises his
discretion, for example, when he approves work, or values variations, or awards an
extension of time. He brings his professional judgment to bear on the issue and must
do so impartially.
Clause 6.1 requires the employer to appoint a principal agent and clause 6.2
Copyright © 2019. Juta & Company, Limited. All rights reserved.

enables him to appoint such other agents as are stated in the CD. [13] In all
probability, at least the architect, the structural engineer and the quantity surveyor
will have been appointed before the start of the contract. Further agents may be
appointed during the currency of the contract [clause 6.2]. Should the principal agent
or any other agent be unable to act or cease to be an agent, the employer is obliged
to replace him. The contractor must be informed about such appointments, and
where an appointment was being made to replace any agent the

Page 87

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
contractor would have the right to make a reasonable objection to the appointment
[clause 6.5].
The Agreement does not stipulate, as did the first edition. [14] that the architect
shall be registered in terms of the Architects’ Act. [15] If he is not so registered, or if
his registration has been suspended or even cancelled by the SACAP as a
punishment for a serious transgression of the prescribed rules of professional
conduct, or for a disability such as insolvency or even for failure to pay his dues, he
would not be permitted to undertake work reserved for architects, and would be in
breach of the Act if he did so. The same holds good for quantity surveyors and
consulting engineers. It would appear from the judgment in MM Fernandes (Pty) Ltd
v Mahomed, [16] that anything done in terms of the Agreement by an architect who is
not registered, is not thereby rendered invalid, and the same would logically be the
case for a quantity surveyor and a consulting engineer.
The employer surrenders many of his contractual rights to his principal agent:
inter alia, the right to approve work [clause 21.12], to order additional work [clause
17.1.2], to determine the value of variations to the nature and extent of the works, to
extend the construction period in appropriate circumstances, and to determine the
amounts of payments to be made under an interim or final payment certificate, and
in doing so, the principal agent binds the employer. It is submitted that this
arrangement is right and proper; it would be inappropriate that the employer should
be judge in his own cause in these matters.
The agreement assigns no functions or duties to the other agents, but the
principal agent may delegate some of his duties to the other agents, [17] and must
inform the contractor accordingly [clause 6.2]. But only the principal agent shall have
the power to bind the employer [clause 6.1], [18] or to receive notices on behalf of the

Page 88

employer, [19] or to issue contract instructions, except that he may delegate to

another agent the authority to issue contract instructions for specific aspects of the
works [clause 6.2].
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The employer cannot dispute a decision of his principal agent within the ambit of
the agreement; clause 30.0 relates to disputes between the contractor on the one
hand and the employer or his agents on the other and does not cover a dispute
between the employer and the principal agent. But if the principal agent was to make
a negligent decision that prejudiced the employer, such as the negligent over-
certification of payment to the contractor in a certificate for final payment which the
employer would not be able to recover from the contractor, he would be entitled to
claim damages from the principal agent in a civil action—Hoffman v Meyer 1956 (2)
SA 752 (C).

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
An employer would be able to rid himself of a troublesome principal agent by
terminating his employment, but would not be able to take over the principal agent’s
functions and perform them as he thought proper; in terms of clause 6.5 he is
required to appoint a new principal agent.
The principal agent and the other agents have a limited function in the
subcontract agreements. The principal agent, or another agent under delegated
powers, approves the subcontract work, [20] and values variations, [21] and determines
the amount to be paid to a subcontractor under an interim, [22] or certificate for final
payment, [23] and prepares the subcontract final account. [24] The subcontract
agreement does not give either the principal agent or any other agent the right to
issue contract instructions directly to a subcontractor. Where an agent wishes to
issue an instruction to a subcontractor, he should issue it as a contract instruction to
the contractor as clause 17.1, who in turn, should issue it as a contractor’s
instruction, [25] to the subcontractor. [26]

Page 89

The PBA makes no specific mention of the appointment of a clerk of works, as did
the first edition, [27] but the right of the employer to appoint agents can be taken as
including the right to appoint a clerk of works. On major building projects a full-time
clerk of works is sometimes engaged to inspect the works on a daily basis and
ensure that the work is being carried out in conformity with the agreement. He is
usually an experienced tradesman, less often with a formal technical or professional
qualification. He is engaged by the employer, who pays his salary, but he usually
receives his instructions from, and reports to, the principal agent. Usually he has no
authority to issue instructions, or even to give formal approval of work that has been
done, but this may be varied to some extent by agreement between the parties. His
duties include keeping records of weather conditions, progress of work, attendance
of nominated and selected subcontractors on site, and any other events that may
affect the progress of the works. He can be of great value to the principal agent in
superintending the daily progress on site, and would be his eyes and ears on the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

site, but his presence does not relieve the principal agent of any of his professional
responsibilities.

Page 90

Chapter 7
Design responsibility
7.1 The contractor shall not be responsible for the design of the works other
than the contractor’s and subcontractors’ temporary works. The
contractor shall not be responsible for the coordination of design

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
elements
7.2 Any design responsibility undertaken by a subcontractor shall not
devolve on the contractor. All contractual or other rights the contractor
has against such subcontractor arising from any design responsibility
undertaken shall be ceded to the employer on the date of final
completion or the date of termination of this agreement [9.2.3]
7.3 The contractor shall be responsible for the timeous submission of design
documentation by a selected subcontractor for acceptance and
coordination by the principal agent and/or agents [23.2.8]

Commentary
7.0 Liability for design [28]
In design-and-build or turn-key contracts, the contractor’s implied warranty of fitness
for purpose extends to the design of the structures as well as to the suitability of the
materials and construction methods he uses. Such contracts are being encountered
more often lately in the field of one-off domestic housing, [29] industrial buildings and,
in certain cases public private partnership developments and are, at this stage, not
catered for by the JBCC agreements and fall outside the scope of this work.
Where the design is prepared by an architect or engineer, the contractor’s
contractual obligation is to build in strict accordance with that design, and any
deviation from it would amount to breach of contract. He cannot warrant that the
design, over which he has no control, or even the materials that he is directed to
use, would be fit for their purpose.

Page 91

To resolve this conflict between the contractor’s contractual obligation and his
liability under common law, the PBA expressly states in clause 7.1 that the contractor
shall not be liable for the design of the works. [30]
A difficulty arises, however, in respect of work that is required to be undertaken by
Copyright © 2019. Juta & Company, Limited. All rights reserved.

a nominated or selected subcontractor, where very often the principal reason for
handling the work in this manner is to enable it to be designed by a specialist who
will then carry it out. [31] In such case, the common-law position would be that the
contractor would be responsible for the design aspect of the subcontractor’s work,
just as he would be responsible for all other work designed by himself or his
subcontractors.
Under the JBCC PBA the contractor expressly contracts out of the common law
on this point [clause 7.2], and he is held not to be liable for any design undertaken by
any nominated or selected subcontractor as part of the subcontract. [32] This would
leave the employer without any recourse in the event of a failure of the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
subcontractor’s design, as there is no privity of contract between the employer and
the subcontractor. This difficulty is overcome by making express provision for the
contractor to cede any rights that he may have in this respect against the
subcontractor, to the employer [clause 7.2].
Does this clause mean that, if the information given in the architect’s drawings is
in any way incomplete or defective, the contractor has no obligation to raise any
concern with the architect or to deviate from the drawings to avoid producing
defective work? The Supreme Court of Appeal in S M Goldstein & Co (Pty) Ltd v
Cathkin Park Hotel (Pty) Ltd and Another 2000 (4) SA 1019 (SCA) answered this
question when it said ‘It has to be accepted that in general a builder does have a
legal duty to both the building owner and to third parties to refrain from building
something which is manifestly unsafe’.
This judgment raises more questions than it answers, and a detailed discussion of
its implications on the interpretation of clause 7.0 is beyond our present scope. But it
may cautiously be said that, in the light of this judgment, the contractor who is issued
incomplete or defective drawings is not relieved from the obligation to carry out the
work according to ‘good building practice and in accordance with generally accepted
standards of workmanship and materials.’ It is clear from the judgment that this does
not leave the architect free of liability; liability would then be shared between the
architect and the contractor.

Page 92

Insurances and Securities

Chapter 8
Works risk
8.1 The contractor shall take full responsibility for the works from the date on
which possession of the site is given to the contractor and up to the date
of issue of the certificate of practical completion or deemed
Copyright © 2019. Juta & Company, Limited. All rights reserved.

achievement of practical completion for the works as a whole or a

section thereof. Thereafter responsibility for the works as a whole, and/or
a section thereof, shall pass to the employer
8.2 The contractor shall make good physical loss and repair damage to the
works caused by or arising from:
8.2.1 Any cause before the date of practical completion [19.0]
8.2.2 Any act or omission of the contractor in the course of any
work carried out in pursuance of the contractor’s obligations
after the date of practical completion
8.3 The liability of the contractor in respect of any loss or damage shall

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
include, but not be limited to:
8.3.1 The cost of making good such physical loss and repairing
damage to the works including clearing away and removing
all debris, and any other costs to reinstate the works
8.3.2 The new replacement value of free issue [12.1.10]
8.3.3 The cost of additional professional services
8.4 Notwithstanding subclause 8.3, the limit of the contractor’s liability shall
not exceed the amount of the contract works Insurance [10.1.1] [CD]
8.5 The contractor shall not be liable for the cost of making good physical
loss and repairing damage to the works caused by or arising from:
8.5.1 The use or occupation of any part of the works by the
employer, the employer’s employees and/or agents and
those for whose actions they are responsible
8.5.2 An act or omission of the employer, the employer’s
employees or agents and those for whose acts they are
responsible
8.5.3 An act or omission by a direct contractor
8.5.4 The use or occupation of any part of the works by a direct
contractor

Page 93

8.5.5 The design of the works for which the contractor is not
responsible [7.1]
8.5.6 A defect in free issue or materials and goods specified by
trade name where the contractor has no right of substitution.
The contractor hereby cedes any right of action to the
employer that may exist against the supplier and/or
manufacturer of such free issue, and/or materials and
goods
8.5.7 Force majeure
8.6 Where the contractor is not liable for the cost of making good physical
Copyright © 2019. Juta & Company, Limited. All rights reserved.

loss or repairing damage [8.5] such making good and/or expense and/or
loss shall be measured and valued and included in the contract value by
the principal agent [17.1.10]
8.7 The contractor shall immediately give notice to the principal agent on
becoming aware of physical loss or damage to the works

Commentary
8.0 Works risk

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
8.1 Obligation to maintain the works in good repair
The contractor is obliged to maintain the works in good repair until final completion.
This obligation is based on two distinct legal principles, quite apart from any
provision in the building agreement itself.
Firstly, the contractor, who is in possession of the site, [33] has a common-law
obligation to take proper care of the site and to return it in due course to the
employer in substantially the same condition as when he took possession of it. The
concept of the site includes any improvements on the site, such as buildings,
whether these are existing structures or structures which the contractor may be
under contractual obligation to erect. This, of course, is subject to any contractual
obligation the contractor may have to vary the existing structures by adding to them,
altering them or even demolishing them, and to any contractual provision that may
exclude liability for structures other than those structures which are the subject of the
contract [clause 9.2.7].
Secondly, the contractor has a contractual obligation to carry out and complete
the works in accordance with his contract, and this contract requires that his work

Page 94

shall be free from defects. [34] Any damage to the works caused by storm, fire or
other similar circumstances, or loss caused by theft, occurring before completion,
would constitute a defect in the works which the contractor would be obliged to make
good before it could be said that he had discharged his obligation to complete and
deliver the works free from defects.
The obligation on the contractor to make good any loss or damage to the site and
the works that might occur during the construction period is thus an obligation that
exists by operation of law, and it is not necessary for the contract to contain express
provisions in this regard. Nevertheless, the PBA reinforces the point in clauses 8.1
and 8.2 by stipulating that the contractor shall take full responsibility for the works, [35]
and shall, at his own cost, make good any physical loss, [36] or damage. [37] The
contractor’s liability in this regard includes the cost of making good loss and repairing
Copyright © 2019. Juta & Company, Limited. All rights reserved.

damage, the replacement value of any materials and goods that might have been
supplied by the employer, and any additional professional fees payable to the
employer’s agents for any additional services [8.3, 8.3.1–8.3.3].
8.2 Period of responsibility
The common-law position is that the contractor’s responsibility for the works would
commence at the time that he took possession of the site and would end when he
surrendered it to the employer. This would normally coincide with the date of
practical completion. The contractor’s responsibility begins on the date when he is

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
given possession of the site and ends on the date of the issue or deemed issue of
the certificate of practical completion [clause 8.1]. [38] Thereafter responsibility passes
to the employer.

Page 95

The contractor’s responsibility for making good physical loss or damage to the
works extends after practical completion to a very limited extent: it extends to
physical loss or damage arising from the performance by the contractor or his
subcontractors of their obligations after practical completion [clause 8.2.2]. [39] The
cost of making good such loss or damage would be to the contractor’s account. [40]
The contractor remains responsible during the defects liability period for executing
and completing remaining and/or defective work.
8.3 The position regarding subcontractors
In terms of clause 8.1 of the NSSA, nominated and selected subcontractors are
under exactly the same obligation to make good at their own cost any physical loss
or damage that may occur to the subcontract works during the subcontract
construction period. [41] Between the date of interim completion and the date of
practical completion the subcontractor remains liable to make good any physical loss
or damage that may befall the subcontract works, [42] and between the date of
practical completion and the date of final completion such physical loss or damage
that arises from the subcontractor performing his contractual obligations after
practical completion. [43] The cost of making good such loss or damage would be to
the account of the contractor. [44]
8.4 Contractual limitation of the risk element
The contractor’s liability for the cost of making good physical loss or damage is not
unlimited—it is limited to the amount of insurance that is required to be

Page 96
Copyright © 2019. Juta & Company, Limited. All rights reserved.

effected in terms of clause 8.4 of the agreement, [45] and it is excluded in respect of
uninsurable risks, [46] and risks that are due to some action of the employer and/or
his agents [clause 8.5.2] including their design of the works. [47]
8.5 Uninsurable risks
The PBA holds the contractor free of liability for the cost of making good physical
loss or damage where this arises from actions or events which are not covered by a
standard works insurance policy, including war, acts of terrorism and similar risks;
riot and related risks; [48] confiscation, nationalisation or requisition by any public or
local authority; and sonic shock waves caused by aircraft or other aerial devices

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
[clause 8.5.7].
8.6 Risks due to some action of the employer or his agents
The contractor is not liable for the cost of making good physical loss or damage that
might arise from the use or occupation of any portion of the works by the employer,
the employer’s employees and/or agents and those for whose acts or omissions they
are responsible; an act or omission of independent workmen engaged by the
employer to carry out work on the contract works; design of the works by the
employer or his agents, [49] and a latent defect [50] in materials or goods specified by
trade name where the contractor has no right of substitution [clause 8.5.2 to
8.5.5]. [51]

Page 97

8.7 Physical loss or damage to existing structures

Where the contract is for alterations or additions to an existing structure, the
contractor is expressly absolved from liability for the cost of making good physical
loss or repairing damage to such structure and its contents [clause 9.2.7]. It would,
however, appear that he would be at risk for loss or damage to that portion of the
works that constituted the additions.
8.8 The position in Organs of State contracts
The JBCC PBA Edition 6.2 generally excludes reference to contracts for works
undertaken by OoS, however, the JBCC is in consultation with the NDPW and the
CIDB to make provision in the CD document to cover specific requirements suitable
for works for OoS. The intention of this collaboration is to align the conditions
required by the State for their projects as closely as possible to the conditions
prevailing in the private sector and it would be remiss not to draw the attention of
readers of this work to the fact that the State does not insure its buildings.
The effect of this is that the extent of the contractor’s liability for the cost of
making good damage is not limited; the State holds him fully liable, not only for loss
Copyright © 2019. Juta & Company, Limited. All rights reserved.

or damages to the works that are the subject of the contract, but to the existing
building as well. In circumstances where the contract is for relatively minor
alterations and additions to a large building, the risk that is imposed on the
contractor becomes disproportionately large and onerous, and it is often aggravated
by the fact that the value of the existing building may be unknown or uncertain, so
that the extent of his risk becomes very difficult to establish and adequately cover by
insurance. It is submitted that the period of his liability is ‘during construction of the
works’. This requirement is in complete contrast with clause 9.2.7 wherein the
employer indemnifies the contractor against physical loss or damage to an existing
structure and the contents thereof where the agreement is for alterations or additions

Page 98

Chapter 9
Indemnities
9.1 The contractor indemnifies and holds harmless the employer, the
employer’s employees and/or agents from all claims or proceedings for
damages, expense and/or loss including legal fees and expenses in
respect of or arising from:
9.1.1 Death or bodily injury or illness of any person or physical loss
or damage to any property other than the works arising out
of or due to the execution of the works or presence on
and/or occupation of the site by the contractor. Should such
an event occur, the contractor shall forthwith give notice to
the principal agent
9.1.2 Non-compliance by the contractor with the law, regulation,
or bylaw of any local or other authority and the failure by the
contractor to obtain any permit, license or approval that the
contractor is required to obtain in terms of this agreement
[2.1]
9.1.3 Physical loss or damage to construction equipment or
other property belonging to the contractor or the
contractor’s subcontractors but excluding direct
contractors’ equipment or property
9.2 The employer indemnifies and holds the contractor harmless from all
claims or proceedings for damages, expense and/or loss including legal
fees and expenses in respect of or arising from:
9.2.1 An act or omission of the employer, the employer’s
employees and/or agents and those for whose actions they
are responsible
Copyright © 2019. Juta & Company, Limited. All rights reserved.

9.2.2 An act or omission of a direct contractor [16.0]

9.2.3 Design of the works [7.2] where the contractor is not
responsible for such design
9.2.4 The use or occupation of any part of the works by the
employer, tenants, direct contractors or others authorised
by the employer
9.2.5 Proceeding with the works on instruction from the employer
without the employer obtaining the required permission
under the law in terms of this agreement [2.1]
9.2.6 Interference with any servitude or other right not recorded in

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
construction information issued to the contractor that is
the unavoidable result of the execution of the works
including the removal of or weakening of or interference with
the support of land and property adjacent to or within the site
unless resulting from any

Page 99

negligent act or omission by the contractor or his

subcontractors. Should such an event occur, the contractor
shall forthwith give notice to the principal agent
9.2.7 Physical loss or damage to an existing structure and the
contents thereof where this agreement is for alterations or
additions to an existing structure. Should such an event
occur, the contractor shall forthwith give notice to the
principal agent
9.2.8 A defect in free issue
9.2.9 Physical loss or damage to the works where a certificate of
practical completion has been issued [19.0] or practical
completion has been deemed to have been achieved
9.2.10 Advance payments certified by the principal agent and paid
by the contractor to subcontractors [27.1.8; 27.2.4]

Commentary
9.0 Indemnity against loss or damage to third parties
9.1 Liability to third parties
Building is a risky business. There is not only the ever-present danger of physical
loss or damage to the works itself, but danger of harm to the people working on the
site and to third parties, [52] on or off the site and to their property. The risk of physical
loss or damage to the works itself was considered in section 8.1; in this section we
Copyright © 2019. Juta & Company, Limited. All rights reserved.

consider the risk of harm to third parties and their property.

The common-law places an obligation on every one of us not to cause harm to
any other person through our negligence. Such harm can take the form of physical
injury to, or even the death of, some other person or loss or damage to that person’s
property. [53] A building contractor, executing the works, may negligently cause injury
to, or the death of, a third party, or damage his property, and such third party (or his
heirs or successors) would have the legal right to claim damages from him.

Page 100

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
There is a presumption that the owner of a site is in control of it and therefore
liable to third parties for personal injury or damage to their personal property arising
from activities on the site. An injured party, to be sure that he was laying the blame
at the right door, would probably sue jointly the owner of the site and the building
contractor who was carrying out building operations on the site, and for good
measure, possibly the architect and engineer as well. [54] Because it would be
inequitable for the employer to be held liable for the consequences of the
contractor’s negligence, and because it is the contractor who is in the best position
to ensure that accidents do not happen, the PBA at clause 9.1, like most other
construction agreements, holds the contractor liable for the death of or bodily injury
to any third parties or physical loss or damage to any property other than the works,
and indemnifies the employer against any claims in this regard. Subcontractors
likewise are held liable [55] for any injury or loss to a third party that might be caused
by their negligence, and indemnify the employer and the contractor against any
claims in this regard.
9.2 Limitation of liability
In circumstances where the death of or bodily injury to any third party or physical
loss or damage to any property other than the works is directly or indirectly caused
by the negligence of the employer, he indemnifies the contractor against loss arising
from any claim, proceedings, damages, costs or expense [clause 9.2]. Such
circumstances might arise from an act or omission by the employer himself, his
agents or servants or anyone for whom they are responsible [clause 9.2.1], as well
as other contractors and workmen engaged by him to perform work [clauses 9.2.2
and 16.0]. Moreover, the employer indemnifies the contractor against any claims,
proceedings, damages, costs or expenses that may arise from the occupation of any
part of the works by the employer or his tenants [clause 9.2.4], and loss or damage
which may be caused to the contents of the works after the date of practical
completion [clause 9.2.9].
9.3 Risk of loss of lateral support to neighbouring property
The employer, in engaging an independent contractor to perform work for him, is
Copyright © 2019. Juta & Company, Limited. All rights reserved.

normally not liable for claims arising from the casual or collateral negligence of the
contractor. But where the work is of a dangerous nature, such that, unless due and
proper precautions are taken, it may reasonably be expected that damage to another
may occur, the employer remains liable.
Being the owner of the land, the employer has, in law, an absolute and continuing
obligation to his neighbour to do nothing on his own site that might adversely

Page 101

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
affect the stability of the neighbour’s site and any improvements on it. It is no
defense to a neighbour’s claim against the employer for damages caused by work
that has undermined the stability of his property that the employer had contractually
passed this liability on to an independent contractor.
Consequently, where the work entails excavation of the site close to boundaries,
unless proper precautions are taken, there is a real risk of slippage or even collapse
of the sides of such excavations causing damage to adjoining properties for which
the employer remains liable notwithstanding any provisions to the contrary there may
be in the contract [clause 9.2.6]. [56] Insurance companies offering insurance against
this type of risk usually require that adequate measures be taken to ensure the
stability of such excavations, usually by means of temporary shoring, such measures
being designed by a registered engineer and carried out under his supervision
[clause 10.1.4]. [57]
It quite often happens that claims are made by owners of neighbouring properties
for damage believed to have been caused by such excavations. Clause 3.3 of the
Preliminaries requires the principal agent and the contractor together to inspect
adjacent properties and structures and to record in writing, possibly supplemented
by photographs, the condition of such properties and structures, in particular those
aspects which could later be claimed to have been affected by the construction
operations. This is intended to defeat claims that might be made in respect of
damage that predated the excavations.
9.4 Further indemnities
In terms of clauses 9.1.1 and 9.1.2, the contractor indemnifies the employer against
expense or loss that may be sustained due to proceedings against the employer that
might arise from the contractor’s failure to comply with any Act of Parliament or any
local authority bylaw or regulation in occupying the site and carrying out the works.
This is a natural consequence of the contractor’s obligation to carry out the works in
compliance with such Acts, bylaws and regulations. The contractor and his
subcontractors are responsible for their tools, plant and equipment, and the
contractor indemnifies the employer against any claim for physical loss or damage to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

such tools, plant and equipment [clause 9.1.3].

Page 102

Subcontractors, in turn, indemnify the contractor against expense or loss that may
arise from the subcontractor’s failure to comply with an Act of Parliament or local
authority by-law or regulation, [58] and against any claim for physical loss or damage
to their tools, plant and equipment. [59]

Page 103

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Chapter 10
Insurances
10.1 The party responsible shall effect and keep the respective insurances
[CD] in force in the joint names of the parties from the date of possession
of the site until the issue of the certificate of practical completion with
an extension to cover the contractor’s obligations after the date of
practical completion [8.2.2.]:
10.1.1 Contract works insurance [CD] for the works shall make
provision for direct contractors [CD], free issue [CD],
materials and goods, professional fees, temporary works,
clearing away and removing of all debris and any other costs
to reinstate the works and where required, damage to
employer owned surrounding property [CD] where not
covered under the removal of lateral support insurance
10.1.2 Supplementary insurance [CD] for the works against loss or
damage caused by civil commotion, riot, strike, labour
disturbance and lockout to the extent not insured under the
contract works insurance
10.1.3 Public liability insurance [CD] providing indemnity in respect
of accidental death or injury to any person and accidental
loss of or physical damage to tangible property, to remain in
force until the date of final completion
10.1.4 Removal of lateral support insurance [CD] where the
employer considers that the execution of the works could
cause the removal of or weakening of or interference with the
support of land or property adjacent to or within the site (also
including employer owned surrounding property) and the
consequences thereof. The employer shall appoint an agent
to design and monitor appropriate support structures for use
in excavations and/or in existing property that form part of the
works and/or the site
Copyright © 2019. Juta & Company, Limited. All rights reserved.

10.1.5 Other insurances [CD]

10.2 Where practical completion in sections is required [20.0], or where the
works is for alterations and additions, the employer shall effect and keep
in force contract works insurance [10.1.1], supplementary insurances
[10.1.2], public liability insurance [10.1.3] and where applicable, removal of
lateral support insurance [10.1.4] and other insurances [10.1.5] in the joint
names of the parties until the date of final completion

Page 104

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
10.3 The party responsible for effecting insurances [10.1.1–5; 10.2] shall
provide proof of the insurances effected to the other party before the
commencement of the construction period and, where required, provide
proof of extension or renewal of such insurances before their expiry. Upon
request the party responsible for effecting insurances shall provide the
other party with the entire policy wording of such insurances
10.4 The contractor shall be responsible for the deductible amounts [CD] other
than where a claim against an insurance cover is due to default of the
employer, the employer’s employees and/or agents and those for whose
actions they are responsible
10.5 The employer may, at his expense, require the cover of the contract
works insurance [10.1.1] to be increased. The party responsible for
effecting insurances shall provide written proof of such adjustment
10.6 Where the employer fails to effect the required insurances within ten (10)
working days after notice to do so the contractor may, on expiry of the
notice period, suspend the works until such insurances have been
effected [28.1.4]
10.7 Where this agreement is terminated [29.0] and the contractor is not
required to make good the physical loss or repair damage to the works,
the right to the proceeds of an insurance claim shall vest solely in the
employer. The party responsible for the insurances shall give notice to
the insurer to clarify the status of the insurance cover and/or further
insurance obligations applicable to the works, public liability insurance,
supplementary insurance and removal of lateral support insurance
10.8 Any amounts not recovered from insurers shall be borne by the employer
or contractor, in accordance with their respective obligations under this
agreement
10.9 The party responsible for effecting the insurances shall keep insurers
informed of any relevant changes in respect of this agreement
10.10 The parties shall at their discretion effect insurances for aspects not
insured such as construction equipment and work by direct
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contractors after practical completion

Page 105

Commentary
10.0 Insurances
10.1 Contract works insurance
Any major calamity causing physical loss or damage to the works could financially
ruin a contractor, and it would be good business sense to insure the works against

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
such circumstance. Most building contracts impose an obligation on the contractor to
effect insurance for a specified amount, [60] to be maintained until practical
completion of the works, when the risk of loss or damage passes to the employer.
Clause 10.1 of the PBA requires that insurance shall be effected for the works, [61] in
the joint names of the contractor and the employer for the amount, [62] and the
deductible, [63] stated in the CD, [64] before the commencement of the construction
period. SASRIA [65] insurance shall similarly be effected unless otherwise decided by
the employer and indicated in the CD. These insurances shall remain in force until
the certification of practical completion or deemed achievement of practical
completion of the works [clause 10.1]. [66]

Page 106

The party entitled to indemnity is entitled to the proceeds of the insurance [clause
10.7] unless the contract is terminated [clause 29.0], [67] in which case the contractor
shall not be obliged to make good any physical loss or damage and the proceeds of
the insurance shall vest in the employer [clause 10.7].
Some employers, and in particular insurance companies who have become
increasingly prominent as developers of building projects, have an understandable
reluctance to allow the contractor to place the insurance where he will, and
consequently the Agreement makes a provision that such insurance policies may be
taken out either by the contractor or the employer, the decision being taken at the
time tender documents are prepared and the tenderers accordingly advised. [68]
However, where it is required that the works be completed in sections or where the
contract is for alterations and additions, the employer shall effect the insurances
[clause 10.2]. Contract works insurance is for the risk of loss or damage to the entire
works, including the work performed by subcontractors, and it is therefore
unnecessary for subcontractors to effect insurance for the subcontract works. [69]
10.2 Determining the amount of the works insurance cover
In the past a comfortable rule-of-thumb for determining the amount of the works
insurance cover was to set it at 110% of the contract sum; this, it was assumed,
Copyright © 2019. Juta & Company, Limited. All rights reserved.

would cover the cost of completely replacing the building with an additional
allowance for removing from the site the debris of the destroyed building and with a
further allowance for additional professional fees.
In the modern-day economic climate, this would be totally inadequate in many
major projects. The escalations in cost [clause 26.9.3] of a major project could lead
to a significant increase in the contract value. If the building was to be completely
destroyed shortly before practical completion, the construction period would
effectively be doubled, and there would then be a further significant escalation in
cost. Moreover, there would almost certainly be variations ordered by the principal

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
agent which would increase the contract value, as would adjustments to monetary
allowances such as nominated and selected subcontract amounts, prime cost
amounts and budgetary allowances. It is submitted that in the present economic
climate the insurance cover should be discussed with the

Page 107

employer’s insurance advisor but should nevertheless be set at between 125% and
135% depending on the nature and complexity of the works.
A prudent principal agent should therefore regularly monitor changes to the
contract value and be aware when the works insurance cover becomes inadequate.
Where the employer effects the insurance, he should be alerted to increase the
insurance cover. Where the contractor effects the insurance, there is no provision in
the agreement that would entitle the principal agent to instruct him to increase the
insurance cover, but in terms of clause 10.5, where the contract value has increased,
the contract works insurance shall be adjusted at the employer’s expense and the
party responsible for effecting the insurance shall provide written proof of such
adjustment. Clause 10.9 requires the party responsible for effecting the insurance to
keep the insurers informed of any relevant changes in respect of the agreement—
this would include the revision of the date for practical completion and any delays
and additional costs which would impact on the value and period of insurance. A
reasonable contractor would not decline a request from the principal agent to
increase the cover if he was recompensed for the additional premium.
10.3 Sectional completion and alterations and additions
Where the contract is for alterations and additions to an existing building, the
employer is required to effect the insurance cover for the existing building and the
works as the contractor is indemnified against physical loss or damage [clause
9.2.7].
Where practical completion in sections is required or where the works is for
alterations and additions, the PBA requires the employer to effect and keep in force
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contract works insurance, public liability insurance, supplementary insurance where

applicable, and removal of lateral support insurance, in the joint names of the parties
until the date of final completion [clause 10.2].
10.4 Lateral support insurance
Where it appears to the employer or his principal agent that excavations close to the
boundary of the site, or any other aspect of the execution of the works, could
weaken or interfere with the support of the adjacent property, possibly leading to
damage to the property, the employer is required to effect support insurance in the
joint names of the employer and the contractor, and covering the subcontractors as

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
well [clause 10.1.4].
10.5 Indemnity insurance
Public liability insurance, to cover the risks as set out in clause 9.0, is required to be
taken out either by the employer or the contractor [clause 10.1.2], as designated in
the CD and for the amount and deductible as stated in the CD. Each subcontractor is
similarly required to take out public liability insurance for the amount and deductible
stated in clause 10.0 of the subcontract CD.

Page 108

As an accident arising out of even a very small contract can cause serious
personal injury leading to a claim possibly in excess of R1-million, the cover should
be substantial. These insurances are to be kept in force until the contractor’s
responsibility has ended [clause 10.1].
Furthermore, the contractor and subcontractors are required to take out insurance
in terms of the Compensation for Occupational Injuries and Diseases (COID) Act
130 of 1993 as amended to indemnify themselves in respect of claims made by
employees who sustain injuries or disease as a result of their employment on the
works.
10.6 Proof of insurance
Before the commencement of the construction period the party responsible for
effecting each insurance shall furnish documentary proof to the other party that he
has effected the prescribed insurance and shall, on request from the other party,
provide a copy of the entire policy to the other party. Where a party fails to effect or
maintain the required insurances or fails to provide proof of such insurance, the
other party may give five working days’ notice to comply, failing which the other party
may, without prejudice to any other remedy, effect such insurance and recover
expense and/or cost so incurred from the defaulting party [clause 10.6].
The PBA makes the effecting of these insurances a condition precedent to the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

handing over of the site [clause 10.1]. The employer or principal agent would not be
entitled to hand over the site to the contractor if the insurances are not in place.
Should any policy expire before the end of the time for which it is required to be
kept in force, the party responsible for effecting the insurance shall extend or renew
the policy and provide evidence of having done so to the other party before the date
of expiry [clause 10.4].
These requirements also apply to insurances in terms of the NSSA. Furthermore,
the contractor is required to furnish evidence to the subcontractor, before the
commencement of the subcontract construction period, that contract works

[70]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
insurances in terms of the provisions of the PBA, have been effected. [70] Should
either party to the PBA or the NSSA fail to honour his obligation to effect insurance,
or to renew any insurance, the other party may do so and recover the cost from the
defaulting party. [71]

Page 109

Chapter 11
Securities
11.1 The contractor shall provide to the employer a guarantee for
construction within fifteen (15) working days of acceptance of the
contractor’s tender and choose:
11.1.1 A guarantee for construction – (variable) initially equal to
ten per cent (10%) of the contract sum and keep such
security valid and enforceable until the final payment
certificate has been issued to the contractor [25.15]
or . . .
11.1.2 A guarantee for construction – (fixed) equal to five per cent
(5%) of the contract sum and a payment reduction of 5% of
the value of each payment certificate up to a maximum of
five per cent (5%) of the contract sum [25.3.3; 25.12]. The
contractor shall keep such security valid and enforceable
until the only or last certificate of practical completion has
been issued
11.2 The contractor shall:
11.2.1 Maintain and/or replace a guarantee for construction -
(variable or fixed) [11.1.1–2] at least twenty (20) working
days before such security is due to expire
11.2.2 Provide a guarantee for advance payment where an
advance payment is required. The contractor shall keep
such security valid and enforceable until the advance
Copyright © 2019. Juta & Company, Limited. All rights reserved.

payment is repaid [11.3]

11.3 The amount of the guarantee for advance payment shall be reduced by
the amount repaid by the contractor as certified by the principal agent in
payment certificates. If the advance payment is not repaid by the date a
certificate of practical completion is issued or deemed achievement of
practical completion or by the date of termination by the employer due
to contractor default [29.9.3], the entire outstanding amount shall
immediately become due and payable
11.4 Where the contractor fails to provide the specified guarantee for
construction the employer may:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
11.4.1 Hand over the site to the contractor and withhold in interim
payment certificates to the contractor an amount until the
amount is equal to ten per cent (10%) of the contract sum.
The amount withheld shall be reduced at practical
completion [19.0] to two

Page 110

and one half per cent (2.5%) of the contract sum and to zero
per cent (0%) in the final payment certificate [25.9; 25.15]
or . . .
11.4.2 Terminate this agreement [29.1.1; 29.2]
11.5 The employer shall:
11.5.1 Provide to the contractor a guarantee for payment where
required in the accepted tender [CD] within fifteen (15)
working days of acceptance of the contractor’s tender
11.5.2 Keep such guarantee for payment valid and enforceable in
terms of the security form and/or provide a replacement
guarantee for payment at least twenty (20) working days
before such security is due to expire
11.6 Where the employer fails to provide the guarantee for payment [CD], or
such security has expired, the contractor may, after giving ten (10)
working days’ notice, forthwith suspend the works until such security
has been provided [12.1.1; 28.1.1] or by further notice terminate this
agreement [29.14.1; 29.15]
11.7 Where the contract value exceeds the contract sum by more than ten
per cent (10%) the guarantee for payment shall be adjusted at the
employer’s expense. The employer shall provide written proof of such
adjustment
11.8 The original or the replacement security form(s) shall be returned to the
other party within ten (10) working days after the expiry date
Copyright © 2019. Juta & Company, Limited. All rights reserved.

11.9 Where a party makes an unjustified call on a security, the amount paid
and default interest shall be paid to the other party [27.1.2; 27.1.5]
11.10 The contractor shall waive his lien or right of continuing possession of the
works on receipt of a guarantee for payment from the employer

Commentary
11.0 Security for due performance
11.1 Introduction
The contractor may breach the contract in a number of ways: for example, he may

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
complete the works late, or he may fail to complete the works at all, necessitating the
engagement of others to do so, or he may fail or refuse to re-do defective work,
again necessitating the employment of others to make good the defects.

Page 111

Such breaches would probably cause the employer substantial financial loss which
he would be entitled to recover by way of damages.
Recovery of such damages is often uncertain, as the breach giving rise to the
damages is often due to the contractor’s perilous financial position. The employer’s
ultimate common-law remedy of placing the defaulting contractor into insolvency is
seldom effective; contractors’ insolvent estates yield notoriously low dividends.
Most contracts require the contractor to provide some form of guarantee to the
employer to recompense him to some extent for such possible financial loss. These
can take a variety of forms, such as a retention fund, a surety, [72] or a guarantee for
construction.
11.2 Retention
Until the advent of the JBCC Agreements in 1991, which introduced the construction
guarantee, the most common form of security required [73] to be provided by the
contractor for the due performance of his obligations was the retention fund. This
was a form of cash guarantee, usually for a maximum value of 5% of the contract
sum, which was to be provided by the contractor in stages: 10% of the value of each
interim payment certificate was withheld and paid into an interest-bearing joint
account at a financial institution until the value of the fund reached 5% of the
contract sum. Half of the retention fund was paid out to the contractor on practical
completion, and the balance, with interest, on final completion. [74]
Despite its extensive use in building contracts until the advent of the JBCC
Agreements in 1991, the retention fund had a number of disadvantages, chief of
which was that, during the early stages of the contract, when the risk to the employer
of financial loss due to the contractor’s default was at its greatest, the cover provided
Copyright © 2019. Juta & Company, Limited. All rights reserved.

by the fund was low. [75] Even when the retention fund had reached

Page 112

its full value, it was often insufficient to meet the employer’s loss due to a breach by
the contractor. [76]
A further disadvantage was that it impeded the contractor’s cash flow in the first
half of the construction period. The contractor received only 90% of the value of work
done each month, and often had difficulty in making up the shortfall; sometimes he
would be unable to settle the accounts of merchants and suppliers or to pay

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
subcontractors.
A guarantee from a financial institution was sometimes offered in lieu of a
retention fund, the amount of which increased as the retention fund, which it
replaced, would increase.
The ownership of the retention fund has been a vexed question, contractors
alleging that it is ‘their’ money as the fund has been built up by deducting a
percentage of each interim payment certificate which represents the value of work
they have done and materials they have brought to site. But this contention was
rejected by the Appellate Division in the Thomas Construction [77] judgment. The
court held that, as payments on interim payment certificates are not payments for
work already done but advance payments on account of the contract price which
only falls due when the contractor has completed the work, any deductions from
such advance payments cannot be said to be money which is owned by the
contractor.
The contractor’s right to the fund was governed by a suspensive condition and
was not payable to the contractor until he had fulfilled all his obligations. Until that
time it remained the employer’s money.
The inadequacy of the retention fund, especially in the early stages of the
construction period, was well recognised, and frequently the contractor was required
to provide a surety in addition. Should the contractor default and thereby cause the
employer to suffer damages, [78] and the retention fund be inadequate to meet the
extent of such damages, the employer could call on the surety to make good the
shortfall up to the limit of the surety, normally 10% of the contract

Page 113

sum. [79] At one time, it was not uncommon for the surety to elect to perform himself
what the contractor had failed to perform, [80] but today a surety [81] almost always
makes good the employer’s damages in cash.
It is important to note that any conduct prejudicial to the surety, or for that matter,
Copyright © 2019. Juta & Company, Limited. All rights reserved.

a guarantor, may release him from his obligations to the employer. [82] The PBA
Edition 6.2 does not make provision for retention to be withheld on the interim
payment certificates but does provide for the withholding of an amount equal to 10%
of the contract sum where the contractor fails to provide the security required. See
commentary at 11.4 and 11.6 below.
11.3 Variable guarantee for construction
The 1991 edition of the PBA introduced the concept of a construction guarantee to
take the place of the retention fund. It was a guarantee issued by an approved
financial institution, [83] providing the requisite cover available at call. The guarantee

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
provided full cover from the day on which the construction period started, and only
ceased when the contractor had discharged all his obligations. The amount of the
cover varied. Initially it was 12.5% of the contract sum. When the value of completed
work certified on interim payment certificates reached 50% of the contract sum it
reduced to 7.5% of the contract sum. When practical completion was certified it
reduced to 4% of the contract sum. On the issue of the certificate of final completion
it reduced to 2% of the contract sum. Finally, when the final amount due by the
employer to the contractor, or the contractor to the employer, [84] had been paid, it
lapsed, and was to be returned to the contractor for cancellation.

Page 114

The great attraction of the construction guarantee to the employer was that it was
payable at call—the employer was not required to prove his loss before he could
receive payment, as is normally the case where a surety is provided. Payment was
made on the issuing of a certificate by the architect that the contractor was in breach
and had caused the employer to suffer damages of an actual or estimated amount.
The attraction of the guarantee to the contractor was that there was no longer any
retention held on interim payment certificates, and a solid cash flow, sometimes
described as the life blood of the construction industry, was assured.
Nevertheless, there has been, in some quarters, considerable criticism of the
innovation, and reluctance to use it. Some of the opposition was due to conservatism
and a suspicion of something new and untried, and some was due to ignorance and
misinformation. The most persistent criticism, from contractors and employers alike,
was that some contractors were unable to obtain construction guarantees at all and
some others could only do so at considerable expense. While the statement was
frequently true, there was good reason for it. Financial institutions that furnish
construction guarantees need to be confident that, if they should be called upon to
pay out on a guarantee, they would be in a position to recover from the defaulting
contractor. Consequently a contractor who was financially sound and could offer
adequate collateral experienced no difficulty in obtaining a guarantee, [85] whereas
Copyright © 2019. Juta & Company, Limited. All rights reserved.

one who had limited financial resources was unlikely to succeed in doing so. To a
discerning employer, the contractor’s difficulty in obtaining a construction guarantee
should have been a clear indication that the contractor was inadequately capitalised
to carry out the contract, that there was an increased risk of insolvency and that the
contractor would be unlikely to be able to meet a claim for damages in the event of
insolvency or a breach of contract.
In practice, the threat of having his construction guarantee called up was a
powerful incentive to the contractor to pay the amount due to the employer; if his
construction guarantee was called up, it would be unlikely that the financial institution
that provided it would provide him with another in the future, nor would any other

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
financial institution be likely to do so, and he would be unable to undertake contracts
using the JBCC Agreements. This could be the kiss of death to his business.

Page 115

This form of construction guarantee has been carried over into Edition 6.2 of the
PBA and NSSA [clause 11.0], and is now referred to as the guarantee for
construction. This guarantee is defined as ‘A security in terms of the JBCC
guarantee for construction form obtained by the contractor from an institution
approved by the employer [CD]’. The contractor has the choice of selecting either a
variable or a fixed guarantee for construction which he may offer [clauses 11.1.1;
11.1.2]. [86] The amount of cover that the guarantee for construction is to provide, and
the stages at which this cover decreases and the guarantee finally lapses, is
contained in the JBCC guarantee for construction form. [87] The variable guarantee
for construction provides for a maximum guarantee sum not exceeding 10%
reducing to a sum not exceeding 6% of the contract sum on the date of issue of the
only certificate of practical completion or last certificate of practical completion where
there are sections. The guaranteed sum is further reduced to 4% on the date of
issue of the only certificate of final completion or last certificate of final completion
where there are sections; reduces to 2% of the contract amount from and including
the day after the date of the applicable certificate of final completion and up to and
including the date of issue of the final payment certificate where payment is due to
the contractor, whereafter the guarantee for construction shall expire.
11.4 Fixed guarantee for construction
The fixed guarantee for construction [clause 11.1.2] is an arrangement which, to
some extent, replicates the old concept of the retention fund coupled with a surety.
As the name implies, the contractor is required to provide a guarantee for
construction, [88] but for a fixed amount that is initially less than in the case of the
variable construction guarantee not exceeding 5% of the contract sum [clause
11.1.2] and it lapses on the date of the only certificate of practical completion or the
last certificate of practical completion where there are sections, whereafter this
Copyright © 2019. Juta & Company, Limited. All rights reserved.

guarantee for construction shall expire. Furthermore, the contractor is not paid the
full amount of interim payment certificates [clause 25.12.1]. Where the guarantee for
construction (fixed) and payment reduction has been chosen by the contractor, the
value of the works and materials and goods that exceeds the contract sum and any
contract price adjustments shall be certified in full up to the date of practical

Page 116

completion [25.12]. The value certified that does not exceed the contract sum shall
be subject to a reduced payment of 95% of the value of the works and materials and

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
goods under each interim payment certificate up to the date of practical completion
[clause 25.12.1]. [89] Thereafter, until the date of final completion, he is paid 97.5% of
such value [clause 25.12.2]. Only under the final payment certificate is he paid the
full value of the works [clause 25.12.3]. There is no requirement that the amount
withheld by the employer be paid into an interest-bearing account with a financial
institution, [90] and consequently the money that is withheld remains in the
possession of the employer and the contractor is not entitled to interest on it.
11.5 Comparison between the forms of security
The choice between the alternative forms of security to be provided lies with the
contractor as set out in clauses 11.1, 11.1.1 and 11.1.2, who can be expected to
choose the one that is least burdensome to him. As the size of the contracts that he
undertakes will be limited by the capital he has available to carry the costs between
one interim payment certificate and the next, he would be unlikely to opt for the fixed
construction guarantee, which would entail interim payments less than or only
marginally more than the cost of the work during the construction period. Provided
that he can provide the collateral required by the financial institution, the variable
construction guarantee is the more favourable.
In choosing the form of security to provide, the contractor should give serious
consideration to what his position might be should the employer become insolvent.
Where the contractor had provided a variable construction guarantee, he would, on
the insolvency of the employer and the termination of the agreement, have a claim
for the value of work done and materials provided since the last interim payment
against the guarantee for payment provided by the employer. Where he had
provided a fixed construction guarantee, this claim would also include the amounts
withheld on all certificates to date. The contractor would have a claim against the
guarantee for payment provided by the employer, and depending on the value of the
security provided, he may not be able to fully recover the portion of the deductions
made on the interim payment certificates, which amounts are held by the employer.
His position may be less favourable in the latter case.
From the point of view of the employer, who has no choice in the matter, the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

variable construction guarantee is the more favourable, as it provides a cover of 10%

of the contract sum during the first half of the construction period, when he is

Page 117

at greatest risk, and 6% in the second half, when his risk is somewhat less. [91] The
fixed construction guarantee provides cover that is initially equal to 5% of the
contract sum, and as the amount withheld by the employer increases, the cover will
gradually rise until practical completion is achieved. It provides the least cover at the
stage when the greatest protection is required.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
The superiority of the variable construction guarantee persists after practical
completion; it provides cover of 4% of the contract sum, whereas with the fixed
construction guarantee the cover is reduced to 2.5% until final completion is certified.
After final completion, the cover provided by the variable construction guarantee is
2% of the contract sum.
The contractor shall extend or provide a replacement guarantee for construction
(variable or fixed) [clause 11.2.1] and/or guarantee for advance payment [clause
11.2.2] at least 20 working days before such security is due to expire.
11.6 Default provision
Whichever form of security the contractor may have chosen to provide, [92] he is
required to provide it within fifteen working days of the acceptance of his tender
[11.1]. If he should fail to do so within this time limit, the employer would be entitled
to terminate the agreement [clauses 11.4.2 and 29.1.1] or alternatively to hand the
site over to the contractor to enable him to start work and to withhold such payment
from the contractor as he might otherwise have become entitled to under interim
payment certificates until the amount withheld is equal to 10% of the contract sum
[clause 11.4.1]. This amount would be held by the employer as a form of guarantee
in cash; he would not be required to deposit it in an account in a financial
institution, [93] and the contractor would not be entitled to interest on it. On practical
completion the amount so withheld by the employer would be required to be reduced
to 2.5% of the contract sum, and reducing to 0% in the final payment certificate.
It is difficult to view this arrangement as anything other than a recipe for disaster.
The contractor who has failed to provide his chosen form of security within the

Page 118

prescribed time limit has surely demonstrated that his financial position is not sound;
the financial institutions that he has approached for a guarantee for construction
have assessed him as an unacceptable risk. How, one wonders, is he going to move
on to site and start work, buy materials and hire plant and equipment, and pay his
Copyright © 2019. Juta & Company, Limited. All rights reserved.

workers and subcontractors with no income until the income that he would otherwise
have received has exceeded 10% of the contract sum? The chances of his survival
against such odds would seem to be very slight.
11.7 The guarantee for advance payment
The difficulty of protecting the interests of the employer where an interim payment
certificate includes the value of unfixed materials and goods that have not been
delivered to site and where the employer will not acquire ownership for any reason,
are discussed at 25.2 below, where the need for a suitable form of guarantee by the
contractor was identified. This is the guarantee for advance payment [clause 11.2.2].

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
This is a guarantee, procured by the contractor from a financial institution
approved by the employer and in favour of the employer. It provides that where the
employer has made an advance payment to the contractor in respect of materials
and goods purchased for the works by the contractor and stored off site and, for any
reason, he has not become the owner nor has the amount of the advance payment
been recouped, the guarantor will make good to the employer his loss up to the
amount of the guarantee.
The contractor is required to state in his tender whether he will require an
advance payment, and if so, for how much, and this information will be recorded in
the CD. [94] There is no requirement that the contractor shall furnish such guarantee
within any particular time limit, as is the case with the guarantee for construction,
[clause 11.1], and it would appear that he may furnish it at any time before he
requires the advance payment.
While the guarantee for advance payment was introduced to meet the situation
where a contractor, who had purchased goods the ownership of which he could not
yet transfer to the employer, required payment for such goods in an interim payment
certificate, there appears to be no reason why it should not also be used in the
situation where a subcontractor, who will fabricate goods for the works off site,
requires a deposit with order, such as often is the case with kitchen fittings and other
types of purpose-made work for a house or may also be used to provide sufficient
start-up money for the subcontractor.
A similar type of situation can, and often does, arise in respect of nominated and
selected subcontracts, and the NSSA makes exactly the same provision for a
subcontractor to provide the employer with a guarantee for advance payment.

Page 119

The amount of the guarantee for advance payment may be reduced by the
amount repaid by the contractor as certified by the principal agent in payment
certificates [clause 11.3]. If the advance payment is not repaid at practical
completion, or deemed practical completion, or by the date of termination by the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

employer due to contractor default, the entire outstanding amount shall immediately
become due and payable [clause 11.3].
11.8 Security to be provided by subcontractors
The NSSA contains almost identical provisions requiring the subcontractor to furnish
the contractor with security either in the form of a variable guarantee for construction
or a fixed guarantee for construction, the choice resting with the subcontractor.
Where either form of guarantee for construction is to be provided, the JBCC NSSA
guarantee for construction form is to be used.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
An anomalous situation could arise. The contractor could have chosen a fixed
guarantee for construction while a subcontractor could have chosen a variable
guarantee for construction. The contractor would be paid, in terms of interim
payment certificates, 95% of the value of work, materials and goods (including the
subcontract work, materials and goods), whereas the subcontractor would be
entitled to receive from the contractor the full value of work, materials and goods. For
the duration of the construction period, the contractor would therefore have to make
up the difference.
If a nominated or selected subcontractor requires an advance payment for goods
or materials that he may purchase for the works which will not be stored on site, he
must stipulate accordingly in his tender, stating the amount required. It is submitted
that the guarantee for advance payment provided by the subcontractor should be in
favour of the employer.
11.9 Guarantee for payment
The JBCC guarantee for payment is an undertaking by the guarantor to the
contractor to pay at call the certified amount in terms of a payment certificate where
the employer has made a partial or no payment within 14 calendar days of the date
of issue of the certificate or where the principal agent fails to issue a payment
certificate. At the end of such time, the contractor may give five working days’ notice
to the employer to comply, failing which the contractor may [clause 25.14.1] suspend
the works or [clause 25.14.2] exercise the lien where this has not been waived
[clause 25.14.3] or call up the guarantee for payment. Where the contractor wishes
to recover the certified amount from the guarantor, he must issue a first written
demand notice to the guarantor with a copy to the employer and follow the
procedure as set out in the guarantee for payment.
The employer is obliged to provide and maintain a payment guarantee if he
requires the contractor to waive his lien within fifteen working days of acceptance

Page 120
Copyright © 2019. Juta & Company, Limited. All rights reserved.

of the contractor’s tender, and likewise if the contractor states in his tender that he
requires such guarantee [clauses 11.5.1, 11.5.2 and 11.7]. The amount of the
guarantee required by the contractor must be specified by him in his tender. [95]
Unlike the NSSA, there is no requirement in the PBA that if the employer should
fail to pay the contractor in respect of any interim payment certificate, he shall
provide the contractor with a guarantee for payment for the unpaid balance of the
contract sum.
In the NSSA, the subcontractor may, in his tender, stipulate for the provision by
the contractor of a NSSA guarantee for payment. Such guarantee shall be a

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
guarantee at call provided by a financial institution approved by the subcontractor
and shall be for an amount equal to 10% of the subcontract sum. [96] This shall be
provided by the contractor within fifteen working days of acceptance of the
subcontractor’s tender, failing which the subcontractor may after ten working days
notice, where such default has not been remedied, by further notice forthwith
suspend the n/s subcontract works until such security has been provided in terms of
the NSSA clause 11.5 or terminate the subcontract agreement in terms of NSSA
clauses 11.6 and 28.1.1.
Where the contractor has made a partial or no payment of the amount due on an
issued n/s subcontract payment advice, the subcontractor may give five working
days notice to comply, failing which the subcontractor may suspend the n/s
subcontract works [NSSA clause 25.13.1]; exercise the lien where this has not been
waived [NSSA 25.13.2] or call up the NSS guarantee for payment. [97]

Page 121

Execution
Chapter 12
Obligations of the parties
12.1 The employer shall:
12.1.1 Provide a guarantee for payment [11.5], where applicable
[CD]
12.1.2 Record specific requirements [CD] where the existing
premises will be in use and occupied during the execution of
the works, including restriction of working hours [CD]
12.1.3 Record and describe relevant natural features and known
services [CD] where the contractor shall be responsible for
their preservation
12.1.4 Define any restrictions to the site or areas that the
contractor may not occupy [CD]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

12.1.5 Give possession of the site to the contractor on the agreed

date [CD]
12.1.6 Effect and keep in force insurances in the joint names of the
parties, where the employer is responsible for providing
insurances [CD]
12.1.7 Make payments by the due date [25.10] [CD]
12.1.8 Make advance payments, where required [CD]
12.1.9 Permit reasonable access to the works by the contractor
and/or subcontractors subsequent to practical completion

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
to fulfil outstanding obligations [17.1.17 and 19.7]
12.1.10 Supply free issue [CD] to suit the programme
12.1.11 Define the extent of work to be carried out by direct
contractors [CD]
12.1.12 Ensure that the principal agent and/or agents provide
adequate construction information timeously to the
contractor
12.1.13 At the employer’s discretion make direct payment where the
contractor has failed to honour a n/s subcontract payment
advice after notice of default by a subcontractor to the
principal agent, the employer and the contractor [14.5
and/or 15.5]

Page 122

12.2 The contractor shall:

12.2.1 Have inspected the site and any existing structures and be
thoroughly acquainted with the conditions under which the
works is to be executed including means of access and any
matters which may influence the execution and/or the pricing
of the works
12.2.2 Within fifteen (15) working days of acceptance of the
contractor’s tender submit to the principal agent the
priced document with items priced to include all costs,
overheads and profit, extended and cast. Where the priced
document contains errors or discrepancies and/or prices
considered by the principal agent to be imbalanced or
unreasonable the principal agent and the contractor shall
adjust such prices without any change to the contract sum
12.2.3 Provide a guarantee for construction [11.1.1; 11.2.1]
12.2.4 Provide a guarantee for advance payment [11.2.2] where
applicable [CD]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

12.2.5 Effect and keep in force insurances in the joint names of the
parties where the contractor is responsible for providing
insurances [10.0] [CD]
12.2.6 Prepare and submit to the principal agent within fifteen (15)
working days of receipt of construction information a
programme for the works in sufficient detail to enable the
principal agent to monitor the progress of the works
12.2.7 On being given possession of the site commence the works
and proceed with due diligence, regularity, expedition, skill
and appropriate resources to bring the works to practical

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
completion and to final completion [21.12]
12.2.8 Provide everything necessary for the proper execution of the
works in compliance with the agreement
12.2.9 Coordinate the programme with subcontractors’ and direct
contractors’ programmes
12.2.10 Regularly update the programme to illustrate progress of the
works and revise the programme where the principal
agent has revised the date for practical completion
12.2.11 Regularly submit to the principal agent a progress report
and a schedule of outstanding construction information to
avoid delays to the works

Page 123

12.2.12 Cooperate with the principal agent in the preparation of

cash flow projections and the compilation of payment
certificates [25.1]
12.2.13 Designate a competent person to continuously administer
and control the works and to receive and implement notices
and contract instructions on behalf of the contractor
12.2.14 Maintain daily records of categories of persons and
construction equipment employed on the works and
regularly provide copies to the principal agent
12.2.15 Keep on site a copy of all construction information
required for execution of the works to which the employer
and principal agent and/or agents shall have reasonable
access
12.2.16 Allow the employer and principal agent and/or agents
reasonable access to the works, workshops and other
places where work is being prepared, executed and/or stored
12.2.17 Give notice forthwith to the principal agent and/or the
employer where items of free issue have been received
Copyright © 2019. Juta & Company, Limited. All rights reserved.

damaged prior to storage or, where on unpacking, are found

not to be in good order before installing such items
12.2.18 Provide, maintain and remove on practical completion all
temporary structures, construction equipment and notice
boards
12.2.19 On achievement of practical completion hand over to the
principal agent all information for the preparation of ‘as built’
documentation and applicable statutory and/or regulatory
approval certificates as well as operating and instruction
manuals and the like

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
12.2.20 Cede to the employer on the date of issue of the certificate
of final completion any guarantees, product warranties or
indemnities, pertaining to the works. This cession shall not
prejudice any other rights that the employer may have
[21.11]
12.2.21 Forthwith notify all subcontractors where a certificate of
practical completion and/or a certificate of final
completion has been issued by the principal agent for the
works, or a section thereof
12.3 The principal agent and the contractor shall hold regular meetings to
monitor progress of the works and to deal with technical and coordination
matters. The principal agent shall record and timeously distribute the
minutes of such meetings

Page 124

Commentary
12.0 Obligations of the parties
12.1 Obligations of the employer under the PBA
The prime obligations of the employer under the contract are to appoint agents, to
hand over the site to the contractor, to provide drawings, construction information
and instructions as required, to make payments in accordance with the agreement
and to provide a payment guarantee if so required.
12.2 The obligation to appoint a principal agent and other agents
The employer has an obligation in terms of clause 6.1 to appoint a principal agent
with full authority and obligation to act and bind the employer in terms of the
agreement. The principal agent, however, has no authority to amend the agreement.
Clause 6.2 makes provision for the employer to appoint other agents to deal with
specific aspects of the works in terms of the agreement. These other agents would,
Copyright © 2019. Juta & Company, Limited. All rights reserved.

for example, be the architect, if he is not the principal agent, the quantity surveyor,
various engineers, a land surveyor and other professional consultants. The
appointment of the principal agent and other agents is dealt with in greater depth in
Section 2 at 6.
12.3 The obligation to hand over the site
12.3.1 The common-law concept of possession
At the commencement of the construction period, [98] the site is required to be
‘handed over’ to the contractor by the employer to enable him to carry out the
[99] [100]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
contract. The contractor is put in possession [99] of the site, but ownership [100] of the
site remains with the employer.
As possessor of the site, the contractor occupies the site and, in common law, is
entitled to exclude anyone else from the site – including the lawful owner and his

Page 125

agents! However, the principal agent and the other agents require access to the site
to fulfil their duties under the contract, and the agreement requires the contractor to
afford them, and the employer, reasonable access to the site [clause 12.2.16].
The contractor is put in possession of the site to enable him to carry out the
contract, and he may not abuse his right by using the site for any other purpose—for
accommodating families of workers or squatters as [clause 17.1.19] or for storing
plant and equipment not required for the execution of the contract, for example.
12.3.2 Legal consequences of the contractor’s possession of the site
While he is in possession of the site, the contractor must maintain it in the condition
in which he found it, and he is responsible for any loss or damage to it and any
improvements on it, including buildings, fences, trees and so on, whether or not such
loss or damage is directly attributable to anything done or not done by him [clause
8.1]. He must, at his own expense, take such precautions to protect the site and any
improvements from damage as could, in the circumstances, be considered to be
reasonably necessary. [101]
The contractor, in common law, is also delictually liable to third parties for any
injury or loss that he may cause them due to any negligence arising from his
occupation of the site and his activities thereon [clause 9.1].
Such liability does not extend to damage to adjoining properties due to
excavations on the site having affected their stability. The owner of the site has, in
law, an absolute liability to his neighbours for such damage, a liability which he
cannot contractually pass on to the contractor. It is therefore necessary to make
special provision in the agreement for the lateral support of adjoining properties
Copyright © 2019. Juta & Company, Limited. All rights reserved.

while their stability is threatened by excavations [clause 9.2.6], and for special
insurance against such damage [clause 10.1.4].
12.3.3 Contractor’s lien
The contractor has a lien, [102] on the site and the work that he has carried out as
security for the payment of any amount that might be due to him. A financial

Page 126

institution providing finance for a building project under a mortgage bond will

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
normally require the contractor to waive his lien on it so that if the employer were to
default on his obligations to the mortgagor, the mortgagor would be free to take
possession of the property and, if so authorised by the court, sell it to satisfy the
employer’s obligations to it. Consequently, the PBA gives the employer the right to
require the contractor to waive his lien, and the JBCC waiver of lien form should be
used for this purpose [clause 11.10].
Where the employer requires the contractor to waive his lien, he is required to
provide a guarantee for payment to the contractor, and the contractor is obliged to
furnish a waiver of lien [clause 11.10].
Where the State is the employer, the contractor does not acquire a lien on being
given possession of the site because in law no-one may acquire a lien over State-
owned land.
12.3.4 Where the contract is for alterations and additions to an existing
structure
Where the contract is for alterations and additions to an existing structure, the
position regarding possession of the site may change materially, depending on the
circumstances of the particular case. The contractor may be given possession of a
portion of the site, and acquire the right of lien over it, or he may only be granted
access to the portion of the existing structure in which he is to carry out work and
would probably not acquire any right of lien.
12.3.5 Handing over the site
The employer is required to appoint an agent, usually a registered land surveyor, to
establish the boundary pegs of the site and to point these out to the contractor in the
presence of the principal agent [clauses 13.1.1 and 13.1.2]. [103] The principal agent
is required to define the levels which are required for the execution of the works,
normally in relation to some immovable datum point inside or outside the site and
usually established by the land surveyor [clause 13.1.2]. The contractor must take
care not to disturb these pegs and reference points, and should he do so, must
replace them at his own expense [clause 13.2.2].
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 127

The principal agent is required to provide the contractor with such information as
shall enable him to set out the works correctly [clause 12.1.12]. He is also required
to provide assistance and whatever else may be needed for the accuracy of setting
out to be checked. There is no obligation, however, on the principal agent or anyone
else to check the accuracy of the setting out, and failure to do so would not
constitute negligence. The contractor is obliged to rectify any incorrect work arising
out of inaccurate setting out at his own cost, [104] except where such incorrect work

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
arises from incorrect information supplied [clause 13.2.3].
12.4 The obligation to provide a guarantee for payment
When a contractor is required to waive his lien, he will be surrendering an important
means of enforcing payment for his work, and as a quid pro quo the employer is then
obliged to provide a guarantee for payment [clause 12.1.1] using the JBCC
guarantee for payment form. Even where the contractor is not required to waive his
lien, he may, in his tender form, stipulate that he requires the employer to furnish a
guarantee for payment for a specified amount. If so, the employer is obliged to
provide a guarantee for payment within 15 working days of acceptance of the
contractor’s tender [clause 11.5.1].
12.5 The obligation to make payments in accordance with the agreement
Perhaps the most important of the employer’s obligations is to pay the agreed price
for the work performed by the contractor, and this is fully discussed in Section 2 at
25.
12.6 The obligation to provide construction information and instructions
The contractor has undertaken to carry out the work in accordance with the drawings
and instructions issued from time to time by the principal agent and is entitled to
receive whatever information, whether in the form of drawings or otherwise, that he
may need to fulfil his contractual obligations.
In former, more leisurely times it was the general practice to prepare all drawings
before inviting tenders, and the contractor commenced work with all the information
that he was likely to need. But in the present economic climate it is far more usual to
invite tenders on the basis of provisional bills of quantities, and to prepare drawings
for construction purposes during the construction period – the so-called ‘fast track’
contract. This can put considerable pressure on the architect and structural engineer
and it is often essential that the production of outstanding drawings is carefully
planned to ensure that the contractor is kept supplied with
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 128

necessary information. The contractor is to prepare and submit a programme to the

principal agent for the works in sufficient detail to enable the principal agent to
monitor the progress of the works [clause 12.2.6]. This programme is to be regularly
updated and revised where the principal agent has revised the date for practical
completion [clause 12.2.10]. It is submitted that the contractor normally includes a
schedule of information required in conjunction with the principal agent for the
preparation and release of outstanding construction documentation and agrees
dates for the release of each item of documentation [clause 12.2.11].

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
The contractor is also entitled to receive instructions regarding the nomination of
nominated subcontractors and the selection of selected subcontractors [clause
17.1.14], materials and goods for which prime cost amounts have been provided in
the bills of quantities or priced document, and work for which contingency and other
monetary provisions have been included in the contract sum [clause 17.1.13].
The employer, or the principal agent on his behalf, is obliged to furnish all such
drawings and instructions at such respective times as will enable the contractor to
fulfil his contractual obligations, that is to say, at such times as will not cause delay to
practical completion. But the agreement foresees the possibility of the late issuing of
drawings and instructions, and provides for this eventuality by permitting the
contractor appropriate additional time in such event [clause 23.2.5].
12.7 Obligations of the contractor under the PBA
12.7.1 The obligation to submit priced bills of quantities or lump-sum
document
The contractor’s tender is a lump-sum price for carrying out the work, and his copy of
the bills of quantities, in which he has calculated his price, does not accompany his
tender. Only if his tender is accepted is he obliged to submit [105] a fully priced copy of
the bills of quantities for checking by the principal agent, [106] and for incorporation in
the agreement. The bills of quantities will be used to provide appropriate rates
primarily for valuing variations, but also for valuing work in progress for interim
payment certificates.

Page 129

In a ‘lump-sum’ contract (a contract without bills of quantities) the contractor may

have adopted an unsophisticated approach to pricing his tender and may have done
so on the basis of a rate per square metre of floor area. A more sophisticated
contractor may have prepared a schedule of rough quantities that he has priced out.
There is no obligation on the contractor to reveal how he has priced his tender, and
there is therefore no basis in such contract for valuing variations and work in
Copyright © 2019. Juta & Company, Limited. All rights reserved.

progress comparable to the bills of quantities. The contractor’s priced schedule falls
under the definition of priced document.
The priced document may [107] contain a schedule of selected items of work to
which the successful tenderer would be obliged to attach rates or prices. The
principal agent may check these rates and prices, and he and the contractor shall
adjust prices where they are considered imbalanced or unreasonable, and to
eliminate errors without changing the tendered contract sum [clause 12.2.2].
In terms of clauses 14.1.3 and 15.1.3 of the NSSA the subcontractor is required to
submit his priced bills of quantities or priced document to the contractor for scrutiny

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
before acceptance of his tender. This is for inclusion with the subcontract documents
for signature; the contractor is not concerned with checking the rates in the
subcontract bills of quantities, which would be done by the principal agent or the
agent concerned with the subcontract.
12.7.2 The obligation to furnish security
Clause 11.0 provides for two alternative forms of security for the due performance of
the contract to be furnished by the contractor, [108] and the choice rests with the
contractor who is required to indicate his choice in his tender [clause 11.1]. The
employer is obliged to hand over the site on the date stipulated in the CD whether or
not the security has been furnished. In the event that the contractor fails to provide a
security within 15 working days of acceptance of his tender, the employer may either
accept the default form of security [clause 11.4], or terminate the agreement [clauses
11.4.2 and 29.1.1].
12.7.3 The obligation to furnish a waiver of lien
Where the contractor is required to waive his lien [clause 11.10], he shall do so,
using the JBCC waiver of contractor’s lien form, on receipt of a guarantee for
payment from the employer [clause 11.10].
12.7.4 The obligation to appoint a site representative
The contractor is required to have on site at all times a competent representative to
administer and control the works with whom the principal agent can discuss the

Page 130

progress of the works and to whom he can give contract instructions and notices
[clause 12.2.13].
Traditionally, the contractor’s representative on site was a site foreman. [109] He
had started his career as an artisan – frequently a carpenter, sometimes a bricklayer
– and having acquired a wealth of practical experience and being possessed of a
measure of organising ability, was put in charge of the day-to-day running of the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contract on site, responsible, inter alia, for setting out the works, ordering materials,
coordinating the work of the various trades and subcontractors, hiring and firing
workers, and taking instructions from the employer’s agents.
The traditional foreman is seldom encountered today, and his place has been
taken by a variety of site agents, contracts managers and clerks who attend to the
various aspects of the administration of a building project. They are frequently
university graduates with degrees in quantity surveying or project management, but
often lack the practical knowledge and experience that characterised the traditional
foreman.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
12.7.5 The obligation to prepare a construction programme
The common-law position is that the contractor, having contracted to carry out
certain work within an agreed time, is free to carry it out in whatever manner and
tempo he wishes. It is no business of the employer if he dawdles for the first half of
the construction period and then works like a beaver to complete in time
Nearly all building contracts modify this right to a greater or lesser extent. The
PBA requires the contractor to proceed ‘with due . . . diligence, regularity and
expedition’ [clause 12.2.7], and requires the contractor to prepare and submit to the
principal agent within 15 working days of receipt of construction information, a
programme for the works [clause 12.2.6]. This programme is to contain sufficient
detail to enable the principal agent to monitor the progress of the works. The
purpose of the programme is to demonstrate how the contractor intends to comply
with his obligation ‘to proceed with due . . . diligence, regularity and expedition’ and
complete the works by the stipulated completion date, and to enable the principal
agent to monitor the progress of the works and establish whether the contractor will
indeed complete the works by the agreed date. Should the contractor deviate
appreciably from the programme, he is required to revise it.
This programme shall fully include the work of subcontractors and direct
contractors, and the obligations of the subcontractors in terms of such programme

Page 131

shall be agreed with the subcontractors concerned. The subcontractors are not
required to programme their own work. [110]
There is no obligation on the principal agent to approve the programme, and
should he do so, such approval does not vary the legal obligations of the parties. [111]
Where the contract has been entered into on the basis of provisional bills of
quantities, and construction documentation is not complete at the outset of the
construction period, the contractor is required, in consultation with the principal
agent, to identify realistic dates for the release of outstanding construction
Copyright © 2019. Juta & Company, Limited. All rights reserved.

information, [112] and the reasonable availability of such information may have a
significant effect on his construction programme.
The contractor is further required to regularly update the programme to illustrate
progress of the works and to revise the programme where the principal agent has
revised the date for practical completion [clause 12.2.10].
12.7.6 The obligation to carry out and complete the work in accordance with
the agreement
The contractor’s first and most obvious obligation is to carry out the agreed work,
and to do so to a satisfactory standard and by the agreed date [clause 12.2.7]. [113]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Failure to complete the works by the agreed date renders him liable to penalties for
non-completion. [114]
The scope of the works and the nature and quality of the materials to be used will
have been described in the drawings, specifications and bills of quantities. In most
building contracts, the bills of quantities have taken the place of a specification but,
in recent times, there has been a resurgence in architects once again providing

Page 132

specifications of work to be done and materials to be used [clause 5.4]. [115] In the
absence of bills of quantities, a specification is usually necessary to define the
quality of materials and workmanship to be employed, the manner in which the
contractor is to proceed with the works, and other requirements for the works that
cannot readily be shown on the drawings. If neither a specification nor bills of
quantities is provided, as not infrequently happens in the smaller lump-sum
contracts, the contractor’s obligation to provide anything not shown on the drawings
becomes uncertain. He is expected to provide what might reasonably be assumed to
be necessary for the proper completion of the works. For example, if the drawings
indicate baths, basins and other sanitary fittings but do not indicate the necessary
runs of water piping, it must reasonably be assumed that the contractor is obliged to
provide a piped water supply to all such fittings.
In the absence of a specification or clauses in the bills of quantities describing the
standard of work, the employer is not entitled to expect a superlative standard of
work; the contract is to be interpreted as obliging the contractor to provide a
reasonable standard of work, consistent with the standard of work normally found in
similar projects in the same geographical area. But such lack of a specification does
not excuse poor workmanship or unsuitable materials. The contractor is expected to
be competent and skilled in the work that he does, and the law implies a contractual
obligation that what he produces will be suitable and fit for its purpose and free from
defects.
The contractor, in undertaking to carry out and complete the works, is required to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

provide everything reasonably necessary to enable him to do so, including all plant
and equipment, and all temporary work such as formwork, propping, scaffolding, etc.
[clause 12.2.8]. [116]
The first edition of the PBA required that the work be done ‘to the reasonable
satisfaction of the architect’. [117] While this requirement has not been explicitly stated
in the current edition of the PBA, it is strongly to be inferred from the obligation
placed on the principal agent to issue a certificate of final completion which is
‘conclusive as to the sufficiency of the works and that the contractor’s obligations
have been fulfilled other than for latent defects’ [clause 21.12]. In approving such

Page 133

insofar as he performs this duty, but the manner in which he performs it, and the
standards he applies, must be his own, and he should not allow himself to be
influenced by the employer whose expectations and standard may be higher than his
own. [118] He has an obligation to be fair and impartial to both parties, and it is a
matter of professional honour to most principal agents to be so. The remedy of the
contractor, who considers that the principal agent has been unreasonable in
disapproving work, lies in resorting to the dispute resolution provisions of the
contract [clause 30.0]. The employer, however, is bound by the decisions of his
agent. [119]
The principal agent’s seal of approval of the work is given by the certificate of final
completion, and prior to that he does not approve any portion of the works. In
particular, the issue of an interim payment certificate does not constitute evidence
that the principal agent approves the work or materials the value of which is included
in the amount certified [clause 25.8]. [120]
In the private sector it sometimes happens that the principal agent or other agent
is also the employer (as when he is contracting for the building of his own house) or
is a member of a consortium promoting the project. Failure by a principal agent or
other agent to disclose to a prospective contractor his interest in or involvement with
the employer would not be grounds to invalidate the contract, but would be unethical
conduct on the part of the agent. [121]
12.7.7 The obligation to provide satisfactory materials and workmanship
It is a term, implied by law, that materials used in the works will be free from defects.
The contractor is deemed to be an expert in building, and is expected to ensure that
the materials that he acquires for the works are not defective. He has the right, [122]
under the conditions of his contract of sale with the supplier, to return defective
materials for replacement and to claim any damages he may have suffered. He
Copyright © 2019. Juta & Company, Limited. All rights reserved.

cannot, by definition, detect latent [123] defects in materials, but when these manifest
themselves, he has an obligation to the employer to replace them or

Page 134

otherwise to be liable for damages, and he would still have his right of recourse
against the supplier. [124]
As an expert in building, he also warrants, by a term implied by law, that the
materials that he uses will be fit for their purpose, and if they turn out to be
unsuitable, he is obliged to replace them with suitable materials or to be liable for
[125]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
damages. [125]
This warranty of fitness for purpose is excluded where his freedom of choice is
removed by any specification of such materials laid down by the principal agent
and/or agents. Where a particular material is specified by trade name, he must use it
and no other or be guilty of breach of contract, even though he may believe it to be
unsuitable. [126] He remains liable for patent defects in such materials, but not for
latent defects.
The contractor is responsible for producing a satisfactory standard of
workmanship. This is a quality that is often very difficult to define. In the absence of a
contractual stipulation, the common-law position would be that the contractor has
undertaken to produce workmanship that is of a similar standard to that produced by
other competent contractors working in similar circumstances. [127]
12.7.8 Obligation to rectify latent defects
The contractor’s obligation is to complete the works free of patent defects. [128] Latent
defects may become apparent some time after final completion, and if they were due
to some breach of the agreement (i.e. use of materials or workmanship not in
accordance with the requirements of the agreement), the contractor would be liable
for their rectification.

Page 135

In theory, this liability lasts for the life of the building. [129] In practice, it often
becomes very difficult to prove that a defect that becomes apparent some years after
completion of the building is due to inferior materials and workmanship and not fair
wear and tear, defective design or specification, or any other circumstance. The
onus of proving that the contractor is liable for the defect lies with the employer.
Nevertheless in the JBCC Agreements, as a matter of policy and in order to reach
finality in the matter, the contractor’s liability for latent defects is contractually limited
to five years from the certified date of final completion [clause 22.1].
There is a further proviso that the contractor shall not be liable for latent defects in
Copyright © 2019. Juta & Company, Limited. All rights reserved.

materials and goods specified by trade name, where he has no right of substitution
[clause 8.5.6]. The employer is not, however, left without remedy; the contractor
cedes to him any right of action against the supplier and/or manufacturer of such
materials and goods that he may have.
12.7.9 Liability for design
See commentary in Section 2 at 7
12.7.10 The obligation to comply with statutory requirements
See commentary in Section 2 at 2

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
12.7.11 Suspension of the works by the contractor
The contractor may suspend the works after giving the employer and the principal
agent ten working days’ notice of his intention to do so [clause 28.1]. The conditions
under which the works may be suspended due to default by the employer or the
principal agent are listed [clauses 28.1.1 to 28.1.6].
A similar provision for suspension by a subcontractor is included in the NSSA.
12.7.12 Contractor’s obligations to nominated and selected subcontractors
The contractor stands in the same relationship to a subcontractor under a nominated
or selected subcontract agreement as the employer does to him under the principal
agreement, and many of his obligations to subcontractors are similar to those of the
employer to him: to give the subcontractor access to the portion of works necessary
for the execution of the subcontract works [130] (although the

Page 136

subcontractor does not take possession of any portion of the site or works and
enjoys no right of lien), to make payments in accordance with the subcontract
agreement, [131] and to provide drawings and instructions. [132]
The contractor is obliged to provide a guarantee for payment for the fulfillment of
his liability to the subcontractor, if requested by the subcontractor to do so, within 15
working days of acceptance of the subcontractor’s tender. [133] The guarantee shall
be for an amount of 10% of the subcontract sum and shall be in accordance with the
JBCC NSSA guarantee for payment form. Where the contractor has failed to pay a
subcontractor an amount that has been certified by the principal agent and paid by
the employer [clause 25.10], the subcontractor may give the contractor five working
days’ notice to comply, failing which he may suspend the n/s subcontract works, or
call up the NSSA guarantee for payment for the full balance of the n/s subcontract
sum not yet paid. [134]

Page 137
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Chapter 13
Setting out
13.1 The principal agent and/or an agent with delegated authority shall:
13.1.1 Point out boundary pegs or beacons identifying the site and
the datum level
13.1.2 Define the setting out points and levels required for the
execution of the works
13.2 The contractor shall:
13.2.1 Be responsible for accurate setting out of the works

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
notwithstanding checking by others
13.2.2 Be responsible for the preservation and the reinstatement of
boundary pegs, beacons and other survey information and,
where disturbed or destroyed, replace such items at his
expense
13.2.3 Not be responsible for incorrect setting out if incorrect
information was issued to the contractor. In such event the
contractor may be entitled to a revision of the date for
practical completion [23.2.5] and/or an adjustment of the
contract value [26.0]
13.2.4 Immediately suspend affected work to an appropriate extent
where encroachments of adjoining structures occur and
where undocumented services, natural features, articles of
value or relics are uncovered on site, and give notice to the
principal agent who shall issue a contract instruction on
how to proceed with the works. Any relics or other articles
found on the site shall remain the property of the employer

Commentary
13.1 Setting out
The principal agent would be well advised to delegate his authority for pointing out of
the boundary pegs and datum level to a registered land surveyor appointed by the
employer as another agent and to make the necessary arrangements with the
appointed land surveyor to enable him to attend the site handover meeting for this
purpose.
The principal agent is required to provide the contractor with such information as
shall enable him to set out the works correctly [clauses 13.1.1 and 13.1.2]. [135]

Page 138

The contractor is required to provide assistance and whatever else may be

needed for the accuracy of setting out to be checked. There is no obligation,

however, on the principal agent or anyone else to check the accuracy of the setting
out, and failure to do so would not constitute negligence. The contractor is obliged to
rectify any incorrect work arising out of inaccurate setting out at his own cost, [136]
except where such incorrect work arises from incorrect information supplied [clause
13.2.3]. It would be advisable for the principal agent to include a condition in the CD
for the contractor to price for the provision of a certificate from a registered land
surveyor certifying the correctness of the setting out of a new building.

Page 139

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Chapter 14
Nominated subcontractors
14.1 The principal agent and/or agents shall:
14.1.1 Prepare tender documents in conformity with the n/s
subcontract agreement and this agreement for work
intended to be executed by a nominated subcontractor
14.1.2 Call for tenders
14.1.3 Scrutinise the received tenders for compliance with the
tender documents, in consultation with the contractor, where
appointed
14.1.4 Nominate a subcontractor and instruct the contractor
[17.1.14] to appoint such subcontractor as a nominated
subcontractor in terms of the n/s subcontract agreement
and other tender requirements
14.1.5 Inform the contractor where an advance payment is to be
made to the subcontractor for an amount included in the
accepted tender and that a guarantee for advance payment
shall be provided by the subcontractor for the amount
stated [NSSA-CD]
14.2 The contractor may refuse to appoint such subcontractor:
14.2.1 Against whom the contractor makes a reasonable objection
14.2.2 Who refuses or fails to enter into a n/s subcontract
agreement and/or to comply with other tender requirements
14.2.3 Who has failed to provide a required security [NSSA-CD]
14.3 Where such subcontractor is not appointed by the contractor for the
reasons stated [14.2], or where the appointment of a subcontractor has
been terminated, another subcontractor shall be nominated and
appointed in accordance with a contract instruction issued by the
principal agent
14.4 Where the subcontractor has complied with the tender requirements, in
accordance with a contract instruction issued by the principal agent
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[17.1.14], the contractor shall:

14.4.1 Appoint the subcontractor as a nominated subcontractor
and forward a copy of the signed n/s subcontract
agreement to the principal agent
14.4.2 Provide a guarantee for payment in the amount stated
within fifteen (15) working days, where required in the n/s
subcontract agreement [CD]

Page 140

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
14.4.3 Forward the subcontractor’s regular payment claims to the
principal agent and/or agents by the date stated [NSSA-
CD]
14.4.4 Issue to each subcontractor (with a copy to the principal
agent) a JBCC® n/s subcontract payment advice and a
JBCC® n/s subcontract recovery statement to reconcile the
amount due for payment with the amount stated in the
JBCC® n/s subcontract payment notification issued by the
principal agent.
14.4.5 Pay the subcontractor the amount certified by the date
stated in the JBCC® NSSA n/s contract data [25.13]
14.5 Where the contractor fails to provide proof of payment to the
subcontractor within five (5) working days of a notice by the principal
agent, the employer may instruct the principal agent to certify direct
payment to the subcontractor and recover such amount from the
contractor [27.2.7]
14.6 Where a nominated subcontractor has been declared insolvent, or
where, after notification by the contractor, the principal agent agrees
that a nominated subcontractor is in default of a material term of the n/s
subcontract agreement, the principal agent shall instruct the
contractor to give notice to the subcontractor to rectify such default.
The principal agent shall instruct the contractor to terminate the n/s
subcontract agreement should such default continue for five (5) working
days after such notice [17.1.15]
14.7 Where a n/s subcontract agreement with a nominated subcontractor is
terminated:
14.7.1 Due to default or insolvency of the subcontractor [23.2.10],
or default of the employer, the principal agent and/or
agents [23.2.11], any variation in the cost of completing such
subcontract works shall be for the account of the employer
14.7.2 Due to default or insolvency of the contractor any variation
Copyright © 2019. Juta & Company, Limited. All rights reserved.

in the cost of completing such subcontract works shall be for

the account of the contractor. The employer may recover
expense and/or loss [27.2.8]
14.7.3 The principal agent shall instruct the contractor to appoint
another nominated subcontractor [14.1.4] to complete the
n/s subcontract works
14.8 There shall be no privity of contract between the employer and a
subcontractor appointed by the contractor

Page 141

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Commentary
14.0 The trend towards subcontracting: A general introduction
Those who earn their living in the building industry have, since very early times,
tended to specialise, and even in medieval times there were stone masons,
carpenters, bricklayers, plasterers and so on, who were members of guilds which
exercised strict control over their training and the manner in which they worked.
Initially, they worked directly for the building owner, either as employees earning a
wage, or as independent contractors under a contract to perform specific work. The
emergence of the building contractor a couple of centuries ago provided them with
more regular employment, mostly as employees but a few, maintaining their
independence, as subcontractors.
The current tendency among building contractors is to limit themselves to the so-
called wet trades, [137] and to engage subcontractors for the remainder of the work,
particularly the finishing and fitting aspects. [138] In some contracts, nearly all the
work, even the wet trades, is carried out under subcontracts, the principal contractor
confining himself to managing and controlling the process.
In large, complex and sophisticated building projects, a great deal of the work is
highly specialised which requires specialist subcontractors to be employed to carry
out such work. The types of specialisation include, but are not limited to, piled
foundations, plumbing and wet services especially incorporating solar and alternate
energy systems, air conditioning installations, fire detection and protection, vertical
transportation systems, electrical installations, façade installations incorporating
energy efficient glazing systems and many others.
As the trend towards subcontracting developed, employers saw the opportunity of
getting the best of both worlds, and the nominated/selected subcontract was
introduced, which enabled the employer to have the benefit of a principal contractor
to control the entire building operation (and to assume the risks that went with it)
while yet being able themselves to choose specific subcontractors to undertake
specific work, as they had previously been able to do.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

14.1 Nominated and/or selected subcontractors

The JBCC PBA makes provision for the appointment of both nominated
subcontractors [clause 14.0] and selected subcontractors [clause 15.0]; the

Page 142

advantages and disadvantages of the choice are set out below. The NSSA terms
and conditions are applicable to both nominated and selected subcontractors and
the differences between the two types of subcontractors are set out in more detail
below.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
14.2 Advantages and disadvantages of nominated and/or selected
subcontracts
There could be a variety of reasons why an employer, or his principal agent, might
wish to appoint a nominated or selected subcontractor to perform certain work,
instead of leaving the work to be measured and included in the bills of quantities for
the principal contract, which would allow the contractor to engage a subcontractor of
his own choice to perform the work:
• They may require work of a particularly high standard—panelling and joinery
in a board-room, for example—and would be prepared to pay an enhanced
price for the work to be done by a particularly skilled subcontractor of their
choice, instead of leaving it to the general contractor to subcontract to
whoever quotes him the lowest price.
• The work may be of such a specialised nature, such as an air-conditioning or
lift installation or façade cladding, involving an element of design by the
subcontractor, that it cannot be measured and billed in the normal manner,
and must be the subject of different and separate tendering techniques or
even of negotiation.
• Some of the requirements of the employer may not be available at the time of
tendering, and perforce a monetary allowance must be allowed for them that
would enable tenders to be invited from subcontractors to perform the work
when eventually the requirements are known and the tender documents can
be prepared. For example, the required type and layout of partitioning in an
office building might not be known until leases had been arranged, which
might not be until late in the construction period.
• There may be urgency in completing sufficient tender documentation for
tenders to be called for the principal contract. In order to save time, monetary
allowances could be allowed for work that would occur in the later stages of
the contract and which in any event would normally be carried out by
subcontractors, enabling the preparation of tender documentation for such
work to be deferred to a later date. In provisional bills of quantities a high
proportion of work is generally made the subject of nominated or selected
Copyright © 2019. Juta & Company, Limited. All rights reserved.

subcontracts. Nominated and/or selected subcontracts may account for the

major part of the contract sum of a large project, in which the number of
subcontractors could amount to fifty or more.

Page 143

Contractors, who depend on the co-operation of their subcontractors for the timeous
and profitable completion of their contracts, are understandably reluctant to enter
into nominated and/or selected subcontracts with unknown and untried
subcontractors unless there are contractual provisions to protect them. Most building

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
agreements contain provisions that absolve the contractor from liability for delays
caused by the default of nominated subcontractors, [139] and for the additional costs
that are incurred when a defaulting or insolvent nominated subcontractor has to be
replaced [clause 14.7.2].
These provisions have, over the years, been highly unpopular with employers, [140]
who lack the contractual nexus with nominated subcontractors that would enable
them to sue them for damages, and who are therefore left without remedy. This has,
in recent years, led to the introduction of the selected subcontractor in an attempt to
overcome the prejudice.
The selected subcontractor is, to all intents and purposes, the same as a
nominated subcontractor save that the contractor, not the employer, accepts the
consequences of delays caused by the default of a selected subcontractor, [141] and
for the additional costs that are incurred when a defaulting or insolvent selected
subcontractor has to be replaced [clause 15.7.2].
The contractor clearly is at a greater risk in employing selected subcontractors
than he is in employing nominated subcontractors, and in order to limit that risk he is
entitled to participate in the process of inviting tenders for selected subcontracts
[clause 15.1.1 and 15.1.2] and in selecting the successful subcontractor [clause
15.1.4]. Whether this eliminates the additional risk is uncertain; if it remains it is likely
that an astute contractor, when preparing his tender, will price for it. In practice,
selected subcontracts have largely replaced nominated subcontracts, but the
benefits that the employer enjoys quite possibly come at a price. [142] The
involvement of the contractor in the tendering process has the consequence that
selected subcontract documents cannot be finalised and

Page 144

tenders invited until the contractor has been appointed. If for any reason the principal
agent wishes to invite tenders for subcontracts before the contractor has been
appointed, such subcontracts must be nominated, not selected. Attempts to
circumvent this difficulty, as, for example, by listing in the tender documents for the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

principal contract the names of subcontractors from whom tenders for selected
subcontracts are being invited, do not conform to the letter and spirit of clauses
15.1.1–15.1.4 and the practice is strongly deprecated.
14.3 Entering into a nominated subcontract
A nominated subcontractor is a subcontractor who performs specific work for which a
monetary allowance, termed a provisional sum [clause 1.1], has been included in the
contract sum, or who performs additional work in terms of a contract instruction, [143]
and this subcontract shall be in terms of the JBCC NSSA. [144]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
Tender documents are prepared by the principal agent who thereafter invites and
receives tenders, [145] recommends the acceptance of one to the employer, [146] and
on receipt of the employer’s approval, instructs the contractor to enter into a
nominated subcontract with the successful tenderer in terms of clause 14.4.1. [147]
The contractor would be entitled to refuse to enter into a subcontract with a
subcontractor who has been nominated by the principal agent where:
• the subcontractor refuses to enter into a subcontract in terms of the JBCC
NSSA and other tender requirements [clause 14.2.2];
• the subcontractor is unable to produce security in terms of JBCC NSSA
[clause 14.2.3];

Page 145

• the contractor makes reasonable objection to appointing such subcontractor

[clause 14.2.1]. What would constitute ‘reasonable objection’ is uncertain, and
would depend on circumstances. A suspicion that the subcontractor’s
resources are too limited for him to complete the required scope of work within
the time available would, it is submitted, be grounds for reasonable objection,
as would previous poor delivery or service by the subcontractor experienced
by the contractor.
As a consequence of the contractor’s refusal to enter into a subcontract agreement
with a nominated subcontractor on the above grounds, the tender process must be
repeated to secure a new subcontractor.
The legal principles involved when the principal agent invites and accepts tenders
for nominated or selected subcontracts, and brings such subcontracts into existence,
do not conform to the conventional contractual model, and call for some explanation.
The employer wants to invite tenders from subcontractors, and yet does not want the
agreement that results from the accepted offer to be a contract between himself and
the subcontractor, but instead a subcontract between the contractor and the
subcontractor, in which the subcontractor is under contractual obligations to the
contractor and there is no privity of contract between the employer and the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

subcontractor. It is submitted that the principal agent, when he calls for tenders, does
not do so as the agent of the contractor – by no stretch of the imagination can he be
said to be the agent of the contractor – but as the agent of the employer, and that
such tenders are offers by the subcontractor to the employer to enter into a
subcontract, on agreed terms, with the contractor. On notification by the principal
agent that he has been nominated and that the contractor has been instructed to
accept his tender, the subcontractor comes under a contractual obligation to enter
into a subcontract with the contractor. Unless he has good reason to refuse to do so,
the contractor is under an obligation to the employer to accept the tender, thus
bringing about the desired subcontract.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
The implication of this proposition is that, if the subcontractor should amend or
withdraw his tender before it has been accepted by the contractor, thus aborting the
subcontract, the risk of financial loss in nominating or choosing a new subcontractor
lies with the employer, who has the right to claim damages from the defaulting
subcontractor. The right to such damages arises from the subcontractor’s breach of
his undertaking to the employer to enter into a subcontract with the contractor on the
agreed terms. The amount of such damages might be the additional cost of
accepting a higher tender, possibly additional professional fees, and the financial
loss that the resulting delay might cause.

Page 146

Chapter 15
Selected subcontractors
15.1 The principal agent and/or agents shall:
15.1.1 Prepare tender documents in conformity with the n/s
subcontract agreement and this agreement for work
intended to be executed by a selected subcontractor in
consultation with and to the reasonable approval of the
contractor
15.1.2 Call for tenders from a list of tenderers agreed between the
contractor and the principal agent
15.1.3 Scrutinise the received tenders for compliance with the
tender documents in consultation with the contractor
15.1.4 In consultation with the contractor, choose the compliant
tenderer to be appointed as a selected subcontractor in
terms of the n/s subcontract agreement
15.1.5 Inform the contractor where an advance payment is to be
made to the subcontractor for an amount included in the
accepted tender and that a guarantee for advance payment
shall be provided by the subcontractor for the amount
Copyright © 2019. Juta & Company, Limited. All rights reserved.

stated [NSSA-CD]
15.2 The contractor may refuse to appoint such subcontractor:
15.2.1 Who refuses or fails to enter into a n/s subcontract
agreement and/or to comply with other tender requirements
15.2.2 Who has failed to provide a required security [NSSA-CD]
15.2.3 Against whom the contractor makes a reasonable objection
where circumstances have changed
15.3 Where such subcontractor is not appointed by the contractor for the
reasons stated [15.2], or where the appointment of a subcontractor has
been terminated, another subcontractor shall be chosen in consultation

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
with the contractor and appointed in accordance with a contract
instruction issued by the principal agent
15.4 Where the subcontractor has complied with the tender requirements, in
accordance with a contract instruction issued by the principal agent
[17.1.14], the contractor shall:
15.4.1 Appoint the subcontractor as a selected subcontractor and
forward a copy of the signed n/s subcontract agreement to
the principal agent

Page 147

15.4.2 Provide a guarantee for payment in the amount stated in

the n/s subcontract data within fifteen (15) working days, of
such appointment where required in the n/s subcontract
agreement [CD]
15.4.3 Forward the subcontractor’s regular payment claims to the
principal agent and/or agents by the date stated [NSSA-
CD]
15.4.4 Issue to each subcontractor (with a copy to the principal
agent) a JBCC® n/s subcontract payment advice and a
JBCC® n/s subcontract recovery statement to reconcile the
amount due for payment with the amount stated in the
JBCC® n/s subcontract payment notification issued by the
principal agent
15.4.5 Pay the subcontractor the amount certified by the date
stated in the JBCC® NSSA contract data [25.13]
15.5 Where the contractor fails to provide proof of payment to a
subcontractor within five (5) working days of a notice by the principal
agent, the employer may instruct the principal agent to certify direct
payment to the subcontractor and recover such amount from the
contractor [27.2.7]
15.6 Where the selected subcontractor is in default of a material term of the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

n/s subcontract agreement, the decision of whether or not to terminate

the n/s subcontract agreement is that of the contractor
15.7 Where a n/s subcontract agreement with a selected subcontractor is
terminated:
15.7.1 Due to default by the employer, the principal agent and/or
agents, any variation in the cost of completing such
subcontract works shall be for the cost of the employer
[25.3.7]
15.7.2 Other than due to default by the employer the principal
agent and/or agents, any variation in the cost of completing

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
the subcontract works shall be for the account of the
contractor [25.3.7]
15.7.3 The principal agent shall instruct the contractor to appoint
another selected subcontractor [15.1.4] to complete the
subcontract works
15.8 There shall be no privity of contract between the employer and a
subcontractor appointed by the contractor

Commentary
15.0 Selected subcontractors
The basic concept of nominated and selected subcontracts is very similar—see
commentary at 14.2 above.

Page 148

15.1 Entering into a selected subcontract

A selected subcontractor is a subcontractor who performs specific work for which a
monetary allowance, termed a provisional sum, has been included in the contract
sum, or who performs additional work in terms of a contract instruction, [148] and this
subcontract is required to be in terms of the JBCC® NSSA.
Tender documents are required to be prepared by the principal agent in
consultation with and to the reasonable approval of the contractor, and tenders are
to be invited by the principal agent from a list of subcontractors that he has agreed
with the contractor [clause 15.1.1].
The principal agent, having consulted the contractor, instructs the contractor to
enter into a selected subcontract with the chosen tenderer in terms of the JBCC®
NSSA and any relevant tender conditions. Thereupon, the contractor is required to
appoint the selected subcontractor [clause 15.4.1] and where specified and within 15
working days, provide a JBCC NSSA guarantee for payment in the amount stated in
the n/s contract data. If he cannot, or if the contractor can advance acceptable
Copyright © 2019. Juta & Company, Limited. All rights reserved.

reasons [clause 15.2] [149] why he should not enter into a subcontract with the chosen
tenderer, the process must be repeated to choose another tenderer for appointment
[clause 15.3].

Page 149

Chapter 16
Direct contractors
16.1 The contractor shall:
16.1.1 In accordance with a contract instruction [17.1.16] permit

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
direct contractors [CD] to execute and/or install work as
part of the works. Such access to the works shall not
constitute deemed achievement of practical completion or
occupation by the employer [19.6]
16.1.2 Make reasonable allowance in the programme for such work
or installation
16.1.3 Be entitled to claim expense and/or loss caused by direct
contractors) [23.2.9; 27.1.7]
16.2 Payment of direct contractors shall be the responsibility of the employer
outside this agreement
16.3 There shall be no privity of contract between the contractor and a direct
contractor appointed by the employer

Commentary
16.0 Direct contractors
16.1 Work by the employer’s direct contractors
The common-law position is that the contractor, who has undertaken to erect and
complete the building, and who is given possession of the site to do so, is in
complete control of the site and may exclude anyone from it, even the rightful owner
of the site. This right is limited by the provision in the PBA [clause 16.1.1] that
requires him to give access to the employer’s appointed direct contractors. But,
without further contractual provision, the employer would not be entitled to engage
other workmen to carry out any work on the site while the contractor remained in
possession of it.
Under the Agreement and Schedule of Conditions of Building Contract in clause
24.3 the employer was given the very limited right to engage artists, craftsmen and
similar workmen to carry out work on site which was not part of the building contract
while the contractor was still in possession of the site. The intention was to permit
artistic work embellishing the building to be performed by independent artists who,
for various reasons, it was not practical for the contractor to employ as nominated
Copyright © 2019. Juta & Company, Limited. All rights reserved.

subcontractors.
In the first edition of the JBCC® PBA the scope of this provision as clause 22.0
was enlarged to include manufacturing and processing installations. However, it

Page 150

did not address the growing problem of ‘tenant installations’ in commercial

buildings, [150] which the employer and his tenants wished to have carried out as soon
as the works were sufficiently far advanced to permit this, so that the installations
were complete, or very nearly so, when the building itself reached practical

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
completion.
This requirement is catered for in the PBA Edition 6.2 [clause 16.1.1], in terms of
which the contractor is required, if so instructed by the principal agent, to permit such
work to be executed by workmen engaged by the employer, provided that the type
and extent of such work has been described in the CD [clause 17.1.16]. [151] The
contractor is required to make reasonable provision for such work in his programme
[clause 16.1.2]. Any delay to practical completion of the works that might be caused
by such workmen would entitle the contractor to a revision of the date for practical
completion and financial compensation [clause 23.2.9; 27.1.7]. Such workmen are
subject to the reasonable control of the contractor. [152] The contractor is not
responsible for the performance by such workmen of their work, nor for any risks
associated therewith [clause 9.2.2]. [153]

Page 151

Chapter 17
Contract instructions
17.1 The principal agent may issue contract instructions to the contractor
regarding:
17.1.1 Rectification of discrepancies, errors in descriptions or
omissions in the agreement other than in the JBCC®
Principal Building Agreement
17.1.2 Alteration to design, standards or quantity of the works
provided that such contract instructions shall not
substantially change the scope of the works
17.1.3 The site [13.0]
17.1.4 Compliance with the law, regulations and bylaws [2.1]
17.1.5 Provision and testing of samples of materials and goods
and/or finishes and assemblies of elements of the works
17.1.6 Opening up of work for inspection, removal or re-execution
[23.2.4; 26.4.2]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

17.1.7 Removal or re-execution of work

17.1.8 Removal or substitution of any materials and goods
17.1.9 Protection of the works
17.1.10 Making good physical loss and repairing damage to the
works [23.2.2]
17.1.11 Rectification of defects [21.2]
17.1.12 A list for practical completion specifying outstanding or
defective work to be rectified to achieve practical
completion, a list for completion and a list for final
completion specifying outstanding or defective work to be

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
rectified to achieve final completion
17.1.13 Expenditure of budgetary allowances, prime cost amounts
and provisional sums
17.1.14 Appointment of a subcontractor [14.0; 15.0]
17.1.15 Termination of a nominated n/s subcontract agreement
[14.6]
17.1.16 Work by direct contractors [16.0]
17.1.17 Access by other or previous contractors to remedy defective
work
17.1.18 Removal from the site of any person employed on the works

Page 152

17.1.19 Removal from the site of any person not engaged on or

connected with the works
17.1.20 On suspension or termination, protection of the works,
removal of construction equipment and surplus materials
and goods [29.0]
17.2 The contractor shall comply with and duly execute all contract
instructions
17.3 Should the contractor fail to proceed with a contract instruction with
due diligence, the principal agent may give notice to the contractor to
proceed within five (5) working days of receipt of such notice. Where the
contractor remains in default, the employer may engage others to carry
out such contract instruction and recover expense and/or loss incurred
[27.2.3]
17.4 The contractor shall not be obliged to execute contract instructions for
additional work issued after the certified date of practical completion
17.5 Oral instructions shall be of no force or effect

Commentary
Copyright © 2019. Juta & Company, Limited. All rights reserved.

17.0 Contract instructions – Introduction

Building contracts differ from almost any other form of contract in one significant
respect: that after the parties have reached agreement about all the aspects of the
contract, one of them, the employer, has the unilateral right to vary the extent and
nature of the performance to be rendered by the other party. This is not a common-
law right; it is a right created by the agreement. Without this right, the employer or
his principal agent would not be entitled to require the contractor to perform any
additional work, or to vary or omit the work that he had contracted to perform. If the
employer required additional work to be done, or work which the contractor had
contracted to perform to be varied or omitted, the employer would be put to negotiate

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
such variation with the contractor, who would be entitled to refuse to vary the work,
or to accept it on terms which might be very disadvantageous to the employer.
Where there is provision for the employer or his principal agent to vary the scope
of work, the other party, the contractor, cannot refuse to carry out the varied
obligation, and his only remedies would be an adjustment of the price he is entitled
to be paid for the performance, and, in appropriate circumstances, an extension of
the time in which to complete the contract.

Page 153

The nature of building and construction contracts is such that this sort of provision
is essential. Unforeseen conditions [154] may arise which require measures that have
not been provided for in the contract. An unfortunate aspect of this provision,
however, is that it makes it easy for the employer to change his mind and even to
embark on a building project without having properly thought through his
requirements. [155] The bills of quantities provide an easy way of establishing the cost
of such variations, encouraging this trend. In countries, such as the USA, where bills
of quantities are not used, the cost of such variations has to be negotiated with the
contractor, who is in a strong bargaining position, and consequently there is a
powerful disincentive against variations.
Clause 17.1 provides that the principal agent [156] may issue contract instructions
to the contractor regarding 20 specific items listed as clauses 17.1.1 to 17.1.20.
17.1 Instructions to rectify discrepancies, errors in description or omissions
in the construction information other than this agreement
The nature and extent of the work to be performed under the agreement will be
shown and described in a large variety of small- and large-scale drawings, diagrams,
schedules, specifications and descriptions in the bills of quantities, prepared by the
architect and other agents, and discrepancies, errors and omissions in such
documents are inevitable. Clause 17.1.1 permits the principal agent to give
instructions to resolve such errors and discrepancies, [157] and to rectify omissions,
Copyright © 2019. Juta & Company, Limited. All rights reserved.

and indeed it is essential that he does so.

The Preliminaries directs the tenderer to check the numbers of pages of tender
documents against any index provided, and if any pages are missing or indistinct, or
if the intent or meaning of any description is unclear or if the documents contain any
obvious errors, he is required to inform the principal agent who must

Page 154

promptly give a written directive. But his obligation goes no further, and he has no
general obligation to check all drawings and other documents issued to him, each

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
against the other, nor is he liable for the cost of re-doing work that he has incorrectly
carried out through failing to perceive an error in the documentation. The
responsibility of producing correct drawings and other documents lies squarely on
the shoulders of the agents concerned.
But where work is carried out under two or more consecutive contracts, [158] the
Preliminaries requires the contractor to check levels, lines, profiles, etc., of work
carried out under a previous contract and to satisfy himself that it is dimensionally
accurate. He must notify the principal agent of any inaccuracies in such work and
request instructions as to any measures that might need to be taken to deal with
such inaccuracies.
17.2 Instructions that vary the design, quality or quantity of the works
Clause 17.1.2 authorises the principal agent to issue contract instructions to the
contractor regarding ‘alteration to the design standards or quality of the works
provided that such contract instructions shall not substantially change the scope of
the works’. The powers here given to the principal agent are very wide, and he is
empowered to add considerably to the building that is being erected, or on the other
hand, to order that portions of the contemplated building be omitted. He can order
that one type of building material be substituted for another. He can order
equipment, such as air-conditioning plant, to be installed where originally it had
formed no part of the contract. But he may not give instructions that ‘substantially
change the scope of the works’.
It is unclear how substantial a change must be to ‘substantially change the scope
of the works’. [159] It is submitted that these words mean that the instructions may not
have the effect of changing the building from one type to another, from a hotel to an
office building, for example. Nor may they have the effect of causing a substantial
increase or decrease to the contract value. [160] But how great a change is
‘substantial’? Does it matter? There are contractual provisions [clauses 26.1; 26.2.1–
26.2.3] to meet almost any prejudice that the contractor might suffer from the
excessive wielding of this power, so it would in most cases be difficult for the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 155

contractor to allege that the excessive use of this power is a breach of contract
entitling him to damages.
The contractor ceases to be obliged to carry out such instructions after the issue
of the certificate of practical completion [clause 17.4].
17.3 Instructions dealing with the site [13.2.4]
Where undocumented services, natural features, articles of value or relics are
uncovered on the site, the contractor shall immediately suspend all affected work in

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
the vicinity and give notice to the principal agent who shall issue a contract
instruction on how to proceed with the works [clause 13.2.4].
The suspension of a portion of the works resulting from the discovery of
undocumented services may cause a delay to the date for practical completion
should the affected area be on the critical path in the contractor’s programme and
the principal agent would need to act with expediency in such matters to avoid any
unnecessary delay to the works.
17.4 Instructions regarding compliance with the law, regulations and bylaws
[2.1]
The principal agent is empowered to instruct the contractor how to proceed where
work shown on the drawings does not comply with the law, regulations and bylaws
[clause 17.1.4]. [161]
17.5 Instructions regarding provision and testing of samples of materials and
goods, and/or of finishes and assemblies of elements of the works
The principal agent is authorised to instruct the contractor to provide samples of
materials and goods, finishes and assemblies of elements of the works for approval
[clause 17.1.5]. Where the provision of assemblies and elements of the works have
a cost implication, the provision of such assemblies and elements needs to be
described in the CD for the tenderer to include such cost in his bid. In certain
building types such as blocks of flats, it is in the interests of all concerned with the
contract, to require the contractor to complete a sample, mock-up or show flat to set
the quality and standard of finish and elements required for the rest of the project.
He is further authorised to require that samples of work, materials and

Page 156

goods be tested, [162] to ensure that they conform to the agreement [clause
17.1.5]. [163]
17.6 Instructions regarding opening up of work for inspection, removal or re-
Copyright © 2019. Juta & Company, Limited. All rights reserved.

execution
Where work has been covered up before the principal agent has had the opportunity
to inspect it, [164] the principal agent is permitted to require such work to be opened
up for inspection to ascertain conformity with the agreement [clause 17.1.6]. If it is
found that the work opened up did not conform to the agreement, the contractor is
required to bear the consequences of costs and delays for the removal and re-
execution thereof. If the work, on the other hand, is found to conform, the contractor
will not be liable for costs or delays arising therefrom.
17.7 Instructions regarding removal or re-execution of work

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
The principal agent may issue instructions regarding the removal or re-execution of
work found to be defective or not in conformity with the agreement [clause 17.1.7]. It
is submitted that this power and indeed, obligation, includes for example, the
demolition of skew or out of level brickwork which the principal agent notices during
his inspections and should be brought to the attention of the contractor by means of
a contract instruction as soon as such defective work is noted.
17.8 Instructions regarding removal or substitution of any materials and
goods
The principal agent is given the powers to instruct the contractor to remove or
substitute materials and goods brought onto site for inclusion in the works. This
power would, under normal circumstances, be exercised by the principal agent
where the materials or goods are found to be of a poor quality, incorrect colour, do

Page 157

not meet with the requirements of the specification and are not in conformity with the
agreement. The materials and goods are defined as being unfixed [clause 1.1]. The
principal agent is therefore not authorised to instruct the contractor regarding
materials and goods already built into the works [clause 17.1.8] as these are no
longer regarded as materials and goods as they are no longer unfixed. An instruction
regarding the removal and re-execution of work may be issued by the principal agent
[clause 17.1.7].
17.9 Instructions regarding protection of the works
The principal agent’s authority to instruct the contractor to protect the works from
damage, should be applied with caution [clause 17.1.9]. The contractor is
responsible for the works, and if he should choose not to take measures to protect
the works and instead accept the risk of damage and the liability to repair it, that is
his business. The principal agent who injudiciously instructs a contractor to take
protective measures which the contractor considers are unwarranted may face a
claim for the cost of such measures.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

17.10 Instructions regarding making good physical loss and repairing damage
to the works [8.0]
While the contractor is under an obligation to make good any physical loss and to
repair damage to the works during the construction period, he could not have
foreseen the circumstances nor be blamed nor penalised for it, and is therefore
entitled to additional time [clause 23.1.3]. Where the contractor is not at risk for the
loss or damage [clause 8.5] he would be entitled to financial compensation as well
[clause 23.2.2].

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 07:41:06.
17.11 Instructions regarding rectification of defects [21.2]
The principal agent may instruct the contractor to progressively rectify defects which
become apparent during the defects liability period whilst at all times minimising
inconvenience to the occupants of the building.
17.12 Instructions regarding a list for practical completion
The principal agent is required to issue a list for practical completion specifying
outstanding or defective work to be rectified to achieve practical completion and a list
for final completion specifying outstanding or defective work to be rectified to achieve
final completion [clause 17.1.12]. The procedure [clauses 19.3.1 and 19.3.2] requires
the principal agent to issue an updated list for practical completion where the work
listed on the original list for practical completion has not been satisfactorily rectified.
This process is to be repeated until all items on the list have been satisfactorily dealt
with, leading to the issuing of the certificate of practical completion by the principal
agent.

Page 158

17.13 Instructions regarding the expenditure of budgetary allowances, prime

cost amounts and provisional sums
Items in the bills of quantities or the priced document will, in all probability, have
directed the contractor, when preparing his tender, to make certain monetary
allowances in his tender, which will become monetary allowances in the contract. [165]
These would be provisional sums, prime cost amounts and budgetary allowances
which permit the employment of nominated and selected subcontractors, prime cost
amounts [166] for the purchase of specific materials and goods chosen by the principal
agent, and budgetary allowances for the execution of work by the contractor, the
extent of which is identified but not detailed. [167] There is usually also a contingency
sum for expenditure on unforeseen matters. [168]
The principal agent is required to give instructions regarding the purchase of
goods and materials for which prime cost amounts have been allowed, and work to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

be executed by the contractor for which budgetary allowances or a contingency sum

has been provided [clause 17.1.13].
17.14 Instructions regarding the appointment of a subcontractor [14.0; 15.0]
The principal agent is authorised to instruct the contractor to enter into subcontracts
with nominated and/or selected subcontractors [clause 17.1.14].
17.15 Instructions regarding termination of a nominated n/s subcontract
agreement [27.2.8]
Where a nominated subcontractor has been declared insolvent, or where after

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
notification by the contractor, the principal agent agrees that a nominated
subcontractor is in default of a material term of the NSSA, the principal agent shall
instruct the contractor to terminate the NSSA should such default continue for five
working days after such notice. The insolvency of the subcontractor is not, in itself, a
circumstance that will necessarily lead to the termination of the subcontract
agreement and the appointment of a new nominated subcontractor, but will
nevertheless be a circumstance that could cause substantial delays, which could be
neither foreseen by the contractor nor prevented by him, and as such he is entitled
to additional time in respect of the delay caused.

Page 159

Where the NSSA with a nominated subcontractor is terminated [clause 14.7.1],

the principal agent shall instruct the contractor to appoint another nominated
subcontractor.
17.16 Instructions regarding work by (a) direct contractor(s) [16.1.1]
The principal agent shall issue a contract instruction to the contractor where a direct
contractor(s) is required to execute and/or install work as part of the works as
provided for in the CD. The contractor shall permit such direct contractor(s) access
to the works and make reasonable allowance in the programme for such work or
installations [clause 16.1.2]. Access to the works by a direct contractor shall not
constitute deemed achievement of practical completion or occupation by the
employer [clause 16.1.1]. Unless very carefully managed, this situation has a
considerable potential for causing disruption and delay to the contractor, particularly
in the closing stages of the construction period as the works approach practical
completion and the agreement correctly entitles the contractor to claim expense and
or loss. The contractor may claim a revision of the date for practical completion and
an adjustment of the contract value where the works is delayed by the actions of a
direct contractor [clause 23.2.9].
17.17 Instructions regarding access by other or previous contractors to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

remedy defective work

Where work may have been carried out on site by a contractor under a previous
contract, and it becomes necessary for the previous contractor concerned, or his
subcontractors, to return to site to remedy defective work [clause 17.1.17], the
principal agent may instruct the contractor to afford access to such previous
contractor or his subcontractors to perform work where necessary. Such an event
may be as a result of earthworks carried out by an earthworks contractor in
preparation for the new building works on the site.
17.18 Removal from the site of any person employed on the works

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
This clause, [clause 17.18], which enables the principal agent to order the contractor
to remove from the site anyone employed on the works, should be used with great
discretion. It is intended to apply to an employee who is making a nuisance of
himself by brawling or fighting, or conducting some illegal activity such as brewing
liquor. It is not intended to be used to secure the dismissal of a worker whose work
the principal agent considers is of an unacceptable standard; this situation should be
left to the contractor to deal with and the principal agent should go no further than to
indicate to the contractor that the work being performed by a worker is not to the
required standard.

Page 160

17.19 The removal from the site of any person not engaged on or connected
with the works
The contractor is not entitled to use the site for any other purpose than the works nor
to permit anyone on to the site who is not employed on the works. The principal
agent may order the removal from the site of anyone not engaged on or connected
with the works [clause 17.1.19]. This is aimed at squatters, and the wives and
families of workers, who sometimes camp on the site.
17.20 On termination, protection of the works, removal of construction
equipment and surplus materials and goods
Where the contract is terminated by either party [clause 29.20], the principal agent
may issue a contract instruction for protective measures to be taken by the
contractor before work may cease, and in such case termination would only take
effect once the contractor has completed these measures. Such protective
measures would ensure public safety, and probably also safeguard the works
against unauthorised entry.
The contractor, if so instructed by the principal agent, is required to permit others
engaged by the employer to come on to site to carry out certain work on the contract
works [clause 16.1.1, and clauses 17.1.16 and 17.1.17]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

17.21 Limitation on power to issue instructions

The powers conferred on the principal agent are very extensive, so extensive that it
is possible to erect and complete a large and complex building with minimal sketchy
contract drawings heavily supplemented by contract instructions [clauses 17.1.1 to
17.1.20]. [169] This, in fact, is what happens in so-called ‘fast track’ contracts using
provisional bills of quantities. It is important, therefore, to appreciate that, although
the powers are extremely wide, they are not limitless, and to appreciate what
instructions a principal agent cannot give.
A contractor is entitled to programme the work in the way he thinks best and to
[170]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
arrange the manner and order in which he carries out the work, [170] and the principal
agent has no right to interfere. The principal agent cannot instruct the contractor
about the order in which he is to carry out the work, [171] nor can he

Page 161

instruct him to suspend work, or to accelerate work. Nor may he order the omission
of any work if the intention is to engage someone else to carry out that work [clause
17.1.2]. Any omission must be a genuine omission in the sense that the employer
does not want the work to be done at all. [172]
The principal agent’s power to issue instructions to the contractor to perform
additional work expires on the issue of the certificate of practical completion, other
than in respect of repairing damage to the works [clause 8.0] and the rectification of
defects [clauses 21.0 and 22.0.]. [173] The time for afterthoughts has passed!
17.22 Instructions to be given in writing
A contract instruction is defined in clause 1.1 as an instruction given in writing, [174] to
the contractor by the principal agent, and clause 17.5 specifically lays down that an
oral instruction shall be of no force or effect. [175] The PBA does not mention site
instructions although this term is very often referred to and many contractors provide
a site instruction book on site with triplicate pages and insist on the principal agent,
or other agents authorised to issue contract instructions, to record any instructions
given on site in this book. It is submitted that a prudent principal agent should retain
a copy of the recorded site instruction and confirm such instruction in a written
contract instruction properly identified and dated and receipt of which is signed by
the contractor or his authorised site representative.
17.23 Obligation to carry out instructions
The contractor is required to comply with and duly execute all contract instructions
[clause 17.2]. This does not necessarily mean immediately they have been issued;
when he should do so will depend on circumstances. Sometimes an
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 162

instruction, particularly an instruction to perform additional work or to vary the work,

may cause a delay to practical completion of the works as a whole [clause 17.1.2].
The contractor has an obligation to do whatever may reasonably be necessary to
minimise such delay, and this will probably mean promptly carrying out the
instruction.
If the principal agent considers that the contractor is not proceeding with due
diligence to execute a contract instruction, he may notify [176] the contractor to

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
proceed with the instruction within five working days of receipt of the notice. Should
he not do so, the employer may pay others to carry out the instruction [clause 17.3].
Expense or loss incurred by the employer in doing so may be recovered from the
contractor [clause 17.3]. The exercise of this right by the employer shall not
prejudice any other rights he may have against the contractor.
The contractor is not obliged to carry out any instruction to perform additional
work after the certified date of practical completion, save for making good damage
and rectifying defects [clause 17.4].
17.24 Financial consequences of instructions
The principal agent shall determine the value of adjustments to the contract value in
cooperation with the contractor in the preparation of the final account [clause 26.1].
The manner in which adjustments are to be made to the contract value resulting
from a contract instruction shall be determined on the basis of additional work
[clause 26.2]; requires the pricing of work of a similar character [clause 26.2.1]; work
not of a similar character [clause 26.2.2]; and the pricing of work which is neither of
the above two methods [clause 26.2.3]. Work omitted by means of a contract
instruction must be valued at the rates in the priced document [clause 26.2.4].
It must be self-evident that where the contractor is instructed to perform additional
work [clauses 17.1.2, 17.1.4 and 17.1.13] he is entitled to an upward adjustment of
the contract value, and where he is instructed to omit work [clause 17.1.2], to a
downward adjustment. Where the scope of work is varied, the contract value would
be varied by the difference between the value of the original work and the value of
the varied work.
It is trite to say that a party is not entitled to benefit from his own breach, and it
follows that contract instructions issued to deal with some breach by the contractor
would not entitle him to any recompense for expense incurred. Thus

Page 163

where the principal agent has ordered the removal and re-execution of defective
Copyright © 2019. Juta & Company, Limited. All rights reserved.

work [clause 17.1.7] or the removal and replacement of defective [177] materials and
goods [clause 17.1.8], he would not be entitled to any adjustment of the contract
value. Where covered work is instructed to be uncovered, and tests are instructed to
be performed on work, materials and goods, and the work, materials and goods are
found to be defective, the contractor would not be entitled to the cost of uncovering
and performing the tests [clause 17.1.6].
Normally, the contractor would not be entitled to the cost of protecting the works,
as this is part of his contractual obligations, but if ordered to provide protection
[clause 17.1.9] beyond the normal, he would be entitled to additional payment.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
He would not be entitled to an adjustment of the contract value in respect of
making good physical loss and repairing damage to the works unless he was not at
risk for such loss or damage, [178] but would instead enjoy the benefits of the
proceeds from the works insurance.
The contract value would be subject to adjustment where monetary allowances in
respect of the employment of nominated and selected subcontractors [clause 26.9.2]
and the prime cost amounts and budgetary allowances [clause 26.9.1] allowed for
the purchase of materials and goods differed from the actual amounts paid. Where
the contractor incurs expense or loss arising out of compliance with a contract
instruction for which he is not reasonably compensated [clause 26.2], he is entitled
to such compensation provided he notifies the principal agent of such expense or
loss within 20 working days of becoming aware, or ought reasonably to have
become aware of expense and/or loss for which provision was not required in the
contract sum, failing which he loses his entitlement to such compensation as his
claim shall be forfeited [clause 26.5]. This time-bar situation is one which contractors
need to take special note of and act timeously to avoid being time barred.
17.25 Contractor’s instructions
In the NSSA provision is made for the contractor to issue contractor’s
instructions, [179] which are effectively the same as those which the principal agent
may issue to the contractor in the PBA. This arrangement is logical; if the principal
agent wishes to issue an instruction that will require compliance by a

Page 164

subcontractor, he should issue the instruction to the contractor who will then repeat it
as a contractor’s instruction to the subcontractor. For the principal agent to give an
instruction directly to a subcontractor, bypassing the contractor, would undermine the
contractor’s authority on site and his ability to control and monitor the works.

Page 165
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Completion
Chapter 18
Interim completion
This clause applies only in the n/s subcontract agreement and is included to retain
same clause numbers between the two agreements

Page 166

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
Chapter 19
Practical completion
19.1 The principal agent shall:
19.1.1 Inspect the works at appropriate intervals to give the
contractor interpretations and direction on the standard of
work and the state of completion of the works required of the
contractor to achieve practical completion [CD]
19.1.2 Issue a contract instruction [17.1] consequent on each
such inspection, where necessary
19.2 The contractor shall:
19.2.1 Inspect the works in advance of the anticipated date for
practical completion to confirm that the standard of work
required and the state of completion of the works for
practical completion has been achieved
19.2.2 Give at least five (5) working days’ notice to the principal
agent of the anticipated date for the inspection for practical
completion of the works to meet the anticipated date for
practical completion
19.3 The principal agent shall inspect the works, or a of section thereof,
within the period stated [CD] and forthwith issue to the contractor:
19.3.1 A comprehensive and conclusive list for practical
completion [17.1.12] where the works has not reached
practical completion specifying the defects to be rectified
and work to be completed to achieve practical completion
19.3.2 An updated list for practical completion, limited to items on
the list for practical completion that have not been
attended to satisfactorily. The contractor shall repeat the
procedure until all items on the list for practical completion
have been dealt with satisfactorily before the certificate of
practical completion is issued by the principal agent
or
Copyright © 2019. Juta & Company, Limited. All rights reserved.

19.3.3 A certificate of practical completion with a copy to the

employer stating the date on which practical completion of
the works, or of a section thereof, was achieved
19.3.4 A list for completion with a copy to the employer

Page 167

19.4 Should the principal agent not issue a list for practical completion or
the updated list within five (5) working days after the inspection period, or
the certificate of practical completion, [19.3] the contractor shall give

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
notice to the employer and the principal agent. Should the principal
agent not issue such list within a further five (5) working days of receipt
of such notice, practical completion shall be deemed to have been
achieved on the date of such notice and the principal agent shall issue
the certificate of practical completion forthwith
19.5 On issue of the only or last certificate of practical completion the
employer shall be entitled to possession of the works and the site
subject to the contractor’s lien or right of continuing possession of the
works where this has not been waived. On issue of the certificate of
practical completion for a section, the employer shall be entitled to
possession of such section
19.6 Where the employer takes possession of the whole or a portion of the
works by agreement with the contractor, practical completion shall be
deemed to have occurred. The principal agent shall after inspection of
the works [19.3] issue a certificate of practical completion to the
contractor with a copy to the employer within five (5) working days of
the date of possession of the whole or a portion of the works by the
employer and the list for completion of items to be rectified and work to
be completed within a period to be agreed between the parties
19.7 On issue of the certificate of practical completion of the works or a
section thereof, where the principal agent instructs that installation work
is to be executed by others, the employer and/or contractor shall allow
access for such installations

Commentary
19.0 Practical completion
19.1 Definition
The definition of Practical Completion in the PBA Edition 6.2 differs from that which
appeared in earlier versions of the PBA in that it is no longer ‘in the opinion of the
Principal Agent’ to determine whether completion of the works has substantially been
Copyright © 2019. Juta & Company, Limited. All rights reserved.

reached and can be effectively used for the purposes intended. The new definition of
Practical Completion is now defined as the stage of completion as certified by the
Principal Agent where the works or a section thereof has been completed free of
patent defects other than minor defects identified in the list for completion and can
be used for the intended purpose [CD]. With the withdrawal by the JBCC of the
works completion stage in the earlier

Page 168

versions of the PBA, Edition 6.2 places greater emphasis on the state of practical

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
completion required and provision is made in the CD for the standard of practical
completion required to be specified in sufficient detail to enable tenderers to price
the works accordingly. The description of the state of practical completion required
will differ from project to project and guidelines of recommended descriptions are
included in the Standard Forms and Annexures in Section 5.
19.2 Contractor’s duty
The contractor is required to give sufficient advance notice of the date on which he
considers that the works will have reached practical completion to enable the
principal agent to make and complete his inspection on or before that date [CD].
Before giving such notice, the contractor must inspect the works himself to satisfy
himself that the standard of work and of completion is in accordance with the
standard indicated by the principal agent [clause 19.2.1]. [180]
If the principal agent considers that the works have reached practical completion,
he is required forthwith to issue to the contractor a certificate of practical
completion, [181] with a copy to the employer [clause 19.3.3]. [182] Where the works
have not reached practical completion the principal agent shall issue, within five
working days of the date of the practical completion inspection period, a
comprehensive and conclusive list for practical completion or the updated list of
items to be rectified and work to be completed with a copy to the employer which
defines the outstanding work and defects to be rectified to achieve practical
completion [clause 19.3.1]. When the contractor considers that he has completed all
the work on the list for practical completion, he shall give timeous notice to the
principal agent of the anticipated date for the inspection for practical completion. The
principal agent shall make an inspection of the works within the time period stated in
the CD. If the principal agent considers that the work has indeed been

Page 169

completed, he must issue the certificate of practical completion [clause 19.3.3]. If

not, he must indicate to the contractor the items on the list for practical completion
that have not been satisfactorily attended to and issue the updated list for practical
Copyright © 2019. Juta & Company, Limited. All rights reserved.

completion [clause 19.3.2]. This procedure is repeated until the principal agent is
satisfied that the works are practically complete and he is prepared to issue a
certificate of practical completion
If the principal agent should fail to issue a list for practical completion, or an
updated list for practical completion, within five working days of completing the
inspection, the contractor shall notify the employer and the principal agent
accordingly. Should the principal agent still fail to issue such list within a further five
working days of receipt of such notice, practical completion shall be deemed to have
been achieved on the date of such notice and the principal agent shall issue the
[183]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
certificate of practical completion forthwith. [183]
19.3 Principal agent’s duty
The duty of the principal agent is to ensure that the contractor complies with his
contractual obligations. To do so, he will need to visit the works on a regular basis to
make inspections to ascertain that the materials and goods that are being used, and
the work that is being done, is in conformity with the requirements of the agreement.
In common law he owes the contractor no duty to point out deficiencies as they
occur, [184] and is only obliged, when the contractor offers the building for acceptance
as complete, to reject it if he considers that it does not comply with the agreement
and to give reasons for his rejection.
In practice, such conduct would be intolerable, and most principal agents are
quick to point out deficiencies in materials, goods and workmanship required. The
principal agent is required to ‘inspect the works at appropriate intervals to give the
contractor interpretations and guidance on the standard of work and the state of
completion of the works required of the contractor to achieve practical completion’
[clause 19.1.1]. [185] The principal agent is required to issue a contract

Page 170

instruction [clause 17.1] to the contractor consequent to each such inspection, where
necessary. The purpose of this obligation on the principal agent is to record any
items that the principal agent discovers during his inspection and to instruct the
contractor to take the necessary steps to timeously rectify the matter. The principal
agent is also required to inform the contractor how long he will require to conduct an
inspection for the purpose of issuing a certificate of practical completion [clause
19.3]. [186]
19.4 Consequences of practical completion
On the issue of the certificate of practical completion the employer shall be entitled
to possession of the works and the site subject to the contractor’s lien or right of
continuing possession of the works where this has not been waived [clause
Copyright © 2019. Juta & Company, Limited. All rights reserved.

19.5]. [187]
On the achievement of practical completion, the employer takes possession of the
works; the contractor’s liability for penalties for late completion ceases; the contract
works insurance policy reduces until final completion; the public liability insurance
remains in force until final completion; the employer’s building owner’s insurance
commences; the contractor is no longer obliged to execute contract instructions for
additional work; the guarantee for construction (variable or fixed) reduces in terms of
the guarantee and the 90-day defects liability period for the works commences on
the calendar day after the date of practical completion.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
19.5 Certificate of occupation
The employer’s right to take possession of the works on practical completion is,
however, subject to a further condition about which the PBA is completely silent – the
issue of a certificate of occupancy in terms of s 14 of the National Building
Regulations and Building Standards Act 103 of 1977 as amended. In terms of this
provision, a duty is imposed on the local authority to issue a ‘certificate of
occupation’ if it is satisfied that the completed building has been erected in
accordance with the regulations.
‘A local authority shall within 14 days after the owner of a building of which the
erection has been completed, or any person having an interest therein, has

Page 171

requested it in writing to issue a certificate of occupancy in respect of such building–

(a) issue such certificate of occupancy if it is of the opinion that such building has
been erected in accordance with the provisions of this Act and the conditions
on which approval was granted in terms of section 7, and if certificates issued
in terms of the provisions of subsection (2) and, where applicable, subsection
(2A), in respect of such building have been submitted to it; [Para. (a)
substituted by s. 7 (a) of Act 62 of 1989.]
(b) in writing notify such owner or person that it refuses to issue such certificate of
occupancy if it is not so satisfied or if a certificate has not been so issued and
submitted to it.’
Any person who occupies or uses such building, or permits the occupation or use of
such building, where such certificate has not been issued, would be guilty of an
offence.
Normally the local authority’s building inspectorate and fire prevention officer
would inspect the works and satisfy themselves that the requirements of the Act
have been met, but the local authority also requires a certificate to be issued by the
structural engineer that the structural work complies with statutory requirements, as
well as certificates issued in respect of the electrical, mechanical and plumbing
Copyright © 2019. Juta & Company, Limited. All rights reserved.

installations, glazing, lifts and roof trusses where applicable. The local authority may
refuse to issue the certificate if building plans, amended to reflect all revisions in
which the works deviate from the building plans originally submitted and approved,
have not been submitted and approved.
It is the employer’s responsibility to obtain the certificate of occupancy, however,
this activity is often delegated to the principal agent to carry out this function on
behalf of the employer. The principal agent, where so delegated, usually arranges
the local authority inspections for the issuing of the certificate of occupancy in
conjunction with the contractor. It is submitted that a principal agent should

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
coordinate the obtaining of the certificate of occupation with the contractor and the
building inspector at the time of issuing the certificate of practical completion. If a
certificate of occupancy had not been issued due to some failure on the part of the
contractor to comply with an aspect of the Act, it would arguably be the contractor
who applies for the certificate of occupancy. Nothing is said about this in the PBA,
but a principal agent might be well advised to stipulate this as an added requirement
in the preliminaries, priced document or in the CD.

Page 172

Chapter 20
Completion in sections
20.1 Where completion in sections is required [CD] the terms and conditions
applicable to the works as a whole shall apply to each section
20.2 The principal agent shall for each section issue:
20.2.1 A certificate of practical completion [19.3]
20.2.2 A certificate of final completion, indicating where
applicable, if it is for the last section to reach final
completion [21.6.2]

Commentary
20.0 Sectional completion
Many major building projects are arranged to be completed in sections, each section
being handed over to the employer for his possession and use as it reaches practical
completion. Thus, in a multi-story commercial building, the parking basement, the
ground floor shops and the upper floor offices may constitute three separate sections
to be completed and delivered to the employer at different times. The extent of each
section requires clear definition, and the respective dates on which the different
sections are required to reach practical completion and the penalty provision for late
completion of each section are recorded in the CD [clause 20.1].
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Where different sections are required to be completed at different times as

stipulated in the CD, the terms and conditions of the agreement that would have
applied to the works without sections apply mutatis mutandis to each section [clause
20.1]. This principally affects the stages of completion. For each section the principal
agent shall issue a certificate of practical completion and a certificate of final
completion [clause 20.2.2] save that in respect of the final completion of the last
section to be completed, the certificate of final completion shall be the certificate of
final completion of the works as a whole [clause 20.2.2].
The exception to this is in respect of payment provisions. Interim payment
certificates, recovery statements, the final account and the final payment certificate

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
shall be prepared and issued in terms of the relevant provisions of the Agreement for
the works as a whole [clause 25.2]. Furthermore, on the final completion of the final
section, a certificate of final completion of the works as a whole shall be issued
[clause 20.0].
Where the works are to be completed in sections, the contract works insurance
shall be effected by the employer [clause 10.2].

Page 173

Chapter 21
Defects liability period and final completion
21.1 The defects liability period for the works shall commence on the calendar
day following the date of practical completion and end at midnight
(00:00) ninety (90) calendar days from the date of practical completion
[CD] or when work on the list for completion has been satisfactorily
attended to [21.6], whichever is the later
21.2 Where defects become apparent during the defects liability period the
principal agent may instruct the contractor [17.1.11] to progressively
attend to such items, whilst at all times minimising inconvenience to the
occupants
21.3 The contractor shall:
21.3.1 Inspect and forthwith rectify all items on the list for
completion no later than ten (10) working days before the
expiry of the defects liability period [19.3.4]
21.3.2 Give notice to the principal agent to inspect the works
within five (5) working days of receipt of such notice
21.4 Where items on the list for completion have not been attended to the
principal agent shall give notice to the contractor of such outstanding
items. The process [21.3] shall be repeated until all items on the list for
completion have been attended to
21.5 The contractor shall give notice to the principal agent when the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

outstanding items on the list for completion have been attended to. The
principal agent shall inspect the works within five (5) working days of
receipt of such notice
21.6 On the expiry of the ninety (90) calendar days defects liability period
[21.1] or when all items on the list for completion have been attended to
and on receipt of the contractor’s notice to the principal agent,
whichever is the later, the principal agent shall inspect the works and
within ten (10) working days either:
21.6.1 Issue a list for final completion detailing all outstanding
work or defects that must be attended to or rectified to

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
achieve final completion
or . . .
21.6.2 Issue the certificate of final completion to the contractor
with a copy to the employer

Page 174

21.7 Where the principal agent issues a list for final completion:
21.7.1 The contractor shall forthwith complete all outstanding work
and rectify all the defects
21.7.2 The contractor shall give notice to the principal agent
when all outstanding work has been completed and all the
defects have been rectified
21.7.3 The principal agent shall, within five (5) working days of
receipt of the contractor’s notice(s) [21.7.2] give notice to
the contractor either that the items on the list for final
completion have been completed, or issue an updated list
for final completion of the items not completed and of any
further defects that have become evident since the last
inspection.
21.8 Where the principal agent gives notice to the contractor of items on the
list for final completion or an updated list for final completion
specifying all outstanding work to be completed and/or defects to be
rectified to achieve final completion, the process [21.7.2–3] shall be
repeated until all items on the (updated) list for final completion have
been completed. On completion of all items on the (updated) list for final
completion the principal agent shall forthwith issue the certificate of
final completion to the contractor with a copy to the employer
21.9 Where the principal agent has not issued the list for final completion or
the updated list within five (5) working days after the inspection period,
[21.6] the contractor shall forthwith give notice to the employer and the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

principal agent. Should the principal agent not issue such list within a
further five (5) working days of receipt of such notice, final completion
shall be deemed to have been achieved on expiry of such notice period
and the principal agent shall forthwith issue the certificate of final
completion
21.10 Where a subcontractor’s defects liability period extends beyond the
contractor’s defects liability period:
21.10.1 The contractor’s obligations and liability concerning the
subcontractor’s defects shall end on the date of issue of
the certificate of final completion

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
21.10.2 The remaining portion of the subcontractor’s defects liability
period shall be ceded to the employer on the date of issue of
the certificate of final completion

Page 175

21.11 Where the contractor, a subcontractor or a supplier is required to give a

guarantee, warranty or indemnity, other than a security to the contractor,
the rights and obligations under such guarantee, warranty or indemnity
shall be ceded to the employer on the date of issue of the certificate of
final completion. This cession shall not prejudice any other rights the
employer may have [12.2.20]
21.12 A certificate of final completion shall be conclusive as to the sufficiency
of the works and that the contractor’s obligations [12.2.7] have been
fulfilled other than for latent defects

Commentary
21.0 Defects liability period and final completion
21.1 Defects liability period
The contractor remains liable to remedy at his own cost any defects in the works that
may become apparent within a period of ninety calendar days from the day following
the date of practical completion [clause 21.1]. [188] A defect is defined in clause
1.1 [189] as ‘any aspect of materials and workmanship forming part of the works that
does not conform to the agreement and/or construction information’. He is not,
however [clause 7.0], liable for defects that might arise due to design by the principal
agent or other agents
At the end of the defects liability period the principal agent is required forthwith to
inspect the works. Where he considers that there are no defects, he shall issue a
certificate of final completion to the contractor with a copy to the employer [clause
21.6.2]. Otherwise he shall issue to the contractor a list for final completion ‘defining
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the defects which have appeared during the defects liability period which the
contractor shall rectify to achieve final completion’ [clause 21.6.1]. [190]

Page 176

When the contractor considers that he has attended to all the defects on the list
for completion, he is required to give notice to the principal agent accordingly and
the principal agent is required to inspect such work within five working days of
receiving this notice [clause 21.3.2]. Where he considers that the work on the list for
completion has been satisfactorily completed, he is required to forthwith issue a

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
certificate of final completion to the contractor, with a copy to the employer [clause
21.6.2]. If he considers that the work has not been satisfactorily completed, he shall
identify the items and give notice to the contractor accordingly. The procedure shall
then be repeated until the principal agent is satisfied that final completion has been
attained and he may issue a certificate of final completion [clause 21.6, 21.6.1–2 and
21.8].
Once more there are time bars to ensure prompt response by the principal agent
to notification by the contractor. If he fails to issue a list for final completion within five
working days of receiving notice from the contractor, the contractor shall give notice
to the employer and principal agent accordingly. If the list for final completion has not
been issued within a further five working days, final completion shall be deemed to
have taken place, and the principal agent shall issue the certificate of final
completion forthwith [clause 21.9]. [191]
21.2 The finality of a certificate of final completion
A certificate of final completion is conclusive evidence that the works comply with the
requirements of the agreement in all respects and that the contractor has discharged
all his contractual obligations, save only that he remains liable for latent defects for a
period of five years from the certified date of final completion [clause 22.1]. There is
no further bite at this cherry! Perhaps the only grounds on which an employer could
challenge the finality that is conferred by a final certificate would be to allege that the
principal agent had no authority to issue it, [192] or that it had been issued
fraudulently. [193]
The issuing of a certificate of final completion is an awesome responsibility for the
principal agent. He is saying, categorically, that the contractor has done, and

Page 177

satisfactorily done, everything that he undertook to do, and having issued the
certificate, he cannot withdraw it or amend it. [194]
The only respect in which finality is not conferred on the certificate is the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

exception in respect of latent defects. A latent defect is defined in clause 1.1 as ‘A

defect that a reasonable inspection of the works by the principal agent and/or agents
would not have revealed’. What constitutes a ‘reasonable’ inspection is
debatable. [195] It is suggested that the principal agent should include in his inspection
those parts of the building which are not normally accessible but to which access
can be gained without undue difficulty or danger. He may not limit himself to an
inspection on a random or sample basis; he must inspect every floor of a multi-
storey building, and every room on every floor!
If the principal agent were to negligently overlook certain defects or incomplete

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
work and issue a certificate of final completion, relieving the contractor of the
obligation to attend to them, there would appear to be no mechanism whereby the
contract value could be appropriately reduced to compensate the employer for the
expense of engaging someone else to attend to them. [196] His only recourse would
be to claim damages from the principal agent for loss suffered due to his
professional negligence!

Page 178

Chapter 22
Latent defects liability period
22.1 The latent defects liability period for the works shall commence at the
start of the construction period and end five (5) years from the certified
date of final completion
22.2 The contractor shall make good all latent defects that appear up to the
date of expiry of the latent defects liability period
22.3 Where termination of this agreement occurs before the date of final
completion, the latent defects liability period shall end:
22.3.1 Five (5) years from the date of termination [29.10] for the
completed portion of the works only
or
22.3.2 On the date of termination where execution of the works has
become impossible due to circumstances beyond the control
of either party [29.20], or on the date of termination by the
contractor due to default by the employer, the principal
agent and/or agents [29.17.3; 29.23]

Commentary
22.0 Latent defects liability period
The JBCC Agreements provide that the contractor remains liable for rectifying any
Copyright © 2019. Juta & Company, Limited. All rights reserved.

latent defects that might become apparent during the latent defects liability period
and that this liability expires at the end of the period [clause 22.1]. This varies the
common-law position in which he remains liable for latent defects for all time—or at
least, until the building is demolished. [197]
Where a latent defect becomes apparent and the employer wishes to pursue his
rights against the contractor, he, or the principal agent on his behalf, where the
principal agent has not become ‘functus officio’, should give notice to the

Page 179

[198]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
contractor of the defect requiring him to remedy it. [198] Should the contractor refuse,
or fail to do so within a reasonable time, the employer may engage someone else to
do so and claim the cost from the contractor. Where the principal agent has become
‘functus officio’ he no longer has the authority to act on behalf of the employer and it
is submitted that he would need to be appointed by the employer to act on his behalf
under a separate agreement between the employer and the principal agent.
The Prescription Act 68 of 1969 provides that prescription does not begin to run
until a creditor has knowledge of the facts that constitute a breach of contract, and
thereafter has three years in which to bring an action for damages. [199] Applying this
to the issue of latent defects, it would seem that the employer has a right to have the
contractor repair any defect which is due to the contractor’s failure to perform work in
accordance with the agreement, which becomes apparent within five years of the
date of final completion, and thereafter he has three years in which to initiate a claim
for damages if the contractor fails to do so. [200] Thereafter the contractor’s liability
would lapse. [201]
Where the agreement is terminated before the date of final completion [clause
29.1] (contractor’s default) the latent defects liability period for the completed portion
of the works shall end five years from the date of termination [clause 29.10]. Where
the contract is terminated before the date of final completion [clause 29.14]
(employer’s default) the latent defects liability period for the completed portion of the
works shall end [clause 29.17.3]. Where the contract is terminated before final
completion [clause 29.20.2] (cessation of works) the latent defects liability period for
the works shall end on the date of termination [clause 22.3].

Page 180

Chapter 23
Revision of the date for practical completion
23.1 The contractor is entitled to a revision of the date for practical
completion by the principal agent without an adjustment of the contract
value for a delay to practical completion caused by one or more of the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

following events:
23.1.1 Adverse weather conditions
23.1.2 Inability to obtain materials and goods where the
contractor has taken reasonable steps to avoid or reduce
such a delay
23.1.3 Making good physical loss and repairing damage to the
works [8.2] where such risk is beyond the reasonable control
of the parties
23.1.4 Late supply of a prime cost amount item where the
contractor has taken reasonable steps to avoid or reduce

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
such delay
23.1.5 Exercise of statutory power by a body of state or public or
local authority that directly affects the execution of the works
23.1.6 Force majeure
23.2 The contractor is entitled to a revision of the date for practical
completion by the principal agent with an adjustment of the contract
value [26.7], for a delay to practical completion caused by one or more
of the following events:
23.2.1 Delayed possession of the site [12.1.5]
23.2.2 Making good physical loss and repairing damage to the
works [8.5] where the contractor is not at risk
23.2.3 Contract instructions [17.1–2] not occasioned by the
contractor’s default
23.2.4 Opening up and testing of work and materials and goods
where such work is in accordance with the agreement
[17.1.6]
23.2.5 Late or incorrect issue of construction information [12.1.12;
13.2.3]
23.2.6 Late supply of free issue, materials and goods for which
the employer is responsible [12.1.10]
23.2.7 Late appointment of a subcontractor in terms of the agreed
programme where the contractor has taken reasonable
steps to avoid or reduce such delay [14.4.1; 15.4.1]

Page 181

23.2.8 Late acceptance by the principal agent and/or agents of a

design undertaken by a selected subcontractor where the
contractor’s obligations have been met [7.3]
23.2.9 An act or omission by a nominated subcontractor [14.0] or a
direct contractor [16.0]
23.2.10 Insolvency or termination of a nominated subcontractor
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[14.7.2]
23.2.11 Suspension or termination by a subcontractor due to
default of the employer, the principal agent and/or agents
23.2.12 Execution of additional work for which the quantity in the bills
of quantities is not sufficiently accurate
23.2.13 Suspension of the works [28.0]
23.3 Further circumstances for which the contractor may be entitled to a
revision of the date for practical completion and an adjustment of the
contract value are delays to practical completion due to any other
cause beyond the contractor’s reasonable control that could not have

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
reasonably been anticipated and provided for. The principal agent shall
adjust the contract value where such delay is due to the employer and/or
agents
23.4 Should a listed circumstance occur [23.1–3] which could cause a delay to
the date for practical completion, the contractor shall:
23.4.1 Take reasonable steps to avoid or reduce such delay
23.4.2 Within twenty (20) working days of becoming aware, or
ought reasonably to have become aware of such delay, give
notice to the principal agent of the intention to submit a
claim for a revision to the date of practical completion,
failing which the contractor shall forfeit such claim
23.5 The contractor shall submit a claim for the revision of the date of
practical completion to the principal agent within forty (40) working
days, or such extended period the principal agent may allow, from when
the contractor is able to quantify the delay in terms of the programme
23.6 Where the contractor requests a revision of the date for practical
completion the claim shall in respect of each circumstance separately
state:
23.6.1 The relevant clause [23.1–3] on which the contractor relies

Page 182

23.6.2 The cause and effect of the delay on the current date for
practical completion, where appropriate, illustrated by a
change to the critical path on the current programme
23.6.3 The extension period claimed in working days and the
calculation thereof
23.7 The principal agent shall, within twenty (20) working days of receipt of
the claim, grant in full, reduce or refuse the working days claimed, and:
23.7.1 Determine the revised date for practical completion as a
result of the working days granted
23.7.2 Identify each event and the reference clause for each
Copyright © 2019. Juta & Company, Limited. All rights reserved.

revision granted or amended

23.7.3 Give reasons where such claim is refused or reduced
23.8 Where the principal agent fails to act within the period [23.7] such claim
shall be deemed to be refused. The contractor may give notice of a
disagreement [30.1] where the principal agent refuses a claim,
alternatively reduces a claim, or fails to act

Commentary
23.0 Revision of the date for practical completion

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
23.1 Delays to completion
Time is usually an essential element of building contracts. Owners and developers
are continuously pressing for shorter construction periods with larger penalties to
compensate themselves for high holding costs during the construction period and for
the financial losses that follow when the contract overruns its time. Contractors,
faced with the financial losses of running a contract beyond its allotted time on top of
penalties for late completion, seek additional time to stave off penalties, together
with financial reimbursement for their additional management costs. This type of
situation frequently leads to disputes, and currently a large proportion of arbitrations
and adjudications are on claims for additional time and additional expenses.
The common-law rule is that if the contractor, through no fault of his own, is
prevented by supervening circumstances from completing the works by the due
date, he would not be liable for damages, [202] nor for penalties. Such supervening

Page 183

circumstances might include natural disasters such as an earthquake, flooding, [203]

or adverse weather conditions as well as civil disturbance, strikes, and other
unforeseeable events. This rule would also apply where completion by the agreed
date was rendered impossible by some act of the employer, [204] whether acting
within his contractual rights, such as ordering additional work, [205] or in breach of the
agreement, such as by handing over the site late. In such circumstances, the
contractor would be relieved of his obligation to complete the works by the agreed
date and would only be obliged to complete within a reasonable time. [206] Time would
then be said to be ‘at large’.
The employer would not be able, in such circumstances, to revive his right to
damages or penalties by allowing the contractor additional time to complete the
works [207]—he has no right unilaterally to alter a term of the contract. To meet this
difficulty, nearly all building contracts contain an express provision that entitles the
contractor to additional time on the happening of certain specified events, the extent
of the additional time being determined by the principal agent after evaluating the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

timeous claim submitted by the contractor

23.2 Circumstances entitling the contractor to additional time without an
adjustment to the contract value in terms of clause 23.0
The PBA sets out in detail the following circumstances which, if they cause a delay
to practical completion, would entitle the contractor to additional time and a revision
of the date for practical completion but no financial compensation. These are
circumstances caused by neither the employer nor the contractor and for which
neither is to blame. The NSSA contains an identical list of circumstances.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
23.3 Adverse weather conditions in terms of clause 23.1.1
Nearly all other forms of agreement entitle the contractor to additional time when he
is delayed by exceptionally inclement weather. This is one of the supervening

Page 184

circumstances over which he has no control that would, in common law, excuse late
completion. Under such forms of agreement, the contractor is expected to make
allowance for the normal vagaries of weather that can reasonably be expected, and
to accept the risk of any delays that may ensue. The problem is that it is difficult to
define ‘exceptionally’, and different interpretations of the word frequently lead to
disputes.
The JBCC Agreements attempt to solve the problem by providing that delays
caused by adverse weather conditions [clause 23.1.1] entitle the contractor to
additional time. While this solves one problem, it creates another. During the course
of the construction period it will be inevitable that there will be delays caused by the
normal vagaries of weather and other circumstances. The principal agent will be
obliged to revise the date for practical completion, and the works may be completed
considerably later than the desired date without the employer being able to claim
penalties. If it is important that the works reach practical completion by a particular
date and that penalties for non-completion flow from that date, it will be necessary to
stipulate an earlier date for practical completion that makes reasonable allowance for
the delays that might be caused by adverse weather conditions and the
consequential revision of the date for practical completion.
The most commonly encountered aspect of adverse weather conditions is rain, or
rather the effect that rain has on the works. The effect of rain may be twofold. The
contractor may not be able to work while the rain falls, and the rain may leave the
site so waterlogged and muddy after the rain has ceased to fall that he cannot work
until it has dried out. It is submitted that the delay caused by the rain includes the
delay caused by a circumstance, such as the waterlogged site, that is caused by the
rain. Other adverse weather conditions would include high winds which could delay
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the installation of roof sheeting; extremely cold weather which could cause a delay to
the pouring of concrete, which if frozen during the curing process, would reduce its
strength; and excessively hot weather which could cause a delay to certain external
works.
23.4 Inability to obtain materials and goods in terms of clause 23.1.2
The clause requires that the contractor must have taken ‘reasonable steps to avoid
or reduce such a delay’. This restates the contractor’s common-law obligation to
mitigate his damages. Orders must have been placed in good time. This implies that,
where it is common knowledge that certain materials are in short supply, requiring

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
the early placing of orders, orders be placed sufficiently early.
It is submitted that in this context, ‘inability’ is to be interpreted as inability to
obtain the materials and goods at such time as it would be possible for the contractor
to complete the works by due date. If ‘inability’ was to mean complete inability in the
sense that the contractor would not be able to obtain the materials

Page 185

or goods at any time, this would render it impossible for the contractor to complete
the contract and would release him from his contractual obligations. In order to
preserve the contract, the principal agent should intervene by issuing a contract
instruction to substitute the materials or goods with others in ready supply.
23.5 Making good physical loss and repairing damage to the work in terms of
clause 23.1.3
While the contractor is under an obligation to make good any physical loss and to
repair damage to the works during the construction period, he could not have
foreseen the circumstance nor be blamed nor penalised for it, and is therefore
entitled to additional time. Where the contractor is not at risk for the loss or damage
due to any of the circumstances set out in clause 8.5, he would be entitled to
financial compensation as well.
23.6 Late supply of a prime cost amount item in terms of clause 23.1.4
A prime cost amount is an amount included in the contract for the delivered cost of
materials and goods obtained from a supplier as instructed by the principal agent
[clause 1.1]. The contractor is obliged to obtain the specified item from a supplier
designated by the principal agent and has no choice in the matter. Once again the
contractor is obliged to take all reasonable steps to avoid or reduce such delay, and
this would include inquiring whether the specified item might be more quickly
obtained from an alternative source.
23.7 Exercise of statutory power in terms of clause 23.1.5
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Where the execution of the works is directly affected by the exercise of statutory
power by a body of state or public or local authority and a delay to the date of
practical completion occurs, through no fault of the contractor, the principal agent
would be obliged to revise the date for practical completion once the effect of the
delay has been quantified. Such delay could, on the one hand, occur where the
contractor has set out the works from incorrect information received from the
principal agent and/or agents, or on the other hand, has incorrectly set out the works
which encroach over a building line and an order is received from the local authority
to rectify the error. In both instances there would be a delay to practical completion.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
It is submitted that in the former case the contractor would be entitled to a revision of
the date for practical completion but that in the latter case, where the delay is a
result of a contractor’s error, the date for practical completion would not be revised.

Page 186

23.8 Force majeure, civil commotion, riot, strike or lockout in terms of clause
23.1.6
This is a very wide category of supervening circumstances causing delay, all of
which must be unforeseeable and beyond the control of the contractor. Force
majeure is an unavoidable, unforeseeable and irresistible happening, usually but not
invariably a natural phenomenon, which would include a tornado, a flood, an
earthquake, or an extensive fire. Civil commotion and riot denote lawless and
disruptive action and possibly violence by members of the community. Strike is a
stoppage of work by workers in order to enforce what they consider to be their rights,
while a lockout is an action by an employer excluding his employees from the
workplace as a means of coercion. The strike need not necessarily involve
employees on the site; a strike of workers not employed by the contractor or his
subcontractors that causes a delay to practical completion of the works would qualify
for additional time.
23.9 Circumstances entitling the contractor to additional time with an
adjustment to the contract value in terms of clause 23.2
The PBA sets out in detail the following circumstances which, if they cause a delay
to practical completion, would entitle the contractor to additional time and a revision
of the date for practical completion with financial compensation. These are
circumstances caused by either the employer or the employer’s agents.
23.10 Delayed possession of the site in terms of clause 23.2.1
The employer is required to give the contractor possession of the site on the agreed
date as contained in the CD. Failure to do so would be a breach by the employer
causing a delay that would entitle the contractor to a revision of the date for practical
Copyright © 2019. Juta & Company, Limited. All rights reserved.

completion with an adjustment to the contract value.

23.11 Making good physical loss and repairing damage to the works where the
contractor is not at risk in terms of clause 23.2.2
Where physical loss or damage occurs to the works for which the contractor is not at
risk in terms of clause 8.5, the principal agent may issue a contract instruction to the
contractor [clause 17.1.10] instructing the contractor to proceed with making good of
such loss and or damage the extent of which would need to be assessed by the
principal agent in conjunction with the contractor. It would be advisable for the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
contractor to refer the loss and or damage to the terms and conditions of the contract
works insurance.
23.12 Contract instructions in terms of clause 23.2.3
This is the circumstance that most often gives rise to claims for a revision of the date
for practical completion. However, as has been discussed, not all contract

Page 187

instructions involve changes to the scope of the works; many of them require the
contractor to comply with contractual obligations. Only where the instruction was not
occasioned by the default of the contractor, and it delayed practical completion of the
works, would the contractor be entitled to additional time.
Any delay caused by the late issue of a contract instruction, or even the failure to
issue a contract instruction, would also entitle the contractor to additional time
provided that he has in writing requested such instruction.
The position is different where the contract is based on provisional bills of
quantities. In such case, the Preliminaries require the contractor and the principal
agent to ‘work together to identify the requirements for the provision of construction
information’ and to ‘agree the dates that are reasonable by when the contractor is to
be provided with each outstanding item of the anticipated construction information’.
The contractor would not be entitled to any item of information earlier than the
agreed date nor would he be entitled to an extension of time if the lack of the
information caused a delay unless it was provided after the agreed date.
23.13 Opening up and testing of work and materials and goods in terms of
clause 23.2.4
In exercising his right to require work that has been covered up to be opened for
inspection and to require samples of work, materials and goods to be tested to
ascertain conformity with agreement, the principal agent may cause a delay to
practical completion. If it is found that the work, materials or goods did not conform
Copyright © 2019. Juta & Company, Limited. All rights reserved.

to the agreement, the contractor is required to bear the consequences including that
of delays, but if the work, materials or goods are found to conform, the contractor is
entitled to a revision of the date for practical completion in respect of any delay.
23.14 Late or incorrect issue of construction information in terms of clause
23.2.5
This clause entitles the contractor to a revision of the date for practical completion by
the principal agent with an adjustment to the contract value where the principal agent
has issued late or incorrect construction information to the contractor. The contractor
shall not be responsible for incorrect setting out if incorrect information was issued to

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
the contractor [clause 13.2.3]. In such an event the contractor may be entitled to a
revision of the date for practical completion and/or an adjustment of the contract
value. It is submitted that this entitlement is not automatic and that the contractor
would be obliged to follow the procedures [clauses 23.4.2 and 23.5] and within the
time periods stated to avoid the claim being time barred.
Where a contract has commenced without complete documentation (most
contracts fall into this category) a prudent principal agent would obtain a list of
information required by the contractor with dates for the issuing of such information
which the

Page 188

contractor would extract from his building programme. Such dates would normally
allow for lead times for purchasing materials or manufacturing of elements to be built
into the structure. Provided that the information required dates are realistic and
appropriate, the principal agent would need to ensure that information is issued
timeously so as not to delay the contractor.
23.15 Late supply of free issue, materials and goods in terms of clause 23.2.6
Sometimes an employer, because he may be in a position to obtain materials or
goods suitable for the works at an advantageous price or even free, may undertake
to supply such materials or goods. If he does so, he must do so timeously so as not
to cause a delay, and should he cause a delay, the contractor would be entitled to a
revision of the date for practical completion [clause 12.1.10].
23.16 Late appointment of a subcontractor in terms of clause 23.2.7
The late appointment of a subcontractor in terms of the agreed programme entitles
the contractor to a revision of the date for practical completion with an adjustment to
the contract value where the contractor has taken reasonable steps to avoid or
reduce such delay. It is submitted that the reasonable steps taken by the contractor
to avoid or reduce such delay would include the contractor appointing the nominated
or selected subcontractor, as the case may be, on receipt of a contract instruction
Copyright © 2019. Juta & Company, Limited. All rights reserved.

from the principal agent [clauses 14.4 and 15.4].

23.17 Late acceptance by the principal agent in accepting a design
undertaken by a selected subcontractor in terms of clause 23.2.8
The contractor is at risk for any delay caused by the selected subcontractor
preparing the design of the subcontract works. The principal agent must accept this
design as promptly as is reasonably possible, failing which the contractor’s
responsibility for delay ceases and he becomes entitled to additional time. The
contractor must have ensured that the subcontractor timeously prepared the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
subcontract documentation.
The contractor could be expected to comply with this obligation by determining
specific dates for the subcontractor’s performance and to check from time to time to
see whether he is complying with the programme. There is a curious anomaly. This
clause refers specifically to a design undertaken by a selected subcontractor, and it
follows that where the design is undertaken by a nominated subcontractor, the
contractor, who would be entitled to additional time where the nominated
subcontractor caused a delay by his tardy preparation of his design, would not be
entitled to additional time in respect of a delay caused by the tardy approval of the
design by the principal agent.

Page 189

23.18 Act or omission by a nominated subcontractor or a direct contractor in

terms of clause 23.2.9
As was stated above, the price that the employer pays for the privilege of nominating
particular subcontractors is that he bears the consequences of any default of the
nominated subcontractor. Thus, if practical completion is delayed by any default on
the part of a nominated subcontractor, the contractor becomes entitled to a revision
of the date for practical completion. Such default may take the form of non-
adherence to the contractor’s programme, or refusal to comply with a contract
instruction necessitating the employment of others to carry out the instruction, or
insolvency, or conduct that leads to the termination of the subcontract. Of these
circumstances, only insolvency would entitle the contractor to an adjustment of the
contract value. The PBA makes provision for a direct contractor to perform work on
site during the construction period while the contractor is still in possession of the
site [clause 16.0]. Unless very carefully managed, this situation has a considerable
potential for causing disruption and delay to the contractor, particularly in the closing
stages of the construction period as the works approach practical completion, and
the PBA correctly entitles him to additional time and an adjustment of the contract
value if this should occur.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

23.19 Insolvency of a nominated subcontractor in terms of clause 23.2.10

The insolvency of the subcontractor is not, in itself, a circumstance that will
necessarily lead to the termination of the subcontract and the appointment of a new
nominated subcontractor, but it will nevertheless be a circumstance that could cause
substantial delays, which could neither have been foreseen by the contractor nor
prevented by him, and as such, he is entitled to additional time in respect of the
delay caused, with an adjustment to the contract value.
23.20 Suspension or termination by a subcontractor due to default by the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
employer, the principal agent and/or agents in terms of 23.2.11
The principal agent is obliged to issue payment certificates at regular intervals
[clause 25.2] and the employer is required to pay them [clause 25.10]. The employer
may moreover be required to provide a guarantee for payment [clause 11.5.1].
Failure by the principal agent or the employer to carry out these obligations entitles
the subcontractor to suspend work [clause 25.14.1]. This will likely cause a delay to
practical completion, and as the cause will have been due to a default on the part of
the employer, the contractor will be entitled to additional time with an adjustment to
the contract value.

Page 190

23.21 Execution of additional work in terms of clause 23.2.12

Although the nature and extent of work that the contractor undertakes to carry out is
defined by the drawings and schedules, and the bills of quantities only quantify the
work for the purpose of preparing a tender, the agreements recognise that the
contractor will rely heavily on the quantities in the bills as a basis for preparing his
construction programme. Consequently, if certain work is undermeasured, the
contractor may allow insufficient time in his programme to carry it out. The contractor
would be entitled to a revision of the date for practical completion to compensate for
the ensuing delay in terms of clause 23.2.12; the additional work would, in effect, be
treated no differently from additional work ordered by the principal agent [clause
17.1.2].
23.22 Suspension of the works in terms of clause 23.2.13
The principal agent is obliged to revise the date for practical completion on
resumption of work [clause 28.4] where work has been suspended by the contractor
due to the events listed [clauses 28.1.1 to 28.1.5]. The revision to the date for
practical completion will, in addition, entitle the contractor to an adjustment of the
contract value.
23.23 Further circumstances for which the contractor may be entitled to a
Copyright © 2019. Juta & Company, Limited. All rights reserved.

revision of the date for practical completion in terms of clause 23.3

The contractor is entitled to claim for a revision of the date of practical completion
due to delay by any other cause ‘beyond his reasonable control that could not have
reasonably been anticipated and provided for’ [clause 23.3]. The circumstances that
might cause delays and for which the contractor would be entitled to a revision of the
date for practical completion are very comprehensive and it is unlikely that there
could be many causes that could apply to this provision [clauses 23.1 and 23.2].
It has been held that this clause must be interpreted restrictively, and that the
‘other causes’ must be of the same general type as those listed [clauses 23.1 and
[208]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
23.2]. [208] In particular, it is not available to deal with delays caused by any default or
breach by the employer, his principal agent and/or agents. [209] Thus it is

Page 191

submitted that if, for example, the employer had undertaken to make available a
supply of water and electric power for the works, and was late in doing so, causing
the contractor to be unable to achieve practical completion by the intended date, the
date for practical completion stipulated in the contract data would no longer apply,
the contract would be ‘at large’ and the contractor would only be required to achieve
practical completion within a reasonable time.
23.24 Procedure for claiming a revision of the date for practical completion in
terms of clauses 23.4 to 23.8
The onus rests on the contractor to apply for, and motivate, a revision of the date for
practical completion, and in doing so, he must comply with a series of explicit rules.
Failure to comply with these rules could result in the loss of a possible claim for
additional time in which to complete the works due to time barring. The principal
agent has no discretion adjusting such time constraints.
Firstly, if one of the circumstances listed [clauses 23.1, 23.2 or 23.3] occurs
which, in the opinion of the contractor, could cause a delay to practical completion,
he must take reasonable steps to avoid or reduce such delay [clause 23.4.1].
Secondly, the contractor shall, ‘within twenty (20) working days of becoming
aware or ought reasonably to have become aware of such delay give notice to the
principal agent of the intention to submit a claim for a revision to the date for
practical completion’. If the contractor does not make this notification within the
prescribed period of 20 working days, the principal agent shall not consider such
claim, and the contractor loses all right to a revision of the date for practical
completion. As a potential delay cannot be said to exist, it is submitted that what is
meant is that the period of 20 working days should be counted from when the
contractor became aware, or ought reasonably to have become aware, that the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

circumstance might cause a potential delay.

Failure by contractors to understand and apply the provisions of this clause has,
in the past, caused much hardship and heartache. In Group Five Building Ltd v
Minister of Public Works and Land Affairs 1997 (3) SA 150 (C) and Edward L
Bateman Ltd v C A Brand Projects (Pty) Ltd 1995 (4) SA 128 (T), the court,
considering almost identical provisions in other construction contracts, summarily
dismissed the contractor’s claim. In the latter judgement, de Villiers J stated ‘In my
view these provisions again underline the fact that it is an essential element of
plaintiff’s claim that he should have complied with the provisions of the clause.
Unless he does so, such dispute cannot be decided by arbitration or by the courts.’

This drastic time bar was introduced into the 1991 edition of the JBCC
Agreements to counter the practice that had previously prevailed in which claims for
extensions of time tended to be made only after the intended date for practical
completion had passed, when the contractor was in penalty time, at which time it
was often extremely difficult to determine the extent of delays caused by
circumstances that had occurred many months previously. It is very much in the
contractor’s interest to establish, as soon as possible, whether or not he will be
entitled to a revision of the date for practical completion, so that, if his claim is not
successful, he can take the business decision whether he should incur the cost of
accelerating progress to make up time rather than to be liable to pay penalties.
Within 40 working days or such extended period as the principal agent may allow,
of the contractor being able to quantify the delay in terms of the program, he shall
submit a claim to the principal agent [clause 23.5]. Such claim, which shall be in
writing, must set out in detail each circumstance which, in the contractor’s opinion,
has caused a delay, the effect of these delays on the overall progress of the works,
the extent of additional time claimed, and the respective contractual provisions that
the contractor considers entitle him to his claim [clause 23.6]. If he fails to submit his
claim within this, or the extended time limit, he forfeits his right to submit a claim
[clause 23.5]. In quantifying the extent of the delay in terms of the programme, the
contractor would need to take into consideration the effect that the delay would have
on the following trades which would need to be complete to enable him to achieve
practical completion.
The principal agent is required to respond to this claim within 20 working days of
the date of receiving it, and may either grant it in full, or grant some lesser extension
as he considers proper, or reject it, and he must then adjust the date for practical
completion accordingly [clause 23.7 and 23.7.1–27.7.3]. In assessing a claim [clause
23.3], he must apply the principles that apply to claims [clauses 23.1 and 23.2].
Claims in terms of clause 23.2 entitle the contractor to an adjustment of the contract
value as well as a revision of the date for practical completion, whereas those made
Copyright © 2019. Juta & Company, Limited. All rights reserved.

in terms of clause 23.1 do not. The principal agent is required, by reference to the
detailed provisions of clause 23.1, 23.2 or 23.3, to state, in respect of each
circumstance that is alleged to have caused a delay, the reason for refusing the
claim or for reducing the extension of time claimed.
If the principal agent fails to give a decision on a claim within the allotted period of
20 working days, the claim shall be deemed to have been refused. In the event of
the principal agent having failed to act within the 20 working day period, resulting in
the contractor’s claim being deemed to be refused, or where the principal agent
refuses the claim or alternatively reduces the claim, clause 23.8 entitles the

Page 193

23.25 The contractor’s entitlement to an adjustment of the contract value

The cost to the contractor of erecting the building, apart from the cost of labour and
materials, comprises overheads and running costs conventionally referred to as
‘preliminaries’. A few of these costs are fixed, but most are related to the length of
the construction period, and increase if the length of the construction period is
extended. Where the principal agent revises the date for practical completion, the
contractor would normally expect to be compensated for the overhead costs or
preliminaries that he would incur in the extended period.
Where the delay had been caused by the employer, either lawfully in exercising a
contractual right or unlawfully in some breach of his contractual obligations, there
can be no doubt that in equity the contractor should be compensated. But where the
delay has been caused by a circumstance over which neither has control, the
contractor’s right becomes questionable and it is generally held that this would be a
contractual risk to be borne by him.
The JBCC Agreements remove any doubt by stipulating that if the delay was
caused by one of the circumstances listed [clause 23.2], the contractor would be
entitled to an adjustment of the contract value in respect of the preliminaries, but if it
was caused by a circumstance listed [clause 23.1], he would not. Where it was
caused by a circumstance [clause 23.3], the principal agent would need to consider
whether to apply the principles of clause 23.1 or those of 23.2.
Once it has been determined whether or not, in a particular case, the contractor is
entitled to an adjustment of the contract value, the calculation of this amount is
readily made [clause 26.9.4].
23.26 Suggested guidelines for the assessing of delays
The JBCC Agreements offer no assistance in determining how extensions of time
Copyright © 2019. Juta & Company, Limited. All rights reserved.

are to be assessed. While clause 23.6 requires that each claim shall state separately
in respect of each circumstance the particulars of each claim etc., this does not
mean that the effect of each claim on the date of practical completion should be
considered separately and independently of the others. Several circumstances each
potentially causing delay may run concurrently, or partly so, and therefore the
resulting delay is not the sum total of the delays that each circumstance may have
caused if taken in isolation, but the aggregate effect of all the circumstances taken
together.
It is suggested that a practical approach to the problem is, in respect of each

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
circumstance, to ask oneself what the position would have been if the circumstance
had not occurred. If the contractor would have been able to complete earlier had the
circumstance not caused a delay, the extent to which he might have been able to
finish earlier is the extent of the delay caused by the

Page 194

circumstance and the extension of time to be awarded in respect of that

circumstance. If the answer is that the contractor would not have been able to
complete any earlier if the circumstance had not occurred, the circumstance did not
cause a delay and the date for practical completion is not revised.
This approach enables the extent of the delay caused by each circumstance to be
identified and hence it becomes relatively easy to establish, in respect of each,
whether the contractor is entitled to additional preliminaries or not, and if so, how
much.
23.27 Reducing time where work is omitted
It might seem logical that, if the principal agent has the right to extend the time for
practical completion where additional work is ordered, he should have the
corresponding right to reduce the time where work is omitted. As in common law, a
party has no right unilaterally to alter the date by which the other party is obliged to
complete its performance; one must have regard to the express terms of the
agreement concerned.
Authorities such as McKenzie [210] Quail [211] and Malherbe and Lipshitz [212] relying
on the judgment in Kelly and Hingle [213] conclude that the principal agent does not
have the power to reduce time where work is omitted, although in certain limited
cases it may be permissible to set the time saved by omissions against delay caused
by extra work, as when omissions and extras were ordered at about the same time
and labour and other resources could readily be moved from one operation to the
other.
One must, however, also have regard to the provisions of the agreement in
Copyright © 2019. Juta & Company, Limited. All rights reserved.

question. In the JBCC Agreements the term ‘revision of the date for practical
completion’ would appear to permit the date to be moved backwards as well as
forwards. However, clause 23.7 empowers the principal agent to ‘grant, reduce or
refuse the working days claimed’ and the working days are claimed in respect of the
‘extension period’ referred to in clause 23.6.3. Thus the principal agent may award
the contractor less additional time than he asked for, or none at all, and extend the
date for practical completion less than claimed by the contractor, or not at all, but he
is given no power to move it backwards and thereby reduce the construction period.

Page 195

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
23.28 The vexed question of float time
The question, which regularly raises its head, is who owns the ‘float time’ [214] in a
contract programme? This question was considered in Ovcon (Pty) Ltd v
Administrator, Natal. [215] In that case, Ovcon had contracted to complete the works
within 15 months, but believing it could do so in 11 months, programmed the works
accordingly. [216] There were delays in the issuing of necessary instructions, causing
Ovcon to complete in 15 months instead of 11. It claimed an extension of time and
preliminaries for the 4-month delay, [217] alleging that in its tender it had only priced
for preliminaries for an 11-month period, and consequently had been prejudiced by
the late furnishing of instructions.
The court rejected the claim, holding that there had been no breach by the
employer and that the instructions had not been issued so late that Ovcon had been
prevented from completing by the contractual completion date. [218] The court
emphasised the importance of having regard to the contractual provisions when
determining the rights of the parties. [219]
Would the court’s decision be applicable to the JBCC Agreements? Clauses 23.1,
23.2 and 23.3, which deal with circumstances causing delays, each speak of ‘delays
to practical completion’ and practical completion is defined as ‘the stage of
completion as certified by the principal agent where the works or a section thereof
has been completed free of patent defects other than minor defects identified in the
list for completion and can be used for the intended purpose’ [clause 1.1]. This is the
date on which the works actually reach practical completion. This may be the same
as the date for practical completion, which is the date agreed by the parties as the
date by which the works ought to reach completion and is recorded in the contract
data [220] but it may be after that date or even before it. Any delay to practical
completion (the date on which the works would have reached practical completion)
not occasioned by the contractor’s

Page 196

default, qualifies for a revision of the date for practical completion provided the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contractor has followed the appropriate processes [clause 23.0]

23.29 The position regarding subcontractors
Clause 23.0 in the NSSA governing the subcontractor’s right to a revision of the date
for interim completion by the contractor, is substantially the same as clause 23.0 in
the PBA, mutatis mutandis. The only points of difference are:
(a) Clauses 23.2.7 and 23.2.10 in the PBA, which refer to delays caused by the
default or insolvency of a nominated subcontractor, have been omitted from
the NSSA.
(b) Two additional clauses in the NSSA entitling the subcontractor to additional

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
time are; clause 23.2.14 dealing with delay caused by the failure of the
contractor to pay the subcontractor in terms of clause 25.10 where the
contractor has been paid by the employer, and clauses 23.2.1 to 23.2.5
dealing with delay caused by the contractor himself or others employed by
him.
(c) The time limit in clause 23.4.2 in which the subcontractor must notify the
contractor of his intention to claim an extension of time is only 15 working
days.
In general, therefore, all the comments in regard to clause 23.0 of the PBA apply
equally, mutatis mutandis, to clause 23.0 of the NSSA.
It is commonly thought that a subcontractor is entitled to a revision of the date for
interim completion for delay caused by a particular circumstance only if the
contractor is awarded a revision of the date for practical completion for the same
circumstance, and then only to the same extent. This is quite untrue. [221] Clause 23.0
of the NSSA operates quite independently of clause 23.0 of the PBA, and a claim for
a revision of the date for interim completion made in terms of the NSSA must be
considered within the parameters laid down in that Agreement. [222]]

Page 197

Chapter 24
Penalty for late or non-completion
24.1 Where the contractor fails to bring the works or a section thereof, to
practical completion by the date for practical completion [CD], or the
revised date for practical completion, the contractor shall be liable to
the employer for the penalty [CD]
24.2 Where the employer elects to levy such penalty the employer, or the
principal agent on instruction from the employer shall give notice
thereof to the contractor. The principal agent shall determine the
penalty due from the later of the date for practical completion [CD], or
the revised date for practical completion, up to and including the earlier
Copyright © 2019. Juta & Company, Limited. All rights reserved.

of:
24.2.1 The actual or deemed date of practical completion of the
works, or a section thereof [23.7.1]
24.2.2 The date of termination [29.8]
24.3 The principal agent shall include the penalty in regular recovery
statements and interim payment certificates from the date on which the
employer’s entitlement to penalties commences

Commentary

24.1 The concept of a penalty stipulation

Time is frequently stated in the tender documents as being the essence of the
contract. The true meaning in law of this phrase is that if the contractor does not
complete the works within the specified period, they will be of no use to the
employer, who would then have grounds for terminating the agreement for breach.
This is very rarely the case in building contracts. If the building is completed later
than the contracted completion date, the employer will have lost the use of it for a
while, which would probably represent the loss of rentals, but thereafter he would
derive the same benefit from it that he would have enjoyed if it had been completed
on time. Late completion of the works is therefore usually not grounds for the
termination of the agreement, although, as will be seen in clause 29.1, failure to
proceed with the works with due diligence, regularity and expedition, may be
[12.2.7]. An employer who suffers financial loss as a

Page 198

consequence of late completion of the works is entitled to the usual contractual

remedy of damages. He is entitled to such recompense from the contractor as would
put him in the position in which he would have been had the works been timeously
completed.
The problem is that it is often extremely difficult to establish what the employer’s
loss would be in such circumstances. How does the supermarket owner prove what
profits he had been deprived from making due to the late completion of the building
and thereby not being in time for the Christmas shopping spree?
To overcome this difficulty it is common practice for the parties, in their
agreement, to stipulate that the contractor shall pay to the employer a penalty in lieu
of damages for late completion. Such penalty is enforceable at law, [223] but the
employer is precluded from claiming damages as well as penalties, or damages in
lieu of penalties unless specifically so provided by the agreement. [224]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The penalties do not have to be an accurate pre-assessment of the damages

likely to be suffered, [225] nor even are they limited to a consideration of the financial
loss likely to be sustained by the employer. Penalties may include ‘everything that
can reasonably be considered to harm or hurt, or be calculated to harm or hurt a
creditor in his property, his person, his reputation, his work, his activities, his
convenience, his mind or in any way whatever interferes with his rightful interests as
a result of the act or omission of the debtor’. [226] The employer does not have to
prove that the late completion of the works caused him damages in order to claim
the penalty. His right to the penalty is an automatic consequence of the contractor’s
late completion. The courts do have the power, however, to reduce the amount of the
[227]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
penalty if it appears to be very excessive, [227] although they appear to be somewhat
reluctant to interfere in the right of the parties to contract on whatever terms they
wish.

Page 199

24.2 The penalty provisions in the PBA

Clause 24.0 speaks of ‘penalty for late or non-completion’ by which is meant failure
to achieve practical completion on the intended date or revised date for practical
completion but only sometime later.
The rate at which penalties shall be payable is stipulated in the CD. Where the
contractor fails to achieve practical completion by the intended date for practical
completion, [228] or the revised date [clause 24.1] and where the employer elects to
levy such penalty, on notice thereof to the contractor, the principal agent shall
determine the amount due from the later of the date for practical completion as per
the CD, or the revised date for practical completion of the works or a section thereof
or the date of termination [clause 24.2.2], as the case may be. The amount of the
penalties, and the manner in which they are calculated, is required to be shown in
the recovery statement [clause 27.1.1].
In cases where the works are required to be completed in sections, a penalty
amount in respect of each section shall be stated in the CD, and separate
calculations shall be made of the penalty due in respect of each such section.
24.3 The provision for damages in the NSSA
The NSSA makes no provision for the subcontractor to pay penalties to the
contractor for non-completion, and accordingly, the contractor is entitled to his
common-law remedy of damages for breach of contract. Clause 24.0 of the NSSA
confirms, but does not vary, the common law in this regard.
This clause stipulates that the subcontractor shall be liable to the contractor for
damages if he fails to achieve interim completion of the subcontract works on the
date for interim completion according to the programme, [229] or fails to complete the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

relevant work on the list for practical completion or the list for completion on the
dates agreed between the contractor and the subcontractor. [230]
Such damages must be the actual losses suffered by the contractor, [231] and may
not be too remote. [232] They will probably comprise any penalties payable by the

Page 200

contractor to the employer and additional management overheads incurred by the

contractor, as a direct consequence of the subcontractor’s non-completion. The onus

[233]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
is on the contractor to prove his damages. [233]
There could also be circumstances that would entitle the subcontractor to claim
damages from the contractor. If he is prevented from fulfilling his contractual
obligations due to default by the contractor or the other subcontractors, other than
delay caused by any of them for which he is entitled to an extension of time in terms
of subcontract clause 24.3, he is entitled to damages by the contractor.

Page 201

Payment
Chapter 25
Payment
25.1 The contractor shall cooperate with and assist the principal agent in the
preparation of cash flow statements and payment valuations by providing
all required documents and quantified amounts of work duly executed.
Where the contractor has not provided such information the principal
agent shall make a fair estimate of the work executed
25.2 The principal agent shall regularly by the due date [CD] issue payment
certificates to the contractor with a copy to the employer until and
including the issue of the final payment certificate. A payment
certificate may be for a nil or negative amount
25.3 Each payment certificate shall separately include:
25.3.1 A fair estimate of the value of work executed
25.3.2 A fair estimate of the value of materials and goods [25.4;
25.5]
25.3.3 Security adjustment [11.1.2; 11.4.1]
25.3.4 Cost fluctuations, if applicable
25.3.5 The gross amount certified
25.3.6 The amount previously certified
25.3.7 Amounts due to either party in the recovery statement
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[27.1]
25.3.8 Tax
25.3.9 Interest amounts included in the recovery statement
25.3.10 Other non-taxable amounts
25.3.11 The net amount certified due to the contractor or the
employer
25.4 The value of materials and goods [25.3.2] (excluding materials and
goods off site or in transit) shall be included in the amount certified only
where:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
25.4.1 Not prematurely delivered or offered for delivery in terms of
the programme
25.4.2 Stored and suitably protected against loss and damage
25.4.3 Covered by insurances [10.0]

Page 202

25.5 The value of materials and goods [25.3.2] stored off site and/or in transit
shall be included in the amount certified only where covered by a
guarantee for advance payment or such other security acceptable to
the employer
25.6 Materials and goods when certified [25.4] and paid for shall become the
property of the employer and shall not be removed without the written
authority of the principal agent
25.7 The principal agent shall concurrently with each payment certificate
issue:
25.7.1 To the employer and the contractor a recovery statement
showing the amounts due to either party in the current
payment certificate
25.7.2 To the contractor a statement showing the amount certified
for each subcontractor
25.7.3 To each subcontractor a n/s subcontract payment
notification showing the amount included in the payment
certificate and its date of issue
25.7.4 The determination of default interest
25.7.5 The determination of compensatory interest
25.8 An interim payment certificate shall not be evidence that the works and
materials and goods are in terms of the agreement
25.9 The principal agent shall certify one hundred per cent (100%) of the
amount of the final account including adjustments [26.0; 27.0] in the final
payment certificate
25.10 The employer shall pay the contractor the amount certified in an issued
Copyright © 2019. Juta & Company, Limited. All rights reserved.

payment certificate within fourteen (14) calendar days of the date for
issue of the payment certificate [CD] including default interest and/or
compensatory interest
25.11 The contractor shall pay the employer the amount certified in an issued
payment certificate within twenty one (21) calendar days of the date of
issue of the payment certificate [CD] including default interest
25.12 Where a guarantee for construction (fixed) and payment reduction
[11.1.2] has been chosen the value of the works [26.0] and materials and
goods [25.3.2] that exceeds the contract sum and any contract price
adjustments (cost fluctuations) [25.3.4; 26.9.5] [CD] shall be certified in

Page 203

25.12.1 Ninety-five per cent (95%) of such value in interim payment

certificates issued up to the date of practical completion
25.12.2 Ninety-seven and one half per cent (97.5%) of such value in
interim payment certificates issued up to but excluding the
final payment certificate
25.12.3 One hundred per cent (100%) of such value in the final
payment certificate
25.13 The contractor shall pay all subcontractors within seven (7) calendar
days of the due date for payment by the employer [CD] and on request
provide proof thereof to the principal agent within seven (7) calendar
days of a request to do so
25.14 Where the employer has made a partial or no payment of the amount due
in an issued payment certificate by the due date or where the principal
agent fails to issue a payment certificate, the contractor may give five
(5) working days’ notice to comply, failing which the contractor may:
25.14.1 Suspend the works [28.1.3]
25.14.2 Exercise the lien or right of continuing possession of the
works where this has not been waived
25.14.3 Call up the guarantee for payment [11.5]
25.15 The principal agent shall issue the final payment certificate to the
contractor with a copy to the employer within seven (7) calendar days
of acceptance of the final account by the contractor, but not before the
issue of the certificate of final completion, other than on termination
[26.11; 29.0]
25.16 Where the contractor disputes the correctness of the final account within
the period allowed [26.12], the principal agent shall issue interim
payment certificates to the contractor with a copy to the employer by
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the due date [CD] for the undisputed amount(s)

25.17 For the purposes of provisional sentence in relation to a payment
certificate only, the parties consent to the jurisdiction of any court of law
of the country [CD]

Page 204

Commentary
25.0 Payment

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
25.1 Interim payment certificates
In a building contract, being a contract for the letting and hiring of work—locatio
conductio operis—the common law does not oblige the second party, the employer,
to perform his obligation until the first party, the contractor, has completed his
performance. The contractor must complete the works in all respects before the
employer is required to pay. [234]
No contractor has the financial resources to finance the construction of a project
from start to finish, and it has become the invariable custom that the contractor is
paid at regular intervals, usually monthly, an amount which represents the value of
work done since the previous payment. It must be appreciated, however, that the
right to such payment is contractual, and that in the absence of such provision in the
agreement, the contractor has no common-law right to such interim payments. [235]
It has been firmly established by the courts [236] that such interim payments are not
in settlement of the employer’s obligations in respect of portions of work done, [237]
but advance payments against the totality of work still to be done.
Interim payments are made on the basis of interim payment certificates, [238]
issued every month by the principal agent to the contractor, and are to be based on
valuations prepared not later than a specified date each month. [239] The principal
agent remains obliged to issue such interim payment certificates each and every
month until the issue of the final payment certificate, even though a payment
certificate may be for a nil or even a negative amount. [240] Failure to do so would be

Page 205

grounds for the contractor to terminate the contract [clause 29.14.5] or to call up the
full amount of the guarantee for payment. [241]
The amount so certified is required to be a fair estimate of the total amount of
work carried out [242] to date, including variations [clause 25.3], plus a fair estimate of
the value of materials and goods, whether on or off site [clause 25.3.2], procured by
the contractor for the works, less the total amount previously certified [clause 25.3.6]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

and with tax, [243] added to the resulting amount.

The principal agent is obliged to include the value of materials and goods, both on
and off the site, only if he is satisfied that they have not been prematurely delivered
or offered for delivery, [244] are stored and protected against loss or damage, [245] and
covered by insurance [clause 10.1.1]. [246] Moreover, where the materials or goods
are stored off site, they are required to be covered by a Guarantee for Advance
Payment or other such security acceptable to the employer.
While the obligation to prepare the valuation and issue the certificate rests on the
principal agent, the contractor is required to assist him to determine the valuation by

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
preparing and supplying a claim for payment incorporating measurements and
valuations, [247] of duly completed work, and materials and goods, together with
relevant documents such as invoices. Where the contract is a lump-sum

Page 206

contract, [248] the contractor is to compile and present such information in whatever
form is agreed with the principal agent [clause 25.1]. But this information is only for
the guidance of the principal agent and he is not bound to accept it without question.
Understandably, the contractor will pitch his claim as high as he reasonably can, and
the principal agent must view it critically and ensure that it does not include the value
of work, materials or goods that are not to his approval or completed to his
satisfaction.
The valuation should include the value of work done by subcontractors and
materials and goods supplied by them, [249] and the subcontractor is required to
cooperate with the contractor in the preparation of his claim for payment. [250]
The net amount determined as due to the contractor may be adjusted in respect
of amounts due by the contractor to the employer or the employer to the contractor
as stated on the recovery statement [clause 25.3.7].
A further adjustment is required to be made where the contractor has elected to
provide a fixed construction guarantee [clause 11.1.3]. The valuation is to be
reduced to 95% of such value in interim payment certificates issued up to the date of
practical completion [clause 25.12.1]. It is to be reduced to 97.5% of such value in
respect of interim payment certificates in respect of certificates issued on or after the
date of practical completion but excluding the date of final completion [clause
25.12.2]. Finally, it is to be reduced to 100% of such value in the final payment
certificate [clause 25.12.3]. These provisions are subject to the overriding provision
that adjustments shall be made in terms of [clause 26.9].
Finally, tax [251] is added to the net result [clause 25.3.8].
The principal agent is required to issue such interim payment certificates to the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contractor, [252] not later than the day of the month specified in the CD [clause 25.2].

Page 207

Concurrently with the issue of an interim payment certificate, the principal agent is
required to furnish the contractor with a statement showing the manner in which the
amount certified has been determined and indicating the amounts certified in respect
of each nominated and selected subcontractor [clause 25.7.2]. [253] At the same time
he must advise each subcontractor of the date of the certificate, the amount certified
in respect of the subcontract concerned, and the manner in which it was arrived at

[254]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
[clause 25.7.3]. [254] Finally, the principal agent is required to issue a statement to the
employer and the contractor of the total amount certified in respect of the adjustment
amounts [clause 25.7.1]. [255]
Within seven calendar days of the date of issue of an interim payment certificate,
the contractor is required to draw up and issue to each subcontractor a payment
advice, [256] setting out, in respect of the subcontract, the net amount certified in the
interim payment certificate concerned, [257] the amount due by the subcontractor to
the contractor or vice versa in terms of the N/S Recovery Statement, [258] and tax, [259]
on the resulting amount. [260] If issued on the JBCC Payment Advice form it becomes
a liquid document, [261] on which an application to court for provisional sentence may
be made.
Where an interim payment certificate reflects an amount to be paid by the
contractor to the employer, the contractor shall calculate the amount, if any, that is

Page 208

due by the subcontractor. [262] If such amount has not been paid by the subcontractor
to the contractor within 21 calendar days [NSSA 25.11] after the due date for
payment by the contractor to the employer, the subcontractor shall be liable for
default interest, which shall be calculated by the contractor and incorporated in the
N/S Recovery Statement. [263]
25.2 The consequences of a payment certificate [264]
The fact that the value of certain work, materials or goods may have been included
in an interim payment certificate does not necessarily denote that the principal agent
has approved such work, materials or goods. The Agreements provide [clause 25.8]
that the issue of an interim payment certificate by the principal agent shall not be
evidence that the works and materials and goods, whether in terms of the PBA or in
terms of the NSSA, are in accordance of the Agreement concerned. [265]
The Agreements provide that materials and goods, whether supplied by the
contractor or a subcontractor, will become the property of the employer when their
Copyright © 2019. Juta & Company, Limited. All rights reserved.

value has been included in an interim payment certificate and payment has been
made of the certified amount, and may not be removed from the site without the
written authority of the principal agent [clause 25.6]. This is intended to protect the
interests of the employer and give him rights over materials and goods that he has
paid for. Unfortunately, ownership does not pass so easily. Transfer of ownership
normally requires a formal act of delivery, although in certain circumstances delivery
may be symbolic, [266] or fictitious. [267] Moreover, the contractor cannot pass
ownership of goods and materials to the employer unless

Page 209

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
he is himself the lawful owner of the goods and materials. The supplier who sold the
materials or goods to the contractor may have reserved ownership, despite delivery,
until the purchase price has been paid in full. This means that even if the employer
has paid the amount of a certificate that includes the value of certain materials and
goods, if the contractor does not pay the supplier for them, the supplier will have a
legal right to repossess them and remove them from the site, to the prejudice of the
employer refer Saflec Security Systems (Pty) Ltd v Group Five Building (Pty) Ltd [268]
where subcontractor claimed for equipment supplied at Cradock prison which was
not paid for. This prejudice, however, would be fairly short-lived, because when the
subsequent interim payment certificate came to be issued, in the absence of such
materials and goods, their value would not be included in the certificate and the
prejudice to the employer would be removed. [269]
If interim payment certificates were accurately valued, including all adjustments to
the contract value, the full and final value of the works would be valued at practical
completion and there would be nothing further to value in subsequent
certificates. [270]
In practice, and for various reasons, adjustments continue to be made to the
contract value right up to the date on which the final certificate is issued. Contractors
claim that they are being deprived of the use of money that is due to them on
practical completion but is only certified some time after practical completion, and
therefore clause [25.7.5] makes provision for the payment to the contractor of
compensatory [271] interest on all amounts certified later than 31 calendar days after
practical completion. The rate of interest is the prevailing bank rate, [272] compounded
monthly, and the amount of the interest is required to be calculated by the principal
agent and incorporated in the recovery statement.

Page 210

Subcontractors are similarly entitled to compensatory interest on amounts

certified later than 31 calendar days after practical completion, calculated from the
date of practical completion to the date on which payment is due by the contractor to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the subcontractor. [273] The amount so due is required to be calculated by the

contractor and included in the N/S Recovery Statement.
A principal agent, in issuing a payment certificate, either interim or final, does so
as an agent of the employer, not as a quasi-arbitrator. [274] He must approach the task
as an expert using his professional skill and knowledge, and would be liable to the
employer, [275] for damages arising from negligent mistakes causing financial loss to
the employer. However, as agent of the employer, he must nevertheless act
independently in determining his valuation, and the exertion of any influence on him
by the employer would entitle the contractor to terminate the contract [clause
29.14.3].

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
A certificate is a liquid document for the purpose of obtaining a court order
compelling a defaulting employer to pay [clause 25.17]. [276] Once it has been issued
by the principal agent, he cannot purport to withdraw it or amend the amount
certified in it by issuing a ‘revised certificate’, [277] any more than he can amend a
cheque that he has issued by issuing a ‘revised cheque’. [278]
25.3 Payment of the certified amount
25.3.1 By the employer to the contractor
The employer is obliged to pay the amount certified in an interim payment
certificate, [279] within 14 calendar days of the date of issue of that certificate [25.10],
subject to the contractor providing the employer with a VAT [280] invoice

Page 211

for the amount certified. [281] Late payment attracts default interest at the rate of 6%
per annum above the ruling rate of interest compounded monthly from the due date
for payment until the date of payment. [282]
Edition 6.2 of the PBA now provides, in terms of clause 28.1.3, for suspension of
the works by the contractor if the employer failed to pay him by the due date. [283]
A JBCC payment certificate is a liquid document, [284] in which the employer
acknowledges his debt to the contractor, [285] and may be used in an application to
court for provisional sentence. The process is normally quick and inexpensive, and
the contractor would not be required to prove the amount claimed. [286]
If the employer has provided a guarantee for payment, the contractor has a quick
remedy by calling on the guarantor to pay the outstanding amount. [287]

Page 212

An alternate remedy would be for the contractor to suspend the works in terms of
clause 28.1.3 and, where the default has not been remedied, to give notice of his
intention to the employer of termination of the agreement [clause 29.14.5], [288] but
Copyright © 2019. Juta & Company, Limited. All rights reserved.

this would be of little avail after final completion or even after practical completion
25.3.2 By the contractor to the employer
An interim payment certificate may reflect a negative amount, in other words, an
amount due by the contractor to the employer. [289] Although, as has been stated, the
JBCC payment certificate is a liquid document for the purpose of obtaining a court
order that the employer pay the contractor the certified amount, it is submitted that a
court would not regard it as a liquid document for the purpose of compelling the
contractor to pay the employer the certified amount. The principal agent is not the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
agent of the contractor and cannot bind him with a certificate as he can the
employer. Fortunately, there are effective alternative remedies. If the contractor has
not paid the employer within seven calendar days of the date of issue of the payment
certificate, the employer may recover the amount from subsequent payment
certificates [clause 27.3.1], [290] or from the security provided by the contractor
[27.3.2], or from the contractor as a debt [clause 27.3.3].
Where the employer decides to recover the amount from the guarantee for
construction, [291] he may issue to the contractor a written demand for payment of the
certified amount advising that if this amount is not paid within seven calendar days
he intends to call on the guarantor to make payment in terms of the guarantee

Page 213

for construction. [292] A copy of this demand should, at the same time, be sent to the
guarantor. If the contractor fails to make payment by the end of this notice period,
the employer may issue to the guarantor a written demand for payment, stating that
the contractor has failed to respond to the demand and that the amount certified by
the principal agent is still unpaid. A copy of the principal agent’s certificate in
question should accompany the demand. [293] The employer is not required to
account to the guarantor for the monies received, nor is he obliged to refund any of
the monies. [294] This process may be repeated as often as may be necessary until
the guarantee has been exhausted.
Where the contractor has provided a fixed guarantee for construction as the form
of security required [clause 11.1.2] and he fails to pay an amount due to the
employer in terms of an interim payment certificate within seven calendar days of the
date of the certificate, the employer may notify both the contractor and the principal
agent of his intention to recover the outstanding amount from the payment reduction
that he holds. If the amount remains outstanding for seven calendar days from the
date on which the contractor receives this notice, [295] the employer becomes entitled
to retain this amount.
25.3.3 By the contractor to the subcontractor
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The amount included in an interim payment certificate in respect of a subcontract

becomes due to the subcontractor on the issue of the interim payment certificate. [296]
The contractor is required to pay this amount, [297] within 21 calendar days of the date
for issue of the payment by the employer of the amount certified in the interim
payment certificate.
The contractor is obliged to pay this amount to the subcontractor even if the
employer has not paid the interim payment certificate providing for this payment, [298]
provided that he gives notice to the subcontractor of the employer’s

default within five working days of the latest date by which the employer was obliged
to pay. The contractor shall then pay the subcontractor within seven calendar days of
receiving payment from the employer, [299] but in any event not later than 30 calendar
days from the original date by which payment should have been made. [300]
Like the contractor, the subcontractor is entitled to suspend work in order to
enforce payment. [301] If the amount stated in the payment advice remains unpaid at
the latest date for payment, the subcontractor may give the contractor five working
days’ notice of his intention to suspend work until payment is made. [302] If the
contractor continues to default for a further ten working days, the subcontractor may
give notice to the contractor, with a copy to the principal agent, of his intention to
terminate the subcontract. If the default has not been remedied within the ten-
working-day period, he may terminate the subcontract forthwith. [303]
If the contractor has, on the request of the subcontractor, provided a guarantee
for payment, [304] the subcontractor may recover the amount due by giving the
contractor five working days’ notice to comply, failing which the subcontractor may
suspend the subcontract works or call up the N/SS Guarantee for Payment. [305] He
may do so, firstly, if the contractor has received payment from the employer but has
failed to pay the amount due to the subcontractor within the prescribed time; [306]
secondly, if the employer has failed to make payment and the contractor has failed to
notify the subcontractor of this default and failed to pay him the amount due to
him; [307] and thirdly, if the employer has failed to make payment and the contractor,
at the end of the 30 calendar day period [clause 25.10], has failed to make
payment. [308]

Page 215

The remedy most favoured by subcontractors for non-payment by the contractor

is to seek a certificate from the principal agent entitling them to direct payment by the
employer. Clauses 14.5 and 15.5 of the PBA provide that the contractor shall, within
Copyright © 2019. Juta & Company, Limited. All rights reserved.

five working days of receiving a contract instruction to do so, furnish proof that he
has paid a nominated or selected subcontractor the amount due in terms of an
interim payment certificate. Failure to provide such proof would permit the employer
to instruct the principal agent to issue to a subcontractor a certificate entitling him to
direct payment by the employer of the amount concerned. [309] The employer would
then be able to recover this amount from the contractor through the recovery
statement. [310]
25.3.4 By the subcontractor to the contractor
Where the payment advice shows an amount due by the subcontractor to the
[311]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
contractor, [311] such amount becomes due on the date of issue of the interim
payment certificate by the principal agent. The subcontractor is required to pay this
amount within 21 calendar days of the date of issue of the n/s subcontract payment
advice. [312] Clause 25.11 in the NSSA entitles the contractor to default interest on the
late payment of this amount. There is no mechanism whereby the contractor may
recover this amount from the subcontractor if he fails to pay. It is submitted, however,
that the contractor retains his common-law right to deduct any amount owing by the
subcontractor to him from any amount which he may in the future be required to pay
the subcontractor. Clause 25.13 of the n/s subcontract agreement provides for the
contractor, on presentation of an affidavit to the subcontractor, to defer payment to a
subcontractor by not more than thirty days where the employer has made a partial or
no payment to the contractor of the amount due on an issued payment certificate.
Where the contractor has made a partial or no payment of the amount due on an
issued n/s subcontract advice to a subcontractor, clause 25.14.1, 25.14.2 and
25.14.3 entitles the subcontractor to either suspend the n/s subcontract works,

Page 216

exercise the lien where this has not been waived or call up the N/SS guarantee for
payment for the full balance of the n/s subcontract not yet paid.
25.4 Recovery of expense and loss
25.4.1 Recoverable items of expense and loss
As construction work progresses, the contractor becomes entitled to progress
payments in respect of work done and unfixed materials and goods supplied for the
works, and on final completion he becomes entitled to the balance of the contract
value. These payments are dealt with in clauses 25.0 and 27.0, dealing with interim
and final payment certificates respectively and the associated recovery statement.
But apart from becoming entitled to payment for carrying out and completing the
contract works, the contractor may, during the course of the contract, become
entitled to recover certain expenses and losses from the employer, and for that
Copyright © 2019. Juta & Company, Limited. All rights reserved.

matter, the employer may become entitled to recover certain expenses and losses
from him. These do not affect the actual value of the building work, and
consequently do not form part of the valuation of work in progress for interim
payment certificates nor part of the final account that forms the basis for the final
payment certificate. Instead, they are brought into account in the recovery
statement. [313]
The items of expense or loss that the contractor may recover from the employer
are:
• default interest [clause 27.1.4]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
• compensatory interest [clause 27.1.5]
• damages [clause 27.1.6]
• expense or loss caused by a direct contractor [clause 27.1.7]
• advance payments [clause 27.1.8]
• termination of a n/s subcontract agreement due to default of the employer
and/or agents [clause 27.1.9].
The items of expense or loss that the employer may recover from the contractor are:
• penalties for non-completion [clause 27.1.1]
• default interest [clause 27.1.2]
• expense and/or loss [clause 27.1.3]
• paying charges [clause 27.2.1]
• effecting insurance due to contractor’s default [clause 27.2.2]

Page 217

• the cost of engaging others to carry out contract instructions which the
contractor has failed to execute [clause 27.2.3]
• recoupment of advance payments [clause 27.2.4]
• any amount due by the contractor to the employer in terms of a previous
interim payment certificate [clause 27.2.5]
• expense and/or loss resulting from termination of the agreement by the
employer [clause 27.2.6]
• amounts paid direct to nominated and selected subcontractors on the failure
of the contractor to make such payments [clause 27.2.7]
• expense and/or loss due to termination of a n/s subcontract agreement
[clause 27.2.8]
• other expense or loss due to the default of the contractor [clause 27.2.9] [314]
• adjustment of the n/s subcontract preliminaries due to the subcontractor as a
result of a default by the contractor [clause 27.2.10].
25.4.2 The recovery statement
The principal agent is required to prepare and issue a recovery statement to the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

employer and the contractor each month simultaneously with the issue of an interim
payment certificate [clause 27.1], which shows the respective items of expense or
loss due by the contractor to the employer or vice versa. [315] The recovery statement
should be accompanied by copies of such documents and calculations as may be
necessary to substantiate the various entries in the recovery statement.
The amount due by one party to the other as shown in the recovery statement
shall be included in the interim or final payment certificate that is issued at the same
time [clause 27.1].
In terms of the NSSA, the contractor has a similar obligation to prepare a n/s

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
recovery statement, which is substantially the same as the recovery statement in
terms of the PBA. There is one additional item of expense that the subcontractor
may claim from the contractor: a variation resulting from a contractor’s

Page 218

instruction that was not the consequence of a contract instruction in terms of the
principal agreement. [316]
The contractor is required to prepare and issue a n/s recovery statement monthly
to the subcontractor within 14 calendar days of the date of issue of the payment
certificate. [317]
25.5 Adjustments to the contract and subcontract value
25.5.1 Contract sum and contract value
The contract sum is the amount tendered by the contractor and accepted by the
employer for the execution and completion of the contract works and recorded in the
contract data, and it is not adjusted or varied. [318] It is the initial reference point in
establishing the employer’s obligation to the contractor. The contract value
represents the employer’s obligation to the contractor at any stage of the contract.
Initially it is the same amount as the contract sum, but varies as it is adjusted in
respect of the value of variations, CPAP, [319] adjustments in respect of monetary
allowances, etc. The terms ‘n/s contract sum’ and ‘n/s contract value’ are similarly
used in the NSSA.
The contract value shall be adjusted in respect of certain defined categories of
circumstances, as discussed hereunder, and therefore may not be adjusted in
respect of any other circumstance. [320] The adjustments are to be made by the
principal agent using rates or values obtained from the bills of quantities or priced
document [clause 26.0].
25.5.2 Adjustments to the contract value arising from contract instructions
The type of contract instruction that most frequently gives rise to an adjustment of
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the contract value is one altering the design, quality or quantity of the works

Page 219

[clause 17.1.2] and the removal of materials and goods from the site and the
substitution of other materials and goods therefor [clause 17.1.8]. It is within the
scope of these two clauses that the remeasuring of all the works in a contract with
provisional bills of quantities takes place, as well as the measuring of all variations in
a more conventional contract.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
Where the principal agent issues a contract instruction for additional work, the
principal agent and the contractor may agree the adjustment to be made to the
contract sum before this work is put in hand [26.1]. This can be a risky approach.
The contractor, who is in a strong bargaining position, may quote a high price for the
work, adopting the attitude that if the price is not accepted he is not obliged to carry
out the work. This is not so; the contractor is obliged to carry out the work whether or
not there has been agreement on the adjustment of the contract value [clause 17.2].
Where no agreement on price has been reached, items of additional work of
similar character carried out under similar conditions to items contained in the bills of
quantities or priced document are, when measured, to be priced at the rates for such
items in the bills of quantities or priced document [clause 26.2]. [321] Where the work
is not of a similar character or carried out under similar circumstances, items shall be
priced, where possible, at the rates for the most comparable items in the bills of
quantities or the schedule of rates in the priced document, adjusted to suit the
changed circumstances [clause 26.2.2].
Where neither of these methods is appropriate, additional work shall be valued
using new rates which take into account the labour, engineering, drawings, material
and plant necessary for carrying out the work, together with a mark-up of 10%
[clause 26.2.3].
Work that is omitted is valued in exactly the same manner and the contract value
reduced accordingly. It sometimes happens that the omission of work may vary the
circumstances in which the remaining work is carried out, [322] in which case the rates
for the remaining work shall be adjusted to suit the changed circumstances [clause
26.2.4].

Page 220

In valuing variations, the quantity of work and materials is usually measured off
drawings. However, in some circumstances, the principal agent [323] will measure the
actual work on site, [324] and the contractor is required to be given the opportunity of
being present, and shall be given a copy of the measurements that have been taken
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[clause 26.1].
25.5.3 Charges for items not included in the contract
During the course of the contract, there may be contract instructions which require
the contractor to pay charges for which no provision has been made in the bills of
quantities or the priced document. Such instructions might cover charges levied by a
local authority [clause 26.4.1], [325] the cost of opening up work that has been covered
up [clause 17.1.6] and of testing materials [clause 17.1.5] where the work is found to
be in accordance with the requirements of the contract [clause 17.1.6], the cost of
premiums for works or third party insurance where the contractor has paid such

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
premiums on the default of the employer [clause 25.3.7] and the cost of lateral
support insurance premiums where the employer has failed to effect such insurance
[clause 26.4.3].
In such cases the actual amounts paid by the contractor shall be added to the
contract value together with a 10% markup [clause 26.4].
25.5.4 Expense or loss arising from a contract instruction and not
contemplated by the contract
The provisions of the JBCC Agreements are very comprehensive and set out
procedures for dealing with the financial consequences of almost any conceivable
lawful or unlawful circumstance. However, there may from time to time be
circumstances that will cause the contractor expense or loss for which he is not
compensated by these provisions or by any items in the bills of quantities. These
may only be claimed under one or other of the following circumstances as listed in
clause 27.1.4–27.1.9.
1 The issue of a contract instruction
The expense or loss that is claimed must arise from a contract instruction that has
been issued [clause 17.1], and the circumstances giving rise to the claim must be

Page 221

other than those for which compensation is prescribed [clause 26.2]. [326] Such
circumstances are likely to be rare. [327]
2 Unreasonable delay or failure to issue a contract instruction following a
request from the contractor [328]
The contractor would be entitled to an extension of time and additional preliminaries
for late or incorrect issue of construction information [clause 23.2.5], therefore
something more is required in order that the contractor may be entitled to expense or
loss occasioned by this circumstance: he must have requested the information
[clause 23.2.3], and it must either not have been forthcoming at all, have been
Copyright © 2019. Juta & Company, Limited. All rights reserved.

incorrect or unreasonably delayed in being issued, and the delay or failure must
have caused a loss that can be claimed as damages, such as the cost of hired
equipment standing idle.
3 Non-disclosure of changes made to the provisions of JBCC standard
documentation [329]
One of the advantages of standard contract documentation is that the parties are (or
should be) familiar with its provisions, and can enter into contracts based on such
documents without having to scrutinise them each time. Any changes to the JBCC

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
standard documentation should be stated in bill number one of the bills of quantities
or the n/s subcontract priced document, [330] so that, if they have cost implications to
the contractor, he can allow for them in his tender. Failure to do so would, in terms of
this provision, expose the employer to a claim for such expense or loss as the
contractor may be able to show he has sustained as a result of this breach.
The CD provides at B 15.0 a section to be completed by the principal agent when
preparing the tender documentation under the heading of changes made to JBCC

Page 222

documentation. This section states further that reference may be made to other
documents forming part of this agreement. It is submitted that all amendments to the
standard JBCC Agreements should be contained in Bill no 1 of the bills of quantities
or spelt out in one place in a lump sum contract. Tenderers should not have to look
in different places to see where changes to the standard document have been made,
as this could lead to an oversight and the tenderer may find that he has left out an
item when compiling his tender which could result in serious consequences.
Clause 1.8 of the PBA Edition 4.1 stated that this agreement is the entire contract
between the parties regarding matters addressed in this agreement. No
representations, terms, conditions or warranties not contained in this agreement
shall be binding on the parties. No agreement or addendum varying, adding to,
deleting or terminating this agreement including this clause shall be effective unless
reduced to writing and signed by the parties.
4 Expense or loss caused by direct contractors on the site directly employed
by the employer in terms of clause 27.1.7
The employment of direct contractors on the site by the employer has the potential to
cause considerable disruption, and this clause provides the contractor with the
means of claiming reimbursement for the expense or loss that he could suffer as a
result of such circumstance. This circumstance might entitle the contractor to a
revision of the date of practical completion and to additional preliminaries [clause
Copyright © 2019. Juta & Company, Limited. All rights reserved.

16.1.3], and the loss or damage claimed under this clause excludes such relief.
5 Default by the employer or his agents
Default in this context means failure to perform his obligations in terms of the
agreement and not any other action which might be prejudicial to the contractor. This
provision permits the contractor to claim damages for such default where the default
would not entitle him to terminate the agreement [clause 29.0], or where he
nevertheless wishes to uphold the contract.
6 Suspension or termination of a selected or nominated subcontract due to

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
default by the employer or his agents
The various defaults of the employer and/or his agents that would entitle the
subcontractor to suspend or terminate the subcontract are set out in clause 28.1 of
the NSSA, the most common of which are failure to issue a payment certificate and
failure to honour such certificate. Such suspension or termination would almost
inevitably cause a delay to practical completion for which the contractor would be
entitled to a revision of the date for practical completion and additional preliminaries
[clause 23.2.11]. But this action by the subcontractor could cause the

Page 223

contractor further loss and expense, and this provision enables him to claim such
expense or loss as damages for breach by the employer or his agents.
7 Default or insolvency of a nominated subcontractor
The employer is at risk for the default or insolvency of a nominated subcontractor
[clauses 14.7.2 and 23.2.10]. Delay caused by default would entitle the contractor to
an extension of time [clause 23.2.10] and delay caused by his insolvency would
entitle the contractor to both an extension of time and additional preliminaries [clause
23.2].
Any further expense or loss that these circumstances may cause the contractor,
may be recovered by him in terms of this provision.
From the time when he became aware, or from when he ought reasonably to
have become aware, of such expense or loss, the contractor has 20 working days
within which to notify the principal agent [clause 26.5] of the circumstances causing
expense or loss, failing which he loses his right to any compensation [clause 26.5].
Within 40 working days of notice to the principal agent, the contractor is to submit a
detailed and substantiated claim for the adjustment of the contract value to the
principal agent. The principal agent may allow additional time for the submission of
the claim. Within 20 working days of receipt of the contractor’s claim, the principal
agent shall make a fair assessment of the claim and adjust the contract value.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Should the principal agent fail to act within this time limit, the contractor’s claim for
compensation shall be deemed to have been refused and the contractor may give
notice of a disagreement where no assessment is received [clauses 26.6–8; 30.1].
8 Adjustments in respect of monetary allowances
The bills of quantities or the priced document will have required the contractor to
make a variety of monetary allowances in the contract sum: nominated subcontract
amounts for the appointment of nominated subcontractors, selected subcontract
amounts for the appointment of selected subcontractors, prime cost (p.c.) amounts
for materials and goods to be obtained as instructed by the principal agent, and
[331]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
budgetary allowances for work intended to be executed by the contractor. [331]
The principal agent is required to deduct the various nominated and selected
subcontract amounts from the contract value and add back the actual amounts
expended in each case as reflected in the subcontract final accounts [clause 26.9.2].
Where the contractor has priced for profit and attendance on a nominated

Page 224

or selected subcontract, this shall be adjusted proportionately to the adjustment of

the nominated or selected subcontract amount, excluding any allowance for CPAP
[clause 26.9.5]. [332]
Similarly, the principal agent should deduct all prime cost amounts and add back
to the contract value the actual amounts expended on such items delivered to
site, [333] together with a reasonable allowance for waste where applicable [clauses
26.9.1 and 26.9.3]. [334] The contractor’s prices for overheads and profit on prime cost
items should also be adjusted proportionately to the adjustment in the value of such
items. Budgetary and other allowances should be deducted and the actual amounts
determined and added back [clause 26.9.1].
9 Adjustments in respect of preliminaries
The manner in which the preliminaries, [335] are to be adjusted is governed by the
JBCC CD used in conjunction with the PBA and offers the contractor the choice
between options A or B which selection the contractor is required to indicate in his
tender. Where the contractor does not indicate option A or option B, option A shall
apply.
In order to implement alternative A, the contractor is required, within 15 working
days of acceptance of his tender, to furnish the principal agent with a breakdown of
charges (including tax) and, where applicable, an apportionment of preliminaries per
section. Should he fail to do so, the total value of the preliminaries shall be deemed
to be divided into the three categories as follows: 10% of the amount shall not be
varied, 15% shall be varied in proportion to the contract value as compared with the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contract sum, and 75% shall be varied in proportion to the revised construction
period as compared with the initial construction period.
Where sectional completion is required, the contractor is required to distribute the
preliminaries to each section and within each section similarly to categorise the
various amounts. Should he fail to do so, it shall be deemed that the total value of
preliminaries is distributed over the sections in proportion to their respective values
and that they are categorised as above described.

Page 225

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
In lump-sum (priced document) contracts, the amount of the preliminaries in the
priced document is often not disclosed. In such cases, it shall be taken to be 7.5% of
the contract sum excluding VAT, any allowance for CPAP, and any contingency
amount.
Alternative ‘A’ approaches the problem of adjusting preliminaries by the
application of fairly simple formulae.
Alternative B requires the contractor, within 15 working days of the date of
possession of the site, to provide the principal agent with a detailed breakdown of
preliminaries amounts for the works as a whole, or per section where applicable,
including administrative and supervisory staff charges and for the use of construction
equipment in terms of the programme. He must also furnish a programme to
demonstrate the periods to which the various items relate, together with the charge
rate for such items.
Where sectional completion is required, the contractor shall show the resources
allocated to the various sections and those which are common to all.
Should the contractor fail to provide this information within the stipulated time
limit, alternative A shall apply.
10 Contract price adjustment provisions (CPAP) (cost fluctuations)
Until the late sixties, the inflation rate was low and contractors were prepared to
accept the risk of the rise of building costs and made due allowance for this in their
tenders. Then, concurrent with the world oil crisis in circa 1970, costs started
spiralling. Contractors were no longer prepared to accept the risk of prices rising at
an unpredictable rate, and contracts were subject to a cost escalation provision in
which the contractor was recompensed for all increases in costs since the date of
tendering. In order to make this possible, contractors were required to furnish their
base costs and invoices for all materials and submit claims for the actual increases
in costs. The process was very cumbersome and time-consuming.
In the mid-seventies the eponymous Philip Haylett introduced a formula for
calculating cost escalations that had taken place since the date of tendering, based
Copyright © 2019. Juta & Company, Limited. All rights reserved.

on cost indices published by the Central Bureau of Statistics, [336] which became
universally used in the building industry. This formula, and the rules for its
application, were contained in the Contract Price Adjustment Provisions (CPAP)
which were published by JBCC as part of the Series 2000 contract documentation.
The JBCC has subsequently relinquished the publication of the cost indices.
The Agreements require that the contract value shall be adjusted according to the
procedure laid down in CPAP using the appropriate base month [clauses 25.3.4

Page 226

[337]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
and 26.9.5]. [337] The CPAP allowance should be calculated monthly and incorporated
into interim payment certificates. As the publication of the indices is usually about
three months in arrears, the assessment of the CPAP ingredient in interim payment
certificates must be done on a provisional basis and later adjusted when the final
indices are known.
It is not uncommon in contracts of modest value and short duration for the
provision for CPAP adjustment to be deleted from the Agreement and the contractor
to be required to make due allowance in his tender for anticipated cost increases.
[338]
11 Adjustment to the subcontract value
The subcontract value is required to be adjusted, [339] by the principal agent, [340] in
exactly the same way as in the PBA. The only point of difference is that, whereas the
contractor has 20 working days in which to notify the principal agent of a
circumstance [clause 26.5] that has caused him expense or loss, the subcontractor
has 15 working days to notify the contractor of such circumstance. The
subcontractor is required to submit details of his claim to the contractor within 20
working days and the contractor is required to forthwith submit the claim to the
principal agent, failing which the subcontractor shall forfeit such claim. [341]

Page 227

Chapter 26

26.0 Adjustment of the contract value and final account

26.1 The principal agent shall determine the value of adjustments to the
contract value in cooperation with the contractor in the preparation of
the final account. Where such adjustments require measurement on site,
the contractor shall have the right to be present
26.2 Adjustments to the contract value resulting from a contract instruction
[17.1] shall be determined as follows:
Copyright © 2019. Juta & Company, Limited. All rights reserved.

26.2.1 Work of a similar character executed under similar conditions

shall be priced at the rates in the priced document
26.2.2 Work not of a similar character shall be priced at rates based
on those in the priced document and adjusted to suit the
changed circumstances
26.2.3 If the above methods do not apply, work shall be priced at
rates based on the necessary use of labour, construction
equipment and or materials and goods for executing the
work plus an allowance of ten per cent (10%) mark-up
26.2.4 Work omitted shall be valued at the rates in the priced

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
document, but where the omission of such work alters the
circumstances under which the remaining work is carried out,
the value of the remaining work shall be determined by the
above methods
26.3 Where work is identified as provisional in the priced document the
principal agent shall omit such value from the contract value and add
the value of work as executed to the contract value
26.4 Where the contractor has made payment for items not included in the
priced document in accordance with a contract instruction or with the
approval of the principal agent, the actual amounts paid plus a ten per
cent (10%) mark-up shall be added to the contract value limited to:
26.4.1 Charges by authorities [2.1]
26.4.2 The cost of opening up and testing [17.1.6], where the work
is according to the agreement
26.4.3 The cost of insurance [10.0], where applicable [CD]

Page 228

26.5 The contractor shall give notice to the principal agent within twenty (20)
working days of becoming aware, or ought reasonably to have become
aware of expense and/or loss for which provision was not required in the
contract sum failing which such claim shall be forfeited
26.6 Following notice [26.5], the contractor shall submit a detailed and
substantiated claim for the adjustment of the contract value to the
principal agent within forty (40) working days, or such additional period
as the principal agent may allow
26.7 The principal agent shall make a fair assessment of the claim [26.6] and
adjust the contract value within twenty (20) working days of receipt of
such details
26.8 Where the principal agent fails to act within such period [26.7] the claim
shall be deemed to be refused. The contractor may give notice of a
disagreement [30.1] where no assessment is received
Copyright © 2019. Juta & Company, Limited. All rights reserved.

26.9 The principal agent shall:

26.9.1 Omit prime cost amounts and budgetary allowances
[17.1.13] from the contract sum and determine the actual
value of such work to be added to the contract value
26.9.2 Omit provisional sums [17.1.13] from the contract sum and
determine the actual value of such subcontractors’ work to
be added to the contract value
26.9.3 Prorate the contractor’s allowances for profit and
attendance on provisional sums and prime cost amounts
excluding any allowance for cost fluctuations

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
26.9.4 Adjust the preliminaries amounts in accordance with the
method selected [CD]
26.9.5 Adjust the contract value to include contract price
adjustments (cost fluctuations) if applicable [CD]
26.9.6 Rectify discrepancies, errors in description or quantity, or
omission of items in the agreement other than in this JBCC®
Principal Building Agreement [17.1.1]
26.10 The principal agent shall prepare and issue the final account to the
contractor within sixty (60) working days of the date of practical
completion

Page 229

26.11 The contractor shall accept the final account within thirty (30) working
days of receipt thereof or give notice of non-acceptance with reasons
failing which the final account shall be deemed to be accepted
26.12 Should the reasons for non-acceptance of the final account [26.11] not be
resolved within ten (10) working days of the notice of non-acceptance, or
within such extended period as the principal agent may allow on request
from the contractor, the contractor may give notice of a disagreement
26.13 The principal agent shall issue the final payment certificate to the
contractor within seven (7) calendar days of acceptance of the final
account

Commentary
26.0 Adjusting the contract value and preparing the final account
26.1 Adjusting the contract value
The contract value [342] may be adjusted in respect of the value of additional work
performed or work omitted, additional preliminaries consequent on a revision of the
date for practical completion, prime cost allowances and employer’s allowances, and
Copyright © 2019. Juta & Company, Limited. All rights reserved.

sundry other circumstances. [343]

Where the principal agent issues a contract instruction for additional work, or for
the omission of certain work, or for an alteration to the design, quality or quantity of
the works, he and the contractor may agree upon the value of such instruction
before the work is done, but failure to reach agreement shall not relieve the
contractor of his obligation to carry out the instruction [clause 17.2]. [344]
Where agreement has not been reached the principal agent shall determine a fair
value for the variation basing this on prices or rates in the bills of quantities or priced
document [clause 26.2]. Where the bills of quantities or priced document are not of
assistance he shall determine a fair market-related price, in which he shall allow a

Page 230

In certain instances a revision of the date for practical completion will entitle the
contractor to additional payment in the form of additional preliminaries. [345] Where
this applies, the preliminaries amount shall be adjusted pro rata the variation in the
construction period. [346]
Where the contract sum includes employer allowances, [347] the amount so
allowed shall be deducted from the contract value and the actual value of such work
as determined [clause 26.3] shall be added to the contract value.
Where the contract sum includes prime cost amounts, the principal agent shall
similarly deduct all such amounts from the contract value and add back the actual
delivered cost of such items, making reasonable allowance for waste where
necessary. [348] If the contractor has made allowance for overheads and profit on
prime cost amounts in his bills of quantities or priced document, such allowance
shall be adjusted pro rata to the adjustment of prime cost amounts.
Any charges that the contractor has paid for items that were not required to be
included in the contract sum shall be added to the contract value, plus a 10% mark-
up [clause 26.4]. This shall apply where he has been obliged to comply with
regulations regarding the works [clause 26.4.1], and where he has opened up and
tested work that was found to be in accordance with the agreement [clause
26.4.2]. [349]
Where the contractor has incurred expense or loss which arises from a
circumstance for which he was not required to make provision in his tender price, he
shall submit details thereof to the principal agent, who, if he approves the claim, shall
include the amount in the contract value. The contractor shall give notice to the
principal agent and submit his claim within the time constraints [clauses 26.5 and
26.6].
Where the employer has incurred expense or loss arising from an insurance claim
Copyright © 2019. Juta & Company, Limited. All rights reserved.

under a contract works insurance policy for which the contractor was responsible,

Page 231

he shall submit details thereof to the principal agent, who, if he approves the claim,
shall include the amount in the contract value.
26.2 Final account
Simultaneously with the issuing of a payment certificate the principal agent shall
issue a detailed statement determining the current contract value of the works. To do

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
so, he will have to value all variations, adjust preliminaries, employer allowances,
prime cost amounts and sundry contractor’s claims for additional charges and
expense or loss. This will, in effect, constitute a progressive preparation of the final
account, which will keep the employer regularly informed of the variations to the
contract value and avoid unpleasant surprises at the end of the contract.
Within 60 working days of the date of practical completion the principal agent
must submit to the contractor a detailed final account reflecting the total value due in
terms of the agreement [clause 26.10]. [350] If the contractor accepts this final account
within 30 working days, the principal agent will be in a position to issue the final
payment certificate concurrently with the certificate of final completion when the
latter falls due to be issued [clause 26.11]. If the contractor does not accept the final
account he shall give his reasons for such rejection, and if these reasons are
persuasive the principal agent shall revise the final account within ten working days
and resubmit it to the contractor [clause 26.12]. Where the contractor has not
accepted the revised final account within 30 working days after the principal agent
has resubmitted it to him, the final account shall be deemed to be accepted and the
principal agent may, concurrently with the issue of the certificate of final completion,
issue a final payment certificate in an amount in accordance with his version of the
final account. The contractor, if he wishes to dispute the final account, must then
resort to the dispute resolution procedure in clause 30.0 [clause 26.12].

Page 232

Chapter 27
Recovery of expense and/or loss
27.1 The principal agent shall issue a recovery statement with each
payment certificate to the parties with explanatory documentation to
support the calculation of amounts due to:
The employer resulting from:
27.1.1 Penalties [24.3]
27.1.2 Default interest [25.7.4]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

27.1.3 Expense and/or loss [27.2]

The contractor resulting from:
27.1.4 Default interest [25.7.4]
27.1.5 Compensatory interest [25.7.5]
27.1.6 Damages
27.1.7 Expense or loss caused by a direct contractor [16.1.3]
27.1.8 Advance payments [9.2.10; 12.1.8]
27.1.9 Termination of a n/s subcontract agreement due to default
of the employer, the principal agent and/or agents [14.7.1;

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
15.7.1]
27.2 The employer may recover expense and/or loss incurred or to be incurred
resulting from:
27.2.1 Paying charges [2.1]
27.2.2 Effecting insurance due to the contractor’s default [10.0]
27.2.3 Work executed by others due to the contractor’s default
[17.3]
27.2.4 Recoupment of advance payments [9.2.10; 11.3]
27.2.5 The contractor not paying the amount due to the employer
[25.3.7]
27.2.6 Termination of this agreement by the employer [29.1]
27.2.7 Amounts paid directly to subcontractors on default by the
contractor [14.5; 15.5]
27.2.8 Termination of a n/s subcontract agreement [14.7.2; 15.7.2]
27.2.9 Default by the contractor where not less than five (5)
working days’ notice detailing such default has been given
before the issue of the next recovery statement to allow the
contractor the opportunity to remedy such default

Page 233

27.2.10 Adjustment of the n/s subcontract preliminaries due to the

subcontractor as a result of a default by the contractor
27.3 Where an amount is due to either party and has not been paid, the other
party may recover the amount from any of the following:
27.3.1 Subsequent payment certificates [25.0]
27.3.2 A demand in terms of the security [11.0]
27.3.3 The defaulting party as a debt
27.4 Where either party has been liquidated, or this agreement terminated, the
other party may exercise rights in terms of the security [11.0]

Commentary
Copyright © 2019. Juta & Company, Limited. All rights reserved.

27.0 Recovery of expense and/or loss

Recoverable items of expense and loss and the recovery statement are dealt with at
25.4.1 and 25.4.2 above and are not repeated here.

Page 234

Suspension and Termination

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
Chapter 28
Suspension by the contractor
28.1 The contractor may give ten (10) working days’ notice to the employer
and the principal agent of the intention to suspend the works where the
employer or the principal agent has failed to:
28.1.1 Provide and/or maintain a guarantee for payment, where
required [11.5–6]
28.1.2 Issue a payment certificate by the due date [25.2] [CD]
28.1.3 Make payment in full of an amount certified in an interim
payment certificate by the due date [25.10] [CD]
28.1.4 Effect insurances [10.1.1–5; 10.2] where applicable [CD]
28.1.5 Appoint another principal agent and/or another agent,
where applicable [6.5] or where an agent has failed to act in
terms of delegated authority [6.4]
28.2 Where the employer has not remedied a default in terms of a notice the
contractor may suspend execution of the works until such default has
been remedied without prejudice to any rights the contractor may have
28.3 Where the works is suspended the contractor shall instruct each
subcontractor to suspend the n/s subcontract works forthwith
28.4 Where the works has been suspended by the contractor [23.2.13] the
principal agent shall revise the date for practical completion on
resumption of the works with an adjustment of the contract value

Commentary
28.0 Suspension
28.1 Suspension of the works by the contractor
In previous editions of the JBCC PBA, the contractor was not entitled to suspend the
works for any reason whatsoever. Clause 28 now entitles the contractor to suspend
the works where the employer or principal agent fails to carry out the functions
required in terms of clauses 28.1.1 to 28.1.5. The contractor may give the employer
Copyright © 2019. Juta & Company, Limited. All rights reserved.

and the principal agent 10 working days’ notice of his intention to suspend the works
for non-compliance with the clauses listed above. With subcontractors the situation
is similar and the subcontractor may give the

Page 235

contractor 5 working days’ notice of his intention to suspend the n/s subcontract
works where the contractor, employer or principal agent fails to provide or maintain a
JBCC NSSA guarantee for payment [clause 28.1.1] of the NSSA, issue a payment
certificate, n/s subcontract notification or a n/s subcontract payment advice by due
[351]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
date; [351] fails to make payment in full of an amount certified in a payment certificate,
n/s subcontract payment notification or a n/s subcontract payment advice by due
date; [352] and fails to effect insurances where applicable and appoint another
principal agent or other agent where applicable. [353]
The inclusion of the suspension clauses in both the PBA and the NSSA removes
the previous strange situation which could have arisen, for instance on the failure of
the principal agent to issue an interim payment certificate, where the subcontractor
would have been entitled to suspend work but the contractor would not. Any delay to
practical completion that might arise from this situation would entitle the contractor to
a revision of the date for practical completion [clause 23.2.11].

Page 236

Chapter 29
Termination
Termination by the employer
29.1 The employer may give notice of intention to terminate this agreement
where the contractor has failed to:
29.1.1 Provide and maintain a guarantee for construction [CD]
29.1.2 Proceed with the works [12.2.7]
29.1.3 Comply timeously with a contract instruction [17.0]
29.2 Where the employer contemplates terminating this agreement, the
employer or the principal agent on instruction from the employer shall
give notice to the contractor of a specified default [29.1.1–3], to be
remedied within ten (10) working days of the date of receipt of such
notice
29.3 Where the contractor has not remedied a specified default within such
period [29.2] the employer may forthwith give notice to the contractor of
termination of this agreement
29.4 The employer may employ others to safeguard the works, complete the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

outstanding work and rectify defects in that portion of the works executed
by the contractor [27.2.3]. The contractor shall be liable to the employer
for such costs that shall be included in the final account [26.10]
29.5 The employer may use materials and goods and temporary structures
on the site for which payment shall be included in the final account
29.6 Should the contractor default on removing temporary structures or
construction equipment from the site the employer, without being
responsible for any loss or damage, may have such items belonging to the
contractor removed or sold. Resulting costs and/or income shall be
included in the final account

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
29.7 The employer, on notice to the contractor, may recover damages from
the contractor from the date of termination including, but not limited to,
additional costs incurred in the completion of the remaining work [25.3.7;
27.1.3]
29.8 The employer may apply the penalty [24.0] up to the date of termination
where the initial or revised date for practical completion has passed

Page 237

29.9 The employer has the right of recovery against the contractor, where
applicable, [CD] from:
The guarantee for construction (variable) – until the final payment has
been made;
or
The guarantee for construction (fixed) until the date of practical
completion;
or
The payment reduction until the final payment is made;
The guarantee for advance payment until the outstanding balance has
been repaid to the employer
29.10 The latent defects liability period for the completed portion of the works,
shall end [22.3.1] five (5) years from the date of termination
29.11 Where this agreement is terminated, the contractor shall forthwith give
notice of termination of the n/s subcontract agreement to each
subcontractor
29.12 Termination of the works shall not prejudice any rights the employer may
have
29.13 The right to terminate may not be exercised where the employer is in
material breach of this agreement
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Termination by the contractor

29.14 The contractor may give notice of intention to terminate this agreement
where:
29.14.1 The employer has failed to provide and maintain a
guarantee for payment, where applicable [CD]
29.14.2 The employer has failed to give possession of the site to the
contractor [12.1.5]
29.14.3 The employer has failed to allow the principal agent and/or
agents to exercise fair and reasonable judgement as
contemplated in this agreement [6.6]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
29.14.4 The employer has failed to effect insurances where
applicable [CD]
29.14.5 The employer has failed to pay the amount certified by the
due date [25.10]

Page 238

29.14.6 The employer has failed to appoint another principal agent,

and/or agents, where applicable [6.5]
29.14.7 The principal agent has failed to issue a payment
certificate to the contractor by the due date [25.2]
29.15 Where the contractor contemplates terminating this agreement, the
contractor shall give notice to the employer and/or the principal agent
of a specified default [29.14.1–7], to be remedied within ten (10) working
days of the date of receipt of such notice
29.16 Where a specified default has not been remedied within such period
[29.15] the contractor may forthwith give notice to the employer and the
principal agent of the termination of this agreement
29.17 Where this agreement is terminated by the contractor:
29.17.1 The contractor shall forthwith give notice of termination of
the n/s subcontract agreement to each subcontractor
29.17.2 The contractor shall remove temporary structures,
construction equipment and, on notice, surplus materials
and goods from the site within ten (10) working days, or
such period agreed by the principal agent
29.17.3 The latent defects liability period shall end on the date of
termination [22.3.2]
29.17.4 The contractor may be entitled to recover damages [27.1.6]
29.17.5 The guarantee for construction shall expire on the date of
termination
29.17.6 The guarantee for advance payment where applicable
[CD], shall expire on repayment of amounts due to the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

employer
29.17.7 The guarantee for payment [11.5–6], where applicable [CD],
shall expire on payment of the final payment certificate or
on payment in full of the guaranteed sum, or on the security
expiry date, whichever is the earlier
29.18 Termination of the works shall not prejudice any rights the contractor
may have
29.19 The right to terminate may not be exercised where the contractor is in
material breach of this agreement

Page 239

29.20.1 The works is for alterations and/or additions to (an) existing

building(s), or a new building, which has been substantially
destroyed regardless of the cause other than by the party
seeking termination
29.20.2 Progress on the works has ceased for a continuous period of
ninety (90) calendar days, or an intermittent period totalling
one hundred and twenty (120) calendar days as a result of a
force majeure event or the exercise of statutory power by a
body of state or public or local authority that directly affects
the execution of the works
29.21 The party contemplating termination of this agreement shall give ten (10)
working days’ notice to the other party. Where this agreement is
terminated by either party:
29.21.1 The contractor shall forthwith give notice of termination of
the n/s subcontract agreement to each subcontractor
29.21.2 The party responsible for insurance [CD] shall inform the
insurer and the other party of the date of termination of the
agreement
29.21.3 The guarantee for payment, where applicable [CD], shall
expire on payment of the final payment certificate or on
payment in full of the guaranteed sum or on the security
expiry date, whichever is the earlier
29.21.4 The guarantee for construction shall expire on the date of
termination
29.21.5 The guarantee for advance payment [11.2.2; 11.3], where
applicable [CD], shall expire on repayment of amounts due to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the employer
29.22 Neither party shall be liable to the other party for expense and/or loss
resulting from the termination
29.23 The latent defects liability period for the works shall end on the date of
termination [22.3.2]
Termination procedure by the employer, the contractor or by the parties
29.24 On termination of this agreement the contractor shall:
29.24.1 Cease work and ensure that the works is safe in terms of the
law

Page 240

29.24.3 Remove temporary structures, construction equipment

and, on notice from the principal agent, surplus materials
and goods from the site within ten (10) working days, or
such period agreed by the principal agent
29.25 On termination of this agreement the principal agent shall:
29.25.1 Prepare and hand over to the employer all compliance
certificates, as built drawings and product warranties in
conjunction with agents, the contractor and
subcontractors
29.25.2 In consultation with the contractor where possible, compile
and issue to the parties a status report recording completed
and incomplete work on the date of termination of the works
within twenty (20) working days of such date
29.25.3 Continue to certify the value of the work executed and
materials and goods for payment by the employer, or the
contractor, as the case may be, until the issue of the final
payment certificate [25.15]
29.25.4 Prepare and issue the final account to the contractor within
sixty (60) working days of the date of termination including
the cost of materials and goods and those ordered before
termination that the contractor is bound to accept and make
payment for
29.26 Termination shall take effect after completion of the procedure [29.24.1]
29.27 The employer shall arrange appropriate insurances to suit the stage of
completion of the works
29.28 This clause shall, to the extent necessary to fulfil its purpose, exist
independently of this agreement
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Commentary
29.0 Termination of the agreement
The termination clauses in the PBA deal with termination by the employer where
the contractor is in default; termination by the contractor where the employer is in
default; and termination by either party. The clauses set out the conditions under
which termination may be implemented in each instance followed by the termination
procedures. A party may not terminate an agreement unless the other party has
been guilty of a serious breach.

29.1 Termination by the employer—contractor’s default

To remove any doubt about what constitutes a serious breach, the PBA sets out the
defaults of the contractor which would entitle the employer to terminate. These are:
• failure within 15 working days of the date of acceptance of his tender to
provide and maintain a guarantee for construction (if that was the form of
security chosen by the contractor) [clauses 11.1.1; 11.1.2; 11.2.1; 12.2.3 and
29.1.1];
• failure to proceed with the works within the period stated in the CD. This
period commences on being given possession of the site and the contractor is
to proceed with due diligence, regularity, expedition, skill and appropriate
resources to bring the works to practical completion and to final completion
[clause 12.2.7];
• failing to timeously comply with a contract instruction [clauses 17.0 and
29.1.3].
Where the employer wishes to terminate the agreement the following procedure is to
be followed:
If the contractor is in default in any of the above respects and the employer
wishes to terminate, the principal agent shall give the contractor written notice of
such default and of the employer’s intention to terminate if the default is not
remedied within 10 working days of receipt of such notice. If after 10 working days
the contractor is still in default, the employer, or the principal agent on his behalf,
may by written notice to the contractor, terminate the agreement forthwith [clause
29.3]. The employer may not terminate the agreement if he himself is in breach of a
material term of the agreement [clause 29.13].
On termination:
• The employer may employ others to safeguard the works, complete the
outstanding work and rectify defects in that portion of the works executed by
the contractor. The contractor shall be liable to the employer for such costs
Copyright © 2019. Juta & Company, Limited. All rights reserved.

that shall be included in the final account [clause 29.4].

• The employer may use materials and goods and temporary structures on the
site for which payment shall be included in the final account [clause 29.5].
• The employer may have the contractor’s temporary structures or construction
equipment removed from the site in the event of the contractor failing to do so.
Where such goods are sold, the income from the sale shall be included in the
final account [clause 29.6] and the employer will not be responsible for loss or
damage.
• The employer, having given notice to the contractor, may recover damages
from the contractor from the date of termination including additional costs

Page 242

• The employer may apply the penalty up to the date of termination where the
initial or revised date for practical completion has passed [clause 29.8].
• The employer has the right of recovery against the contractor, where
applicable from the guarantee for construction provided by the contractor in
terms of the CD [clause 29.9].
• The latent defects liability period for the completed portion of the works shall
end five years from the date of termination [clause 29.10].
• The contractor shall give immediate notice of termination of the NSSA
subcontract agreement to each subcontractor [clause 29.11].
• Termination of the works shall not prejudice any rights the employer may have
[clause 29.12].
29.2 Termination by the contractor—employer’s default
The contractor may give notice of his intention to terminate the agreement where the
employer has failed to:
• provide and maintain a JBCC guarantee for payment [clause 11.5.1] within 15
working days of acceptance of the contractor’s tender, where applicable [CD]
[clause 29.14.1];
• give possession of the site to the contractor when required to do so [clause
29.14.2];
• allow the principal agent and/or agents to exercise fair judgement as
contemplated in the agreement [clause 29.14.3];
• effect insurances where applicable and as required in the CD [clause 29.14.4];
• make payment of an amount certified by due date [clause 29.14.5];
• appoint another principal agent, and/or agents where applicable [clause
29.14.6]; or
• where the principal agent fails to issue a payment certificate to the contractor
on due date [clause 29.14.7]. [354]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

If the employer is in default in any of the above aspects, the contractor may give the
employer and /or the principal agent written notice of the specific default which is to
be remedied within 10 working days of receipt of such notice. Where the employer
has not remedied the specific default within such period, the contractor may give
notice to the employer and principal agent of termination of the agreement forthwith.

Page 243

The contractor may not terminate the agreement if he himself is in breach of a

material term of the agreement. [355]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
On termination:
• The contractor shall forthwith give notice of termination of the n/s
subcontractor agreement to each subcontractor [clause 29.17.1].
• The contractor shall remove temporary structures, construction equipment
and, on notice, surplus materials and goods from the site within ten working
days, or such period agreed by the principal agent [clause 29.17.2].
• The latent defects liability period for the completed portion of the works shall
end [clauses 22.3.1 and 29.17.3]. The latent defects liability period for the
completed portion of the works will end 5 years from the date of termination
and the contractor shall make good all latent defects that appear up to the
date of expiry of the latent defects period.
• The contractor may be entitled to damages [clause 29.17.4].
• The JBCC guarantee for construction shall expire on the date of termination
[clause 29.17.5].
• The JBCC guarantee for advance payment, where applicable, shall expire on
repayment of amounts due to the employer [clause 29.17.6].
• The guarantee for payment, where applicable, shall expire on payment of the
final payment certificate or on payment in full of the guaranteed sum or on the
security expiry date, whichever is the earlier [clause 29.17.7].
• Termination of the works shall not prejudice any rights the contractor may
have [clause 29.18].
29.3 Termination by either party
Where it becomes impossible for a party to continue to perform, he is excused
further performance and the contract terminates. The PBA lays down two
circumstances which shall be deemed to create impossibility of performance entitling
either party to terminate. The consequences of such termination are regulated.
Either party may cancel the agreement where:
• the works is for alterations and/or additions to an existing building, or a new
building, which has been substantially destroyed regardless of the cause other
than by the party seeking termination [clause 29.20.1];
Copyright © 2019. Juta & Company, Limited. All rights reserved.

• progress of the works has ceased for a continuous period of 90 calendar days,
or an intermittent period totalling 120 calendar days as a result of a force

Page 244

majeure event or the exercise of statutory power by a body of state or public

or local authority that directly affects the execution of the works [clause
29.20.2]. [356]
The termination procedure in this instance is set out in clause 29.24 and makes
provision for the contractor to:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
• cease work and ensure that the works is safe in terms of the law;
• remain responsible for the works until possession is relinquished to the
employer;
• remove his temporary structures, construction equipment and, on notice from
the principal agent, surplus materials and goods from the site within ten
working days, or such period as agreed by the principal agent.
The principal agent shall:
• prepare and hand over to the employer all compliance certificates, as built
drawings and product warranties [clause 29.25.1];
• compile and issue a status report of the works in consultation with the
contractor within 20 working days of the date of termination [clause 29.25.2];
• continue to certify the value of work executed and materials and goods for
payment by the employer, or the contractor, as the case may be, until the
issue of the final payment certificate [clause 29.25.3];
• prepare and issue the final account within 60 working days of the date of
termination including the cost of materials and goods and those ordered
before termination that the contractor is bound to accept and make payment
for.
Termination shall only take place after completion of the above procedure [clause
29.26] and such date shall be recorded by the principal agent.
The employer is to arrange appropriate insurance cover to suit the stage of
completion of the works.
There may be other circumstances beyond the control of the parties which could
lead to termination and which are not covered in this clause 29.0. In such cases, it is
submitted that the parties negotiate a termination agreement which is to be
committed to writing and signed by both parties. An example of such a case is where
a dispute arises between a developer and the owner of the land on which the works
is being constructed and the developer wishes to discontinue with the

Page 245
Copyright © 2019. Juta & Company, Limited. All rights reserved.

development and terminate the works which is in progress. The contractor, who is
not a party to the dispute will need to be properly compensated for loss and/or
damages and the procedures set out in clause 29.0 should be followed as closely as
possible.

Page 246

Dispute resolution

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
Chapter 30
Dispute resolution
Settlement by the parties
30.1 Should any disagreement arise between the employer (or the principal
agent or an agent) and the contractor arising out of or concerning the
action or inaction of the employer (or the principal agent and/or an
agent) or the contractor, or any other matter concerning this agreement
(including the validity thereof), either party may give notice of a
disagreement to the other. The parties shall attempt to resolve such
disagreement between them and record such resolution in writing signed
by them
30.2 Where the disagreement is not resolved within ten (10) working days of
receipt of the notice of disagreement, the disagreement shall be deemed
to be a dispute
30.3 The dispute shall be referred to adjudication within ten (10) working days
of the expiry of the period [30.2] by means of a notice of adjudication by
the party (the referring party) which gave the notice of disagreement
30.4 The notice of adjudication shall clearly define the scope of the dispute and
the relief sought by adjudication
30.5 Failure to comply with the procedure described [30.3–4] shall cause the
dispute to be resolved by arbitration and not by adjudication
Adjudication
30.6 Where a dispute is referred to adjudication:
30.6.1 The adjudicator shall be nominated by the nominating body
[CD] and shall be deemed to have been appointed by the
parties
30.6.2 The applicable rules shall be stated [CD] or shall be by
agreement between the parties and the adjudicator, failing
which the rules shall be determined by the adjudicator.
Neither party shall be
Copyright © 2019. Juta & Company, Limited. All rights reserved.

entitled to legal representation, unless otherwise agreed in

writing by the parties
30.6.3 A determination given by the adjudicator shall be immediately
binding upon and implemented by the parties
notwithstanding that either party may give notice to refer the
dispute to arbitration

Page 247

30.6.4 Where the adjudicator has given a determination, either

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
party may give notice of dissatisfaction to the other party
and to the adjudicator within ten (10) working days of receipt
of the determination, or an extended time period provided in
the applicable rules for adjudication whereafter such dispute
shall be referred to arbitration
30.6.5 Where the adjudicator has not given a determination within
the time period allowed or an extended time period provided
in the applicable rules for adjudication, either party may give
notice to the other party and to the adjudicator that if such
determination is not received within ten (10) working days of
receipt of this notice his appointment is thereupon
automatically terminated and such dispute shall be referred
to further adjudication or arbitration, at the option of the
referring party
30.6.6 The adjudicator shall not be eligible for subsequent
appointment as the arbitrator
Arbitration
30.7 Where the dispute is referred to arbitration:
30.7.1 Arbitration shall not be construed as a review or appeal of an
adjudicator’s determination. Any determination by the
adjudicator shall remain in force and continue to be
implemented unless and until overturned by an arbitration
award
30.7.2 The resolution of the dispute shall commence anew
30.7.3 The referring party in the adjudication shall be the claimant in
the arbitration
30.7.4 The arbitrator shall be nominated by the nominating body
[CD] and shall be deemed to have been appointed by the
parties
30.7.5 The applicable rules shall be stated [CD] or shall be by
agreement between the parties and the arbitrator, failing
Copyright © 2019. Juta & Company, Limited. All rights reserved.

which the rules shall be determined by the arbitrator

30.7.6 The arbitrator shall have the authority to finally determine the
dispute including the power to make, open up and revise any
certificates, opinion, decision, determination, requisition, or
notice relating to the dispute as if no such certificate,
opinion, decision, determination, requisition, or notice had
been issued or given
30.7.7 The arbitrator’s award shall be final and binding on the
parties

Mediation
30.8 Notwithstanding the provisions relating to adjudication and arbitration, the
parties may, by agreement and at any time, refer a dispute to mediation,
in which event:
30.8.1 The provisions relating to adjudication and/or arbitration shall
be deemed to be suspended from the time of such
agreement until notice by either party that they be resumed
30.8.2 The appointment of a mediator, the procedure, and the status
of the outcome shall be agreed between the parties
30.8.3 Regardless of the outcome of a mediation the parties shall
bear their own costs concerning the mediation and equally
share the costs of the mediator and related expenses
General
30.9 The employer consents to the joining of any subcontractor with the
contractor as a party to any proceedings
30.10 Where the parties fail to specify a body to nominate the adjudicator
[30.6.1] or the arbitrator [30.7.4] the referring party shall have the right to
choose a local recognised body to suggest one or more persons with
appropriate skills to be appointed as an adjudicator or an arbitrator, as the
case may be. Such nomination shall be binding on the parties
30.11 The parties shall continue to perform their obligations in terms of this
agreement, notwithstanding any disagreement or a dispute that exists
between them
30.12 This clause shall, to the extent necessary to fulfil its purpose, exist
independently of this agreement

Page 249

Commentary
Copyright © 2019. Juta & Company, Limited. All rights reserved.

30.0 Dispute resolution

30.1 The increasing incidence of disputes
A growing number of building contracts end in disputes that require the intervention
either of the courts or of an arbitrator, mediator or adjudicator to achieve
resolution. [357]
There are various reasons for this. The scale of building projects has increased
enormously in recent years, and their design and construction has grown in
complexity. Such projects require an ever-increasing number of specialist

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
subcontractors, and the growing variety of sophisticated mechanical and electrical
installations and services requires careful co-ordination and integration. The
increase in interest rates and cost escalations over the past few decades has made
employers acutely aware of the importance of keeping construction time, during
which capital earns no return, as short as possible. The pressure has been put on
the construction industry to build more and more in less and less time. The fast-track
contract has become the norm. [358] Circumstances often militate against the
achievement of such tight construction programs, and under such pressure,
mistakes, both by the contractors and by the employer’s agents, are inevitable.
Add to this the fact that the construction industry is currently experiencing a
chronic shortage of work except for a number of large private sector
developments, [359] during which time contractors have had to cut their prices to the
bone to secure contracts, leaving no margin for error.
When the inevitable mistakes have occurred, turning meagre profits into losses,
contractors, seeking ways to recoup such losses, have formulated claims for
compensation for damages allegedly due to inadequate construction information, or
drawings and instructions issued late, or unreasonable decisions by the employer’s
agents, or other real or imaginary breaches of explicit or implied terms of the
contract.

Page 250

In this they are assisted by a growing band of claims consultants who skillfully
and sharply perceive shortcomings in the performance of the employer’s agents,
also working under great pressure. They frequently charge the contractors who
consult them a contingent fee (‘no duck, no dinner’), which is an added incentive to
the use of their services.
30.2 Scope of the dispute resolution provisions in the JBCC Agreements
The scope of the dispute resolution provisions in the JBCC Agreements is extremely
wide, and covers any disagreement between the employer (or the principal agent or
Copyright © 2019. Juta & Company, Limited. All rights reserved.

an agent) and the contractor arising out of or concerning the action or inaction of the
employer (or principal agent or an agent) or the contractor, or any other matter
concerning this agreement . . . [clause 30.1] and ‘any disagreement between the
contractor and the subcontractor [that should] arise out of this NSSA . . .’ [clause
30.1] This would include a dispute about any of the rights and obligations of either of
the parties under the agreement, a dispute as to whether either party had breached
the agreement or not, and a dispute as to whether a term of the agreement should
be rectified. [360] As the dispute resolution clause survives the cancellation of the
contract [clause 30.12 PBA and NSSA] a dispute as to whether a party who has
cancelled the contract was entitled to do so, would come within the scope of this

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
clause.
However, if one of the parties were to assert that the contract was void from the
start, an arbitrator would have no jurisdiction to determine the matter, because doubt
has been cast on the very instrument which gives him authority to act. [361]
To come within the scope of this clause, the disagreement must be a genuine
disagreement, involving differing and conflicting points of view held by the respective
parties, and not merely the failure of one of them to honour a contractual
obligation. [362] For example, a contractor might complain that the employer, without
giving any reason, has failed to pay the amount due in an interim payment
certificate, and he seeks an arbitrator’s award to compel payment. But if the
employer has remained silent about his reasons for failing to pay, there cannot be
said to be a disagreement—nothing has been said by the employer with which the
contractor could disagree—and the requirement for bringing this matter within the
scope of the dispute resolution clause has not yet

Page 251

been met. The contractor’s remedy would either be to persuade the employer to give
a reason with which he could disagree, or to apply to court for provisional sentence
on the certificate.
These provisions do not cater for any dispute between the employer and the
principal agent or any other agent, because these agents are not parties to the
Agreement. The employer is bound by the decisions of the principal agent made in
terms of the Agreements, and any dissatisfaction he may have with his principal
agent and any relief to which he may consider he is entitled due to his negligence,
must be sought in terms of the agreement he has with him.
30.3 Declaring a dispute in terms of the JBCC Agreements
Clause 30.1 of the PBA provides that if a disagreement should arise between the
employer, or his agents acting on his behalf, on the one hand, and the contractor on
the other, concerning any matter arising out of the Agreement, either party may give
Copyright © 2019. Juta & Company, Limited. All rights reserved.

notice to the other to resolve such disagreement. The notice serves two purposes.
The first is to define what the nature and extent of the disagreement is that will be
referred to the dispute resolution procedures set out in clause 30.0; the second is to
initiate a process of amicable negotiation to attempt to settle the disagreement
before it becomes necessary to resort to such procedures. Only after the lapse of ten
working days after notice has been given by one party to the other during which the
parties have been unable to resolve does the disagreement mature into a dispute
and become ready for submission to adjudication or arbitration.
Clause 30.1 of the NSSA similarly provides that if a disagreement should arise

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
between the contractor and a subcontractor concerning any matter arising out of the
NSSA other than a dispute relating to some decision, action or inaction of the
employer or principal agent, either party may give notice to the other to resolve such
disagreement and if such disagreement has not been resolved within ten working
days of receipt of such notice, it shall be deemed to be a dispute and referred to
adjudication or arbitration.
Often where the disagreement concerns a payment made by the contractor, or a
decision given by him, the contractor’s defence will be that the amount of the
payment, or the decision, was instructed or given by the principal agent, and that the
contractor was bound by it and was carrying it out in terms of the principal
agreement. In such case, there is no point in the subcontractor proceeding to
adjudication, mediation or arbitration with the contractor; the subcontractor’s dispute
really lies with the employer or his principal agent, not the contractor. This poses a
difficulty: the arbitration agreement contained in the NSSA is between the
subcontractor and the contractor, not the subcontractor and the employer, and there
is no contractual nexus between the subcontractor and the employer.

Page 252

The NSSA in Edition 4.1 [40.8] made provision to get over this difficulty. In such a
case, it required the contractor to permit the subcontractor to assume its identity and
its name, and in its name to institute the dispute resolution proceedings provided in
the PBA to resolve its disagreement with the employer or principal agent. If the
subcontractor wished to avail himself of this right, he had to provide the contractor
with such indemnity and security for costs as the contractor required. This provision
was omitted from the fifth edition of the NSSA, which omission has been carried
through to Edition 6.2.
30.4 Litigation of construction disputes
If two people have a dispute and are unable to resolve it between themselves, the
courts are available to assist them. The party who considers that he has a claim
against the other may issue summons through the court of appropriate jurisdiction to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

compel the other to appear before the court and defend himself against the first
party’s claims. The court will then decide whether the claim was valid, in which case
it will make an order to compel the other party to honour the claim, usually by paying
a sum of money, or it will dismiss the claim. Once the claim has been decided, it
cannot be brought again, [363] and finality is reached.
Unless the contract provides otherwise, any dispute between the parties to the
contract may be brought to court for resolution. Even where the contract provides for
the arbitration of disputes, a party may take the dispute to court and the court may
proceed to hear it unless the other party insists on his right to have the dispute
[364]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
decided by arbitration. [364]
30.5 Disadvantages of litigating building disputes
Resolving building disputes by litigation in the courts is often an unsatisfactory
process. This is because building disputes frequently involve technicalities about
which the presiding judge or magistrate is, by convention if not in fact, ignorant, and
expert witnesses need to be called, usually at considerable expense, to explain the
technical issues to the court and to express an expert opinion on them. Experts
called by opposing parties will probably not agree, and the judge or magistrate will
then be put to deciding which expert to believe.
At the best of times, litigation is a slow process; the courts frequently have a long
backlog of cases on the roll, and it may take many months for a dispute to come to

Page 253

a hearing. Even when a judgment is finally handed down, this may not be the end of
the matter; the unsuccessful party may be prepared to take it on appeal. Not only
does this take even more time, but the costs mount considerably. The other party
may not have the resources to fight an appeal, and may be forced to withdraw and
lose what he had won.
It is not strange, therefore, that other means of dispute resolution often appear
attractive to the parties, and arbitration has for many years been the popular means
of resolving disputes in building and civil engineering contracts, and arbitration
clauses are almost invariably found in such agreements.
30.6 An introduction to adjudication
In recent years arbitration has tended to become a slower, more formal and more
expensive process than it had been 40 or 50 years ago. It is now much more
common that parties rely on lawyers and advocates to present their cases than it
was in bygone years, and this has tended to introduce more formal High Court
procedures into arbitration than was hitherto the case. While this has undoubtedly
Copyright © 2019. Juta & Company, Limited. All rights reserved.

improved the quality of the decision-making process, it has been at the cost of speed
in the resolution of the dispute. It is now not unusual for six months or more to
elapse between the appointment of the arbitrator and the making of his award. [365]
Where in a construction contract a dispute relates to the amounts certified in
interim payment certificates, as it so often does, the contractor is vitally concerned to
have a quick decision – to be told, six months after the event, that his claim, that
payment certificates had been undervalued, was justified, may bring relief after he
has succumbed to the consequences of a cash-flow crisis.
This has become a matter of considerable concern both in this country and

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
overseas, notably in the UK where Sir Michael Latham in his parliamentary report
‘Constructing the Team’ emphasised the need for the introduction of a speedy
process of determining disputes, particularly those related to interim payments.
The UK Government adopted the Latham Committee’s recommendations and
embodied them in the ‘Housing Grants, Construction and Regeneration Act 1996’
which provides for an accelerated process of deciding disputes termed ‘adjudication’
in which the adjudicator, who is appointed by the parties to resolve their dispute,
must make his determination within 28 days. His decision is not necessarily final and
binding, and may be rejected by either party and submitted to

Page 254

arbitration, but it is provisionally binding on the parties unless and until overturned in
a subsequent arbitration. [366] The Act further requires all construction contracts to
make provision for the adjudication of disputes and where a construction contract
does not contain such provision, it is deemed that it does. This procedure has
attracted great interest in South Africa, and is strongly supported by the CIDB. It has
now been introduced into the JBCC Agreements.
It must be emphasised that the procedure is not one of arbitration and the
adjudicator is not an arbitrator but rather an expert who is required to employ his
expertise in determining the dispute. He is allowed great freedom in determining the
manner in which he does so, the over-riding consideration being that he should
reach a conclusion within a very short time.
Adjudication has now found its way into most of the major construction
agreements in use in South Africa: FIDIC, NEC and the GCC, and it has now been
embodied in the 6.2 Edition (May 2018) of the JBCC PBA and the JBCC MWA.
Where adjudication in the UK differs from adjudication in South Africa is that
whereas adjudication in the UK is a creature of legislation, and therefore is
substantially a similar process regardless of whichever of the many available
construction agreements is applicable, in South Africa it is adopted by agreement
between the contracting parties, and its nature may vary depending on the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

applicable agreement.
The absence in South Africa of legislation governing adjudication has a number of
consequences that differentiate it from arbitration. There is no statutory provision for
the enforcement of the adjudicator’s determination, and the successful party who
wishes to enforce the determination against the other will have to ask the court to
enforce it as an obligation arising from an agreement. There is no statutory provision
that would enable the court to appoint an adjudicator where the parties themselves
cannot agree on the appointment, nor to set aside the adjudicator’s appointment on
grounds such as bias, nor to set the adjudicator’s determination aside for

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
misconduct. This is not to say that an aggrieved party would be afforded no remedy
at all, but that he would have to seek his remedy in the less certain waters of the
common law.

Page 255

30.7 The adjudication process

Adjudication is an accelerated form of dispute resolution in which a neutral person
determines the dispute as an expert and not as an arbitrator and whose
determination is binding unless and until varied or overturned by an arbitration
award. It is the dispute resolution process that shall initially be followed unless, at the
time of concluding the Agreement, the parties have decided that only arbitration shall
apply. The adjudication shall be carried out in accordance with the JBCC Rules for
Adjudication current at the time when the dispute is declared.
The JBCC Adjudication Rules (published: October 2014) form part of the
adjudicator’s appointment in terms of the dispute resolution clause of the JBCC PBA,
the JBCC NSSA and the JBCC MWA. These rules may also be used in conjunction
with the MBSA Domestic Subcontract Agreement.
The JBCC Adjudication rules cover:
(1) interpretation
(2) appointment of the adjudicator
(3) terms of appointment of the adjudicator
(4) the fees of the adjudicator
(5) procedure
(6) determination
(7) termination of the appointment of the adjudicator
Attached to the rules is the Dispute Adjudication Agreement – Appointment of the
Adjudicator which is to be completed and signed by the claimant, defendant and the
adjudicator.
The rules set out time limits for the adjudication process and require the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

adjudicator to deliver his determination to the parties not later than ten (10) working
days after receipt of (a) the initial details of the dispute; (b) the response from the
other party; and (c) receipt of the replication, if any. The time limit shall also be
extended in respect of a delay caused by suspension of work by the adjudicator in
terms of rule 4.1.2 (failure by the parties to pay an initial deposit and further deposits
where necessary). See the JBCC Adjudication Rules in Section 5.
The CD makes provision for the name of the nominating body for the appointment
of an adjudicator to be inserted in the space provided when the CD is prepared prior
to issuing for tender purposes. The JBCC Adjudication Rules [rule 2.1] require the
parties to appoint the adjudicator by mutual agreement at any time but not later than

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
five working days after the date on which the disagreement was deemed to be a
dispute in terms of clause 30.1.
Where the parties fail to make an appointment within the stated period, either
party may request the recognised nominating body as recorded in the CD to

Page 256

appoint an adjudicator [rule 2.2]. This Rule further stipulates that no objection to
such an appointment by either party shall be admissible. The reason for this last
proviso is to avoid delays in the adjudication process which would result from a party
objecting to the appointment of the adjudicator. The adjudicator’s appointment is
limited to the current dispute for which he has been appointed and may be
reappointed by the parties should a further dispute arise during the construction
period on the same project [rule 2.5].
The adjudicator shall at all times act impartially and independently of the parties
and inform the parties of anything which could affect his impartiality or independence
[rule 3.1], not give advice to the parties or their representatives concerning any
aspect of the agreement [rule 3.2], treat all matters referred to him as confidential
[rule 3.3], may not be called as a witness by either party to give evidence concerning
the matter referred or adjudicated by him save as may be necessary for a party to
secure the enforcement of a determination [rule 3.4] and may not assign, delegate or
obtain specialist assistance related to his work under these rules without the prior
approval of the parties [rule 3.5].
On confirmation of the appointment of the adjudicator, the referring party is
required to submit full details of the dispute together with copies of all relevant
documents to the adjudicator for determination [rule 5.2]. The adjudicator shall notify
the parties of the date on which he receives such documents and from this date (the
‘referral date’) the time limit for making his determination shall be calculated [rule
6.1.1]. The adjudicator is required to ensure that each party is furnished with a copy
of any written communication sent to or received from either party [rule 5.4.3]. The
other party may submit a written response to the details of dispute within ten working
Copyright © 2019. Juta & Company, Limited. All rights reserved.

days after the referral date [rule 5.2]. Within five working days of receipt of the
response from the other party, the claimant may submit a replication to the
adjudicator and the other party [rule 5.3.1]. There is no provision for the other party
to respond to the claimant’s replication.
The adjudicator shall determine the dispute as an expert and not as an arbitrator
[rule 5.4.1]. He may, if it should seem appropriate to do so, convene a hearing of the
parties, who shall be given five working days’ notice of the date, time and venue of
such hearing, at which they shall not be entitled to legal representation by practising
lawyers [rule 5.4.4]. He may require any party to submit further information,

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
document or evidence which he may reasonably require [rule 5.5.7], meet in his sole
discretion jointly with the parties together with any of the agents or anyone else
related to the dispute [rule 5.4.4] and proceed with and make a determination
notwithstanding a party’s failure to attend meetings, hearings or to provide any
information requested [rule 5.5.11].

Page 257

He shall deliver his written determination, supported by reasons, to the parties not
later than ten working days after receipt of (a) the initial details of the dispute; (b) the
response from the other party; and (c) receipt of the replication, if any, with the
proviso that, on his own discretion, he may grant an extension of time of five working
days in respect of the time available to him, after receipt of the initial details of the
dispute, the response from the other party and receipt of the replication, if any, to
deliver his determination to the parties [rule 5.5.3]. Such determination shall be
binding on the parties unless and until it is overturned or varied in whole or in part by
an arbitration [rule 6.1.4] and the parties shall immediately give effect to any
requirements of the determination [rule 6.1.3].
Either party may request in writing that the adjudicator correct any patent clerical
or arithmetical error or clarify any ambiguity in the determination. The adjudicator
shall comply with such request within a further five working days [rule 6.2.1].
Rules 4.1 to 4.4 specifically deal with the adjudicator’s fees and the payment
thereof and need to be strictly adhered to by the parties.
Parties wishing to refer a dispute to adjudication are strongly advised to study the
JBCC Adjudication Rules which will be found in Section 5 of this publication.
30.8 The appointment of the adjudicator
The agreement that provides for adjudication should state what qualifications, if any,
the adjudicator is required to possess; generally, no qualifications are stipulated, but
it is implied that he should be an expert in matters relating to the contract. Also of
importance is that he has the time to devote to carrying out the adjudication within
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the allotted time.

The appointment may be made at the time of concluding the contract, or it may be
made when a dispute arises. Advantages of the latter option are that the nature of
the dispute will be known and the most appropriate adjudicator appointed, and that it
can be established, when negotiating an appointment, that the adjudicator will be
readily available. The principal disadvantage is that the process may be time-
consuming but there is no certainty that if the adjudicator had been appointed at the
time of contracting, he would be readily available when needed.
It is generally conceded that an arbitrator has judicial immunity and is not liable to

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
the parties for any lack of skill, diligence or care in carrying out his duties other than
where he is guilty of reprehensible conduct. An adjudicator, on the other hand, does
not enjoy such immunity, and as an expert is required to perform his duties with
proper skill, diligence and care, and he may be held liable to a party for any
damages that may be suffered arising from his failure to do so. Such

Page 258

liability can discourage potential adjudicators from accepting appointment, and in

agreements of appointment of adjudicators, the parties frequently indemnify him
from claims from any act or omission in the performance of his duties save where
there is bad faith.
30.9 The nature of arbitration
Arbitration is a procedure, freely and voluntarily adopted by the parties, in which they
agree to submit any dispute they may have, now or in the future, to the impartial
judgment of some third party, [367] appointed by the nominating body [CD] of their
choice rather than to take such dispute to litigation in the courts, and they agree that
his judgment shall be final and binding on them. It is essentially a consensual
arrangement, [368] and a reluctant party cannot be compelled to enter into an
agreement to arbitrate. [369] The process has a number of advantages over litigation,
particularly where the dispute may involve highly technical issues as in building
contracts:
• The arbitrator may be chosen because of his expert knowledge of the matter
of the dispute.
• There is no requirement that the parties are represented by advocates or even
attorneys, and parties may, and often do, present their cases themselves.
• The process is highly flexible, and may be adapted to suit the particular
requirements of the situation and the convenience of the parties.
• The arbitrator’s decision is final and, unless otherwise agreed, there can be no
appeal, as is the case in litigation.
• These advantages often cause arbitration to be significantly less expensive
Copyright © 2019. Juta & Company, Limited. All rights reserved.

than litigation.
• Arbitration proceedings are often capable of being quickly initiated and
brought to completion in a far shorter time than in litigation.
• Arbitration is a private matter, and there is no undesirable publicity in the
media arising out of the proceedings.
Critics of arbitration may point out that these so-called advantages are not always
achieved, and that sometimes an inept arbitrator makes strange decisions which
cannot be appealed. But the fault here lies not with the

Page 259

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
procedure itself, but rather with the parties who have chosen an unsuitable person to
be arbitrator.
Government bodies are generally reluctant to incorporate arbitration agreements
in their contracts and insist that disputes be either litigated in the courts where they
consider the inherent right of appeal protects the public interest or resolved through
the process of adjudication.
Arbitration is not a new procedure; it has been practised for as long as there have
been settled communities of men. It was known to the Romans, it was extensively
used by the Dutch and the English in the days of their colonial expansion, and it has
been practised in South Africa since the time of Van Riebeeck. [370] The South African
legal system recognises arbitration as a legitimate alternative means of resolving
disputes, as do the legal systems of most other countries, and in the Arbitration Act
1965, provision is made for the courts to support and assist the process of arbitration
in a variety of ways.
30.10 The qualifications of an arbitrator
South African law requires nothing more of an arbitrator than that he or she is over
the age of 18 and is sane. [371] Almost anyone may therefore accept appointment as
an arbitrator. Generally, the parties would be well advised to seek someone who is
knowledgeable about the technical matter of the dispute and who will therefore
understand the issues and can be expected to make a well-informed judgment. It
would also make very good sense if the parties were to choose someone who is well
experienced as an arbitrator and who would therefore be able to guide the
proceedings in the most cost-effective direction. [372]
30.11 The arbitration agreement
An arbitration comes about as a result of an agreement between two people to refer
a present dispute, or some possible future dispute, to arbitration rather than to
submit to the jurisdiction of the courts. Such agreement has all the characteristics of
a contract: the parties must have contractual capacity; [373] they must seriously intend
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the consequences of their decision to deal with their dispute in this manner; neither
may unilaterally renounce his undertaking although by

Page 260

consensus they may alter any aspect or even terminate their agreement; and their
agreement is valid and enforceable whether it is oral or in writing. Arbitrations that
arise from oral agreements are not governed by the provisions of the Arbitration Act,
and are very seldom encountered. Almost invariably, arbitration agreements are in
writing, [374] and very frequently form part of some commercial agreement between

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
the parties, being included to provide a means of resolving any dispute that may
arise out of the agreement at some future date.
The Arbitration Act contains a number of provisions for facilitating the reference of
a dispute to arbitration. By providing that the courts may refuse to hear a matter
referred to it by one of the parties when there is a valid arbitration agreement, [375] the
Act enables the agreement, by default, to be enforced. The agreement is not
terminated by the insolvency, [376] or death, [377] of either party. Where the parties
cannot agree on the appointment of an arbitrator, the courts will appoint one, or a
replacement if the appointed arbitrator dies or becomes incapable of acting. [378] On
application, the courts will express an opinion on a point of law for the guidance of
the arbitrator. [379]
The arbitrator’s award is final and binding and there is no appeal unless otherwise
agreed by the parties, [380] and it may be enforced by the court on application by the
successful party. [381] In doing so, the court will not consider the merits of the award,
and will enforce an award even though, if it had heard the matter itself, it might have
come to a very different conclusion on the evidence and the interpretation of the
relevant law.
The court, on application by one of the parties, or the parties by agreement, may
refer the award back to the arbitrator to clarify any obscurity or ambiguity or to deal
with any aspect of the dispute that had been referred to the arbitrator but not

Page 261

dealt with by him in his award, or to hear further evidence, or for any other purpose
directed by the court or agreed by the parties. [382] The court may set aside an award
if there has been reprehensible misconduct by the arbitrator: refusal to allow a party
to present evidence, or acceptance of a bribe, etc. [383] A bone fide mistake of fact or
of law will, in general, not be ground for the setting aside of an award. [384]
The arbitrator is generally free to conduct the arbitration proceedings in whatever
manner he thinks most suitable, provided that he has the agreement of the parties,
and there are very few rules to restrict him. [385] He must, however, conform to the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

rules of natural justice , the two most important of which are that he may not be in a
position to gain any personal benefit from the outcome of the proceedings, and he
may hear one party only in the presence of the other, so that the other party may
rebut anything said to him by the first party. [386]
30.12 Referring the dispute to arbitration
Arbitration is the final and conclusive means of resolving disputes arising out of
either Agreement. An unresolved dispute shall be referred to arbitration in any of the
following circumstances:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
• where the Agreement does not provide for adjudication and the parties do not
wish to submit the dispute to mediation;
• where one of the parties has given notice of dissatisfaction with the
adjudicator’s decision [clause 30.6.4], or where the adjudicator has not given

Page 262

a determination within the specified time limit, [clause 30.6.5] and the parties
do not wish to submit the dispute to mediation;
• where the parties have not been able to agree on the appointment of a
mediator;
• where the dispute, or some part of the dispute, has not been settled in a
mediation settlement agreement.
30.13 Appointment of the arbitrator
Where a dispute is referred to arbitration, the PBA sets out the procedure to be
followed for the appointment of the arbitrator [clause 30.7]. The arbitration is not to
be construed as a review or appeal of an adjudicator’s award where one party to the
adjudication has objected to such award [clause 30.7.1]. The resolution of the
dispute shall commence anew [clause 30.7.2] and the referring party in the
adjudication shall be the claimant in the arbitration [clause 30.7.3].
It has always been held that one of the advantages of arbitration is that the
parties are free to choose their own arbitrator. This provision has been changed in
the PBA Edition 6.2 in that the arbitrator shall be nominated by the nominating body
in the CD and shall be deemed to have been appointed by the parties [clause
30.7.4]. [387]
The adjudicator shall not be eligible for appointment as arbitrator [30.6.6] because
he will already have considered various submissions, probably not made under oath
nor subject to testing by cross-examination, and have formed an opinion about the
merits of the matter. It is generally considered inappropriate that the person who had
acted as a mediator of the dispute should be appointed to arbitrate the remaining
Copyright © 2019. Juta & Company, Limited. All rights reserved.

unresolved issues. There are various reasons for this, the most important being that
as mediator he will probably have held confidential discussions with one party
without the other party being present and without disclosing the nature of such
discussions to the other party. Such conduct by an arbitrator would be considered
highly improper because he should never receive any communication from one party
of which the other is unaware and unable to answer. [388]
30.14 The conduct of the arbitration
The arbitration is subject to the provisions of the Arbitration Act 1965. Clause 30.7
constitutes the arbitration agreement referred to in s 1 of the Arbitration Act,

and therefore the Act, which applies whenever the arbitration agreement is in writing,
is automatically applicable
The Agreements stipulate that the applicable rules for conducting the arbitration
shall be by agreement between the parties and the arbitrator, failing which shall be
determined by the arbitrator [clause 30.7.5] who is to rely on the Arbitration Act
which is principally concerned with providing the arbitrator with the powers, and the
parties with the rights, that will ensure that disputes may be resolved by arbitration
and that the award may be enforced. It is left to the arbitrator to decide on the most
appropriate and convenient manner in which to conduct the proceedings. [389]
Generally, the arbitrator will require the parties to agree to adopt one of the sets of
procedural rules that are available for the conduct of arbitrations: The Rules for the
Conduct of Arbitrations, published by the Association of Arbitrators, or the rules
devised by the Arbitration Foundation of South Africa or those of the Arbitration
Forum, or even the Uniform Rules of the High Court. The Rules for the Conduct of
Arbitrations , seventh edition, consists of two sets of rules: the Standard Procedure
Rules, and the Restricted Representation Arbitration Rules (RRA Rules), formerly
the Summary Procedure Rules. No mention is made in the seventh edition of the
Small Claims Arbitration Rules. The Standard Procedure Rules, which apply unless
otherwise agreed by the parties, are suitable for most conventional situations,
especially where the parties are represented by lawyers or lay representatives. [390]
The RRA Rules are suitable for the smaller and simpler arbitrations where the
parties are unrepresented and are unfamiliar with arbitration proceedings. These
rules are required to be used where an arbitration arises out of the JBCC MWA.
Hearings under the Standard Procedure Rules tend to be adversarial in character,
and the arbitrator plays a relatively passive role, whereas those under the RRA
Rules tend to be inquisitorial and the arbitrator plays a far more active role. The
Uniform Rules of the High Court are understandably usually preferred by attorneys
and advocates, but it is submitted that they tend to cast the arbitration proceedings
into the mould of High Court actions and lack the flexibility that might make for a
Copyright © 2019. Juta & Company, Limited. All rights reserved.

quick and economical arbitration. It is submitted that arbitrators should avoid being
pressured by the legal fraternity to conduct their arbitrations in terms of the High
Court rules.
Most arbitrations involve oral hearings where the parties and their witnesses give
evidence and are cross-examined, very much as in a court of law, but the

Page 264

procedure in an arbitration hearing is generally less formal. Sometimes written

witness statements are substituted for oral evidence-in-chief. Occasionally the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
relevant documents, correspondence, site minutes, etc., are so comprehensive that
they are capable of conveying all the arbitrator will need to know and an oral hearing
may be dispensed with.
What is sometimes not appreciated by the parties is that the arbitrator must act
judicially and makes his judgment on the evidence laid before him; he does not
make independent inquiries of his own. [391] He does not normally even put questions
to the parties or their witnesses other than to clarify any uncertain or obscure point,
although where the parties are not represented he will find himself required to do so.
Consequently, the onus is on the parties to ensure that they present all the oral
evidence and documents necessary to substantiate their respective cases. Where
evidence appears to be lacking, the arbitrator will not ask for it; he will assume that
there is no evidence to support that particular point and is likely to decide against it.
The claimant bears the onus of proving his claim on a balance of probabilities, [392]
and if at the end of the hearing the arbitrator is quite undecided whose version is
correct, the claimant will fail in his claim.
30.15 Award
The decision of the arbitrator is given in writing in a document known as an award.
Almost invariably the award is for the payment of a sum of money by one party to the
other. Very seldom will the arbitrator award specific performance, which is an order
requiring a party to perform certain specified work, because such award usually
lacks finality. Thus if the dispute is about defective work performed by the contractor,
the arbitrator will award the employer such sum of money as will enable him to get
someone else to rectify it, rather than order the contractor himself to do the remedial
work, because it would probably happen that the remedial work would be no more
satisfactory than the defective work.
The Arbitration Act does not require the arbitrator to give reasons for his award,
but there is a growing tendency for arbitrators to do so, and, of course, they must do
so if so required by the parties. The Rules for the Conduct of Arbitrations

Page 265
Copyright © 2019. Juta & Company, Limited. All rights reserved.

require the arbitrator to give a reasoned award unless the parties agree
otherwise. [393]
30.16 Costs of the arbitration proceedings
The arbitrator will include in his award directions as to who should pay the costs of
the proceedings. [394] The principal costs are the fees of the arbitrator, the lawyers
and counsel where applicable. The usual rule is that the costs of the substantially
successful party are paid by the losing party. [395]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
30.17 Enforcement of the award
The successful party may apply to court for the award to be made an order of court
in terms of s 31(1) of the Arbitration Act in order to compel the losing party to comply
with its terms. In doing so, the court does not consider the merits of the award, even
if the arbitrator has arrived at a very different result from the one at which the court
might have arrived.
30.18 Power of the court to remit or set aside the award
The award is final and binding and not subject to appeal. [396] It may be referred back
to the arbitrator, on good cause, for reconsideration, or to hear further evidence, or
any other purpose agreed by the parties or directed by the court. [397] It may also be
set aside by the court where it has been tainted by gross and reprehensible
misconduct. [398]
30.19 Mediation
Where a disagreement has been declared a dispute, the parties may at any time
attempt to resolve it by mediation [clause 30.8]. Neither the PBA nor the NSSA
states in the CD who the mediator should be, nor is there any provision for the

Page 266

mediator to be appointed by some designated third party. Instead, the parties are
required to agree who should be the mediator and to effect the appointment of the
mediator [clause 30.8.2].
In making this provision, the Agreements recognise that an essential ingredient of
a successful mediation is the will on the part of both parties to make it work to
resolve the dispute between them. Should either party not be prepared to see the
other’s point of view and to make the sort of concessions that will be necessary to
achieve a settlement of the dispute, mediation will be a fruitless exercise and a
waste of time and money. Consequently, the philosophy behind the Agreements is
that if the parties find themselves unable to agree who should be the mediator, it will
Copyright © 2019. Juta & Company, Limited. All rights reserved.

be most unlikely that they will be able to reach agreement on much else, and the
mediation ought to be abandoned.
Once the mediator has been appointed, the parties are required to meet with him
to agree on the procedures, the representation of the parties, [399] and dates for any
meetings that the mediator might require. Normally, this initial meeting will be
convened by the mediator who will take the initiative and who will have a fairly clear
idea how, subject to the wishes of the parties, he will wish to conduct the mediation.
The Agreements are not prescriptive about how the mediation is to be conducted.
The mediator may meet with the parties either together or separately, with the object

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
of assisting them to reach a settlement of the dispute. Such meetings with the
parties are usually confidential, and nothing that may be said to the mediator may be
repeated by him to the other party or to anyone else without the permission of that
party, nor, for that matter, may either party or the mediator be compelled to give
evidence in subsequent arbitration or litigation proceedings about anything said or
done in the mediation except in respect of any agreement that may have been
reached. The proceedings are moreover without prejudice, except in respect of any
settlement that may be reached. [400]
The mediator’s function is essentially to broker a settlement of the dispute. He is a
diplomat who attempts to restore lines of communication between the parties and
get each to see, at least to a limited extent, the other’s point of view. Initially, the

Page 267

parties may be so antagonistic towards each other that he will achieve more by
seeing them separately and conveying to each the other’s attitude.
The mediator is not required to give an opinion on the dispute but is there to
assist the parties to achieve an agreement to resolve their dispute
30.20 The nature of mediation
Mediation is similar to arbitration to the extent that the parties voluntarily choose it as
an alternative means of resolving their disputes, and they choose a neutral third
party to hear their dispute and to advise and assist them in reaching a settlement
[clause 30.8]. It differs fundamentally from arbitration, however, in that there is no
award handed down by the mediator and the mediation will succeed only if the
parties genuinely wish it to succeed and are prepared to make concessions in order
to reach a mutually acceptable settlement. Consequently, mediation has a potential
for failure where the parties are unwilling to make the concessions required to reach
a settlement, leaving the dispute unresolved and requiring arbitration or litigation to
finally resolve the dispute.
In the construction industry, the mediator is required to assist the disputing parties
Copyright © 2019. Juta & Company, Limited. All rights reserved.

in reaching an agreement as to how their dispute is to be resolved without

expressing his own opinion of the merits of the matter. The participants are required
to record in writing the resolution of the dispute that they have made.
There is no legislation, comparable with the Arbitration Act, that governs
mediations, and the enforcement by the court of a settlement would not be as a
consequence of any statutory provision but rather on the basis of the enforcement of
a contractual agreement. Consequently the terms of any settlement should be
reduced to writing and signed by the participants to facilitate such enforcement.
Any provision in an agreement to refer disputes to mediation, that makes the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
mediator’s opinion final and binding on the parties, has the effect of converting the
mediation into an arbitration, [401] because it is the finality and binding effect of the
award that distinguishes an arbitration from a mediation. Such agreements should
be avoided as they would defeat the objective of mediation.
Most advocates of mediation emphasise its potential to preserve future goodwill,
and speak of the importance of recognising interests as well as rights, the interests
being the respective parties’ interests in enjoying an ongoing business relationship in
the future.
30.21 Termination of the mediation process
The mediator has the implied power to terminate the mediation proceedings at any
time if he considers that there is little or no prospect of persuading the parties to

Page 268

reach a settlement and that to proceed further with the mediation would achieve
nothing but a waste of time and money.
Any settlement of the dispute as a whole, or of any part of the dispute, that may
be reached between the parties, should be recorded in writing by the mediator and
signed by both parties.
30.22 Cost of the mediation
Whether or not the mediation resolves the dispute, the parties are equally liable for
the mediator’s fees and any attendant costs of the mediation, and are required to
bear their own costs [clause 30.8.3].
30.23 Continued performance of obligations
The reference of any dispute to mediation, arbitration, adjudication or litigation during
the construction period does not excuse either party from duly fulfilling his
contractual obligations [clause 30.11]. For example, the principal agent might
condemn certain work and issue a contract instruction requiring that it be removed
Copyright © 2019. Juta & Company, Limited. All rights reserved.

and redone. The contractor might dispute the decision, considering that the work is
of an acceptable standard. He cannot refuse to comply with the instruction until an
adjudicator or arbitrator has decided whether the condemnation of the work was
justified or not. This would in all probability cause a considerable delay. He must,
albeit under protest, carry out the instruction, and the dispute would become a claim
by the contractor for the cost of carrying out the contract instruction to remove and
redo this work. As he will be destroying evidence for a subsequent adjudication or
arbitration, he will need to take care that he adequately records the nature and the
state of the work before he removes it. [402]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
30.24 Survival of dispute resolution clause
While there is authority for the proposition that, where a contract contains a clause
providing for the arbitration of disputes, such clause is regarded as an independent
agreement and survives the termination of the contract, the question is put beyond
all doubt by clause 30.12, which states that ‘this clause [30.0] shall, to the extent
necessary to fulfil its purpose, exist independently of this agreement’. Frequently,
when one party has terminated the agreement, the other party will dispute his right

Page 269

to do so, and the dispute resolution agreement would survive the termination to
resolve the dispute.

Agreement
The agreement comprises the entire contract between the parties. No
representations, terms, conditions or warranties not contained in this agreement
shall be binding on the parties. No agreement or addendum varying, adding to,
deleting or terminating this agreement including this clause shall be effective unless
reduced to writing and signed by the duly authorised representatives of the parties.
The contracting parties

The parties Employer Contractor

Business name

Business type

Business registration

Tax number
(VAT/GST)

Contact person

Telephone

Mobile number

Copyright © 2019. Juta & Company, Limited. All rights reserved.

E-mail

Address: Building

name

Address: Street

Address: Suburb

Address: City

Address: PO Box

Address: Post Office

Address: Province

Address: Country

Page 270

Accepted contract sum including tax in
words

Signed – who by signature hereto
warrants authority

Signed: Date

Signed: Location

Signed: Witness

Name of witness

Page 271

PBA Contract Data

The Joint Building Contracts Committee® – NPC

CONTRACT DATA
Principal Building Agreement
Edition 6.2 – May 2018
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
The definitions contained in the JBCC® Principal Building Agreement apply to this
document. A word or phrase in bold type in the text has the same meaning assigned
to it in the definitions of such agreement. Where a word or phrase is not in bold type
it has the meaning consistent with the context of its use.
This contract data contains unique requirements applicable to the project and
variables referred to in the JBCC® Principal Building Agreement and the JBCC®
General Preliminaries. The information provided in this document by the principal
agent is complete and accurate at the time of calling for tenders. Where additional
information becomes available, all tenderers will be informed in writing. Reference to
clause numbers in the JBCC® Principal Building Agreement are shown in [square
brackets] in this contract data eg [3.2.1]. Spaces requiring information must be filled
in, or marked as ‘not applicable’ but not left blank.
This contract data, when completed and submitted by the contractor, becomes
the form of tender. Where the contractor is appointed, the contract documents
comprise the signed JBCC® Principal Building Agreement, this completed contract
data, the priced document, drawings and other listed documents.
Warning!
The JBCC® Principal Building Agreement Edition 6.2 has been coordinated with the
JBCC® Nominated/Selected Subcontract Agreement Edition 6.2, the JBCC® General
Preliminaries and the JBCC® certificate forms and support documents. Forms from
previous editions are not compatible with the JBCC® Principal Building Agreement
Edition 6.2.

Page 272

or both, parties.
Disclaimer
While the JBCC® aims to ensure that its publications represent best practice, it does
not accept or assume any liability or responsibility for any events or consequences
which derive from the use of JBCC® documents.
Copyright reserved
The name ‘The Joint Building Contracts Committee® NPC’, the abbreviation JBCC®
the electronic version e- JBCC® and the JBCC logo® are registered trademarks. The
®

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
JBCC® claims authorship of this work. All rights are reserved. No part of this
publication may be reproduced, stored in any retrieval system, or transmitted in any
form or by any means, electronic, mechanical, photocopying, scanning, recording, or
otherwise, without the prior permission in writing of the JBCC®. Unauthorised
reproduction of the work is an infringement of the copyright. Judicial proceedings can
and will be instituted to obtain relief and recovery of damages.

A Project information

A 1.0 Works [1.1]

Project name

Reference number

Works description

A 2.0 Site [1.1]

Erf/stand number

Township/Suburb

Site address

Local authority

Page 273

A 3.0 Employer [1.1]

Name

Legal entity of above Contact person

Business registration Telephone number
number
Copyright © 2019. Juta & Company, Limited. All rights reserved.

VAT/GST number Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

A 4.0 Principal agent [1.1]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

A 5.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

Page 274

A 6.0 Agent [1.1; 6.2]

Discipline
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.

A 7.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

A 8.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

Page 275

A 9.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

A 10.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

A 11.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Postal code

Physical address

Postal code

Page 276

A 12.0 Agent [1.1; 6.2]

Discipline

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

B Contract information

B 1.0 Definitions [1.1]

Bills of quantities: System/Method of
measurement

B 2.0 Law, regulations and notices [2.0]

Law applicable to the works, state country [2.1]

B 3.0 Offer and acceptance [3.0]

Currency applicable to this agreement [3.2]

B 4.0 Documents [5.0]

The original signed agreement is to be held by the principal
agent [5.2], if not, indicate by whom

Number of copies of construction information issued to the
contractor at no cost [5.6]
Documents comprising the agreement Page numbers
The JBCC® Principal Building Agreement, Edition 6.2 May 2018 1 to 30
The JBCC® Principal Building Agreement – Contract Data, Edition 1 to 14
6.2 May 2018

Page 277

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.

The JBCC® General Preliminaries for use with the JBCC® 1 to 7
Principal Building Agreement, Edition 6.2 May 2018

Contract drawings – Number Revision Date
description

B 5.0 Employer’s agents [6.0]

Authority is delegated to the following agents to issue contract instructions and perform duties for specific aspects of the
works [6.2]

Principal agent’s and agents’ interest or involvement in the works other than a professional interest [6.3]

Page 278

B 6.0 Insurances [10.0]

Insurances by employer Amount including tax Deductible amount

including tax

Contract works insurance

New works [10.1.1] (contract sum or
amount)

or Works with practical completion in

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
sections [10.2] (contract sum or amount)

or Works with alterations and additions [10.3]
(reinstatement value of existing structures
with or including new works)

Direct contractors [10.1.1; 10.2] where
applicable, to be included in the contract
works insurance

Free issue [10.1.1; 10.2] where applicable,
to be included in the contract works
insurance

Escalation, professional fees and
reinstatement costs if not included above

Total of the above contract works insurance amount

Supplementary insurance [10.1.2; 10.2]

Public liability insurance [10.1.3; 10.2]

Removal of lateral support insurance [10.1.4; 10.2]

Other insurances [10.1.5]

Yes/no? If yes, description 1

Yes/no? If yes, description 2

Insurances by contractor Amount including tax Deductable amount
including tax

Contract works insurance:

Page 279

New works [10.1.1](contract sum or
amount)

Direct contractors [10.1.1; 10.2] where
applicable, to be included in the contract
works insurance

Free issue [10.1.1; 10.2] where applicable,
to be included in the contract works
insurance
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Escalation, professional fees and
reinstatement costs if not included above

Total of the above contract works insurance amount

Supplementary insurance [10.1.2]

Public liability insurance [10.1.3]

Removal of lateral support insurance [10.1.4]

Other insurances [10.1.5]

Yes/no? If yes, description 1

Yes/no? If yes, description 2

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.

B 7.0 Obligations of the employer [12.1]

Existing premises will be in use and occupied [12.1.2] Yes/no?

If yes, description

Restriction of working hours [12.1.2] Yes/no?

If yes, description

Natural features and known services to be preserved by the Yes/no?
contractor [12.1.3]

If yes, description

Restrictions to the site or areas that the contractor may not Yes/no?
occupy [12.1.4]

If yes, description

Supply of free issue [12.1.10] Yes/no?

If yes, description

Page 280

B 8.0 Nominated subcontractors [14.0]

Specialisation 1

Specialisation 2

Specialisation 3

Specialisation 4

Specialisation 5

B 9.0 Direct contractors [16.0]

Extent of work [12.1.11]

Extent of work [12.1.11]

Extent of work [12.1.11]

Extent of work [12.1.11]

Extent of work [12.1.11]

B 10.0 Description of sections [20.1]

Section 1

B 11.0 Possession of site [12.1.5], practical completion [19.0; 20.0]

and penalties [24.0]
Practical completion Intended date of Period for inspection Date for practical Penalty amount [24.1]
for the works as a possession of the site by the principal completion [12.2.7;
whole [12.1.5] agent [19.3] 24.1]

Date working days Date Penalty per calendar
day

or where sections are applicable

Page 281

Practical completion Intended date of Period for inspection Date for practical Penalty amount [24.1]
of a section of the possession of a by the principal completion [12.2.7;
works section [12.1.5] agent [19.3] 24.1]

Date working days Date Penalty per calendar
day

Section 1

Section 2

Section 3

Copyright © 2019. Juta & Company, Limited. All rights reserved.

Section 4

Section 5

Section 6

Section 7

Section 8

Remainder of the
works
Criteria to achieve practical completion not covered in the definition of practical completion

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
B 12.0 Payment [25.0]

Date of month for issue of regular payment certificates
[25.2]

Contract price adjustments (cost fluctuations) [25.3.4; 26.9.5] Yes/no?

If yes, method to calculate

Page 282

B 13.0 Dispute resolution

Adjudication [30.6.1; 30.10]

Name of nominating body

Applicable rules for adjudication [30.6.2]

Arbitration [30.7.4, 30.10]

Name of nominating body

Applicable rules for arbitration [30.7.5]

B 14.0 JBCC® General Preliminaries – selections

Provisional bills of quantities [P2.2] Yes/no?

Availability of construction information [P2.3] Yes/no?

Previous work – dimensional accuracy – details of previous [P3.1]
contract(s)

Previous work – defects – details of previous contract(s) [P3.2]

Inspection of adjoining properties – details [P3.3]

Handover of site in stages – specific requirements [P4.1]

Enclosure of the works – specific requirements [P4.2]

Geotechnical investigation – specific requirements [P4.3]

Copyright © 2019. Juta & Company, Limited. All rights reserved.

Existing premises occupied – details [P4.5]

Services – known – specific requirements [P4.6]

Water By contractor Yes/no?

[P8.1] By employer Yes/no?

By employer – metered Yes/no?

Electricity By contractor Yes/no?

[P8.2] By employer Yes/no?

By employer – metered Yes/no?

Ablutions and welfare facilities By contractor Yes/no?

[P8.3] By employer Yes/no?

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.

Page 283

Communication facilities – specific requirements [P8.4]

Protection of the works – specific requirements [P11.1]

Protection/isolation of existing works and works occupied in sections –
specific requirements [P11.2]

Disturbance – specific requirements [P11.5]

Environmental disturbance – specific requirements [P11.6]

B 15.0 Changes made to JBCC® documentation

Reference may be made to other documents forming part of this agreement

C Tender closing

Tender closing date Time

Tender submission address

Tender may be submitted by e-mail Yes/no? E-mail

Page 284

D Tenderer’s selections
Copyright © 2019. Juta & Company, Limited. All rights reserved.

D 1.0 Securities [11.0]

Guarantee for construction: Select Option A or B

Option A Guarantee for construction (variable) by contractor [11.1.1]

Option B Guarantee for construction (fixed) by contractor [11.1.2]

Guarantee for payment by employer [11.5.1; 11.10] Amount

Advance payment, subject to a guarantee for advance payment [11.2.2; 11.3] Amount

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
D 2.0 Contractor’s annual holiday periods during the construction
period

Year 1 contractor’s annual start date end date
holiday period

Year 2 contractor’s annual start date end date
holiday period

Year 3 contractor’s annual start date end date
holiday period

D 3.0 Payment of preliminaries [25.0]

Select Option A or B Where the contractor does not select an option, Option A
shall apply
Where the total amount of preliminaries is not identified (in a lump sum contract)
it shall be taken as 7.5% (seven and a half per cent) of the contract sum, excluding
contingency sums and any provision for contract price adjustment (cost fluctuation)

Option A Assessed by the principal agent, an amount prorated to the value of the works executed in the
same ratio as the amount of the preliminaries to the contract sum which contract sum shall
exclude the amount of preliminaries.
Contingency sum(s) and any provision for contract price adjustment (cost fluctuations) shall be
excluded for the calculation of the aforesaid ratio
Option B An amount agreed by the principal agent and the contractor in terms of the bills of quantities or
the priced document to identify an initial establishment charge, a time based charge and a final
disestablishment charge.
Payment of the time based charge shall be adjusted from time to time as may be necessary to take
into account the progress of the works

Page 285

D 4.0 Adjustment of preliminaries [26.9.4]

Select Option A or B Where the contractor does not select an option, Option A
shall apply
The amount of preliminaries shall be adjusted to take account of the effect of
changes in time and/or value on preliminaries. Such adjustment shall be based on
the particulars provided by the contractor for this purpose in terms of Options A or
B, shall preclude any further adjustment of the amount of preliminaries and shall
apply notwithstanding the actual employment of resources by the contractor in the
execution of the works
For the adjustment of preliminaries both the contract sum and the contract
value shall exclude the amount of preliminaries, contingency sum(s) and any

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
provision for contract price adjustment (cost fluctuation)
Where the total amount of preliminaries is not identified (in a lump sum contract)
it shall be taken as 7.5% (seven and a half per cent) of the contract sum, excluding
contingency sums, and any provision for contract price adjustment (cost fluctuation)

The preliminaries shall be adjusted in accordance with an allocation of preliminaries amounts to be
provided by the contractor within fifteen (15) working days of the date of acceptance of the tender as
follows:
- An amount which shall not be varied;
- An amount varied in proportion to the contract value as compared to the contract sum;
- An amount varied in proportion to the number of calendar days extension to the date of practical
completion to which the contractor is entitled with an adjustment of the contract value as compared to
the number of calendar days in the initial construction period

Option A

Where the above mentioned information is not provided the following allocation of preliminaries
amounts shall apply:
- Ten per cent (10%) shall not be varied
- Fifteen per cent (15%) shall be varied in proportion to the contract value as compared to the contract
sum
- Seventy five per cent (75%) shall be varied in proportion to the number of calendar days extension to
the date of practical completion to which the contractor is entitled with an adjustment of the contract
value as compared to the number of calendar days in the initial construction period

Page 286

Where completion in sections is required the contractor shall provide an apportionment of
preliminaries per section. Should the contractor fail to provide the apportionment of preliminaries
per section the categorised amounts shall be prorated to the cost of each section within the contract
sum as determined by the principal agent

The preliminaries shall be adjusted in accordance with a detailed breakdown of preliminaries amounts
for the works or of a section to be provided by the contractor within fifteen (15) working days of
possession of the site. Such breakdown shall inter alia include administrative and supervisory staff
charges and charges for the use of construction equipment, all in terms of the programme
Option B The adjustment of preliminaries shall be based on the number of calendar days extension to the date
of practical completion to which the contractor is entitled with an adjustment of the contract value as
compared to the number of calendar days in the initial construction period taking into account the
resources planned for the period of construction during which the delay occurred (not for the period
added to the initial or extended date for practical completion)

Where the contractor does not provide the detailed breakdown of preliminaries within the period
Copyright © 2019. Juta & Company, Limited. All rights reserved.

stated, Option A shall apply

E Form of tender

E 1.0 Tenderer’s details

Name

Legal entity of above Contact person

Business registration number Telephone number

Page 287

E 2.0 Acceptance of tender conditions

By submission of this tender to the employer the tenderer offers and agrees to
execute and complete the works and to remedy any defects in conformity with the
specification for the tender amount stated.
The tender shall remain in full legal force for forty-five (45) calendar days from
the closing date of the tender. The tenderer accepts liability for loss or damages that
may be suffered by the employer should the tender validity period not be honoured
The lowest or any tender will not necessarily be accepted by the employer nor
will reasons be given for such a decision

E 3.0 Tender amount compilation

Amount

Tenderer’s work excluding tax

Tax %

Total tender amount including tax

Total tender amount including tax in words

Signature Tenderer who by signature Place
hereto warrants authority

Name Capacity Date
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Signature Witness Place

Name Date

E 4.0 Tender qualifications

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.

Page 288

Commentary
CD 1.0 Introduction
The PBA Edition 6.2, the NSSA Edition 6.2 and, the MWA Edition 5.2 each has its
own unique Contract Data (CD) form which replaces the previous Contract Data EC
and Contract Data CE. The CD consists of five sections being:
A: Project information
B: Contract information
C: Tender closing
D: Tenderer’s selection
E: Form of tender
Sections A, B and C are to be completed by the principal agent whereas Sections
D and E are to be completed by the tenderer.
The CD contains the unique requirements applicable to the project and variables
referred to in the PBA and the information provided by the principal agent is
complete and accurate at the time of calling for tenders. Spaces requiring
information must be filled in, or marked ‘not applicable’ as the case may be, but not
left blank.
The CD, when completed and submitted by the tenderer, becomes the form of
tender. Where the tender is accepted and the tenderer appointed as the contractor,
the agreement comprise the signed JBCC PBA, the General Preliminaries, the
completed contract data, the priced document, the drawings and other listed
documents.
CD 2.0 Sections A, B and C
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Section A identifies the project name, the description of the works, the description
and locality of the site, the identity and details of the employer, the principal agent,
the other agents such as the quantity surveyor, structural engineer, electrical and
mechanical engineers, project manager and others where these have been
appointed.
Section B, Contract information, sets out the PBA clauses providing information to
tenderers including the law, currency applicable, documents, who will hold the
original documents if not held by the principal agent, the system/method of
measurement where bills of quantities are provided, a list of the contract drawings

Page 289

the extent of the works); whether the employers agents have any interest or
involvement in the works other than a professional interest; the various insurance
obligations and who will be responsible for taking out the required cover, the insured
amounts and the deductible amount in each instance; the obligations of the
employer; details of whether the works are for alterations and additions to existing
premises, whether the premises will be occupied, relevant natural features to be
preserved, areas which the contractor may not occupy, location of utilities
connections where known, statutory and other notices to be complied with before
site possession can be given to the contractor, the intended date of site possession
and the description of free issue by the employer. This section also identifies any
subcontractors and direct contractors and their specialisation to be appointed; the
date for practical completion of the works as a whole or sections where so required
including the respective penalty amounts for non-completion; and the criteria
required to achieve practical completion not covered in the definition of practical
completion – this is a most important matter which requires description for the
tenderer to price as it replaces the works completion which was included in earlier
Agreements. Section B ends off with items dealing with payment, dispute resolution,
general preliminaries and a list of changes made to the JBCC documentation.
Section C confirms the tender closing date, time and place and the means by
which tenders may be submitted.
CD 3.0 Section D
Section D which is to be completed by the tenderer, requires the tenderer to select
the form of guarantee for construction to be provided; whether a guarantee for
advance payment will be provided; whether a guarantee for payment will be required
from the employer; details of the tenderer’s annual and other holiday periods and the
tenderer’s selection of payment/adjustment of preliminaries.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

CD 4.0 Section E
Section E is the tender form which is to be completed by the tenderer and shall
remain in full legal force for forty five calendar days from the closing date of the
tender. It is important to note that the tenderer accepts liability for loss or damages
that may be suffered by the employer should the tender validity period not be
honoured. Refer to Section 1 chapter 5.3 for further discussion on this matter. The
tenderer is advised that the lowest or any tender will not necessarily be accepted by
the employer and that the employer will not be required to give reasons for not
accepting a tender.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
The final portion of Section E is the tender amount compilation which is to be
signed by the tenderer and witnessed. Provision is made in this section for the
tenderer to submit any qualifications pertaining to his tender.

[1] This statutory obligation is reinforced by clause 2.0.

[2] The NBRs require the employer to submit copies of drawings of proposed building work to the local
authority for certification of compliance with the regulations before building operations may start, and most
town planning schemes have similar provisions. But this is not an infallible safeguard. The local authority’s
building surveyor may not detect a transgression of a regulation before approving plans, and such failure does
not permit the applicant to build in contravention of the regulations. Moreover it is becoming not uncommon
that permission is granted to commence building operations before the plans have been approved. They do so
at their own risk.
[3] Act 95 of 1998, as amended.
[4] Where there are bills of quantities, it would be necessary to include only the main 1:100 scale working
drawings, which will serve to illustrate the general nature of the contract work. Where there are no bills of
quantities, it will be the drawings that will define the full extent and nature of the work, and they will need to be
complete in all respects. Any subsequent uncertainty about the nature or extent of the work to be performed
would be resolved by reference to the bills of quantities read with the associated drawings and to the contract
drawings alone where a priced document is used in the contract.
[5] CD.
[6] They may do so in each other’s presence or on separate occasions. If a party is a juristic person it is
advisable that he should furnish a copy of a resolution of the juristic person that duly authorises him to sign the
Agreement on its behalf. The Agreement itself has a subscription to the signature of each party that the
signatory warrants that he is duly authorised to sign on behalf of the body for which he acts.
[7] Clause 1.8 in Edition 5 of the PBA provided for a non-variation clause which has been omitted from this
Edition 6.2. This was known as a ‘non-variation’ clause, and its implications can be profound. Were it not for
this clause, it could be argued that the parties who had conducted their mutual affairs at variance with one or
more of the explicit terms of the agreement, had tacitly varied the agreement to that extent. But the implication
of this clause is that, notwithstanding the fact that one of the parties may have permitted the other. to depart
from one or more specific requirements of the agreement, his indulgences have created no binding precedent,
and he can insist on his rights at any time. The rights and obligations conferred by the agreement on the
parties can be increased or diminished only by means of a subsequent written agreement. Note, however, that
contract instructions issued by the principal agent in clause 17.1.1 shall not substantially change the scope of
the works.
[8] The ‘Agreement and Schedule of Conditions of Building Contract’ published by the Institute of South
African Architects.
[9] There is nothing sinister in the change. The consulting engineers found the first edition of the JBCC PBA
very suitable for certain types of project for which they were principal agent, but baulked at having to change
the word ‘architect’ to ‘engineer’ wherever it occurred, and successfully argued for the adoption of a neutral
Copyright © 2019. Juta & Company, Limited. All rights reserved.

term.
[10] The employer warrants that the principal agent has full authority to act in terms of the agreement and is
under an obligation to carry out all his designated duties.
[11] A principal agent has ‘two different types of function to perform. In many matters he is bound to act on
his client’s instructions, whether he agrees with them or not; but in many other matters requiring professional
skill he must perform and act on his own opinion’—Lord Reid in Sutcliffe v Thackrah [1974] AC 727 at 737
(HL), speaking of the architect acting as the principal agent in a building contract.
[12] ‘The employer and the contractor make their contract on the understanding that in all matters where the
architect has to apply his professional skill he will act in a fair and unbiased manner in applying the terms of
the contract. Such matters include not only certificates for payment and for satisfaction with the works but
many instances where the architect has to form a professional opinion upon matters which will affect the
amount paid to (or to be deducted from) the contractor’—Keating on Construction Contracts 10th edition.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
[13] Failure to appoint agents, or failure to re-appoint on the termination of the appointment of an agent, is a
default that would entitle the contractor to terminate the agreement [clause 29.14.6].
[14] Clause 1.1.1 of the 1991 edition of the PBA.
[15] The Architects’ Act 35 of 1970 as amended, now superceded by the Architectural Profession Act 44 of
2000.
[16] MM Fernandes (Pty) Ltd v Mahomed 1986 (4) SA 383 (W).
[17] Thus he could delegate to the quantity surveyor the duty to value variations and interim payment
certificates and to prepare the final account, and where an agent has been appointed in respect of work that is
the subject of a nominated or selected subcontract, he could delegate to that agent the duty to give contract
instructions regarding such work, to approve such work, and to prepare the final account of such subcontract.
Notwithstanding such delegation, it is submitted that the principal agent would be responsible to the employer
for the due and proper fulfilment of all such duties. Thus if the quantity surveyor made an erroneous valuation
on which the principal agent relied to issue a payment certificate and thus caused the employer financial loss,
the employer could recover damages from the principal agent, who might in turn be able to recover damages
from the quantity surveyor.
[18] Examples of acts that would bind the employer would be the issuing of certificates for interim and final
payment, the issuing of a certificate for final completion, the revision of the date for practical completion, etc.
[19] Although clause 6.2 does not specifically state that the principal agent is to receive notices from the
contractor, the contractor’s obligation to issue such notices to the principal agent is set out in various clauses
such as clause 8.7 giving notice of becoming aware of physical loss or damage to the works; 13.2.4 notice
regarding suspension of work where undocumented services are discovered; 19.2.2 notice for inspection for
practical completion; 21.3.2 and 21.5 notice to inspect the works where work on the list for completion has
been completed; 23.4.2 notice of a circumstance that might delay practical completion, etc.
[20] Clause 19.1.1 of the NSSA.
[21] Clause 26.1 of the NSSA.
[22] Clause 25.2 of the NSSA.
[23] Clause 26.10 of the NSSA.
[24] Clause 26.10 of the NSSA.
[25] Clause 17.1 of the NSSA.
[26] In practice, agents frequently give instructions directly to subcontractors, and provided that all parties
acquiesce to this practice, there can be no harm in it. It is, however, important that the contractor is informed of
all instructions that may be given directly to subcontractors. As such instructions are required to be in writing
(clause 17.5), this can be achieved by furnishing him with a copy of such instructions.
[27] Clause 5.2.2 of the 1991 edition of the PBA.
[28] In this context, ‘design’ means the exercise of choice, such as the choice of the most appropriate
method of construction or the most suitable materials with which to carry out the work.
[29] Many builders of individual homes offer their clients a design-and-build service in which the client selects
a design from a range offered by the builder, or the builder may even engage a designer to design the house to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the client’s requirements, the fee for the preparation of such design being merged with the contract price for
the construction of the house.
[30] This refers to the permanent works; the contractor is responsible for the design of temporary works, such
as formwork for in situ concrete, centering for brick arches, scaffolding, etc.
[31] Clause 7.2 confirms that the contractor cedes any design responsibility undertaken by a subcontractor to
the employer on the date of final completion or termination of the agreement.
[32] But while the contractor has no responsibility for design undertaken by a selected subcontractor as part
of his subcontract, he has a responsibility, in terms of clause 7.3, for ensuring that the design and all relevant
design documentation by a selected subcontractor, is timeously produced.
[33] See commentary in Section 2 at 12.3 for a discussion of the concept of possession and the obligations
thereby entailed.
[34] Not only is this a term implied by law but clause 21.8 requires the contractor to remedy all defects before
it can be said that he has discharged all his obligations under the contract.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
[35] The definition of ‘works’ in clause 1 limits the concept to the work carried out by the contractor and
subcontractors in terms of the agreement, and does not include the remainder of the site nor any
improvements on it, and it must be concluded that the agreement sets aside the contractor’s common-law
liability in this regard.
[36] The contractor’s liability is thus limited to loss in respect of the physical elements of the works under the
agreement, and he is not liable for any other loss, financial or otherwise, that the employer may suffer as a
result of the circumstance bringing about such physical loss or damage. Physical loss would include the theft
of unfixed materials and goods on or off site and intended for the works, whether they have become the
property of the employer in terms of clause 8.2 or not.
[37] The agreement does not explicitly state that the cost of making good physical loss or damage shall be
borne by the contractor, but it is submitted that this follows from clauses 8.3 and 8.4 and moreover from the list
of circumstances in clause 8.5 in which the contractor shall not be liable for the cost of making good physical
loss or damage.
[38] In most cases this would be when the contractor would return the site and works to the employer. It
sometimes happens that the employer is granted beneficial occupation (not defined in the PBA) — he is
permitted to occupy a portion or even all of the works before practical completion—and in this case the
contractor would remain responsible for the works until the issue of the certificate of practical completion,
except for any loss or damage caused by the employer himself or his employees or agents, as provided by
clause 8.5.1. It could also happen that the contractor retains possession of the site and works after the issue of
the certificate of practical completion in the exercise of his lien, and would appear not to be responsible for the
works while he does so. This overrules the common-law position, and surely could not have been intended.
Note, however, that, in terms of clause 29.26.2 when the contract has been terminated because of the default
of the employer, and the contractor continues to retain possession of the site in the exercise of his lien, he
remains responsible for the works.
[39] This would be attending to the work on the list for practical completion and the list for completion in
terms of clauses 17.1.12 and 19.3.1.
[40] Because, at this time, the employer would be responsible for the works in terms of clause 8.1. The cost
would be established in terms of clause 8.6.
[41] Defined in clause 8.2 as starting on the date on which the subcontractor shall commence work in terms
of the programme and ending on the date of interim completion.
[42] Clause 8.2.1 of the NSSA.
[43] Clause 8.2.2 of the NSSA.
[44] Clause 8.1 of the NSSA provides that the contractor takes over responsibility for the subcontract works
when the subcontractor’s responsibility ends at the date of interim completion.
[45] In terms of clause 8.6, if the cost of making good loss or repairing damage to the works exceeds the
amount of the contract works insurance, the balance shall be paid by the employer.
[46] As defined in the South African Insurance Association Exceptions. These are the risks listed in clauses
8.5.1 to 8.5.5.
[47] Where the contractor is not liable for the cost of making good loss and repairing damage, it will, of
Copyright © 2019. Juta & Company, Limited. All rights reserved.

course, be the employer who would be liable, and the work entailed in making good loss and repairing damage
shall, in terms of clause 8.6, be measured and valued and added to the contract value.
[48] Clause 8.5.6, except where, and to the extent which, the agreement, in clause 10.1.3, calls for
Supplementary Insurance by SASRIA (South African Special Risks Insurance Association).
[49] Clause 7.0 absolves the contractor from responsibility for the design of the works by the employer or his
agents; this clause, while requiring him to make good any physical loss or damage arising from defective
design, relieves him from the cost of doing so.
[50] Defined in clause 1.1 as ‘A defect that a reasonable inspection of the works by the principal agent and/or
agents would not have revealed’. Thus if some hitherto unknown defect in materials or goods specified by
trade name became apparent at any time before the issue of the list for final completion (at the end of the
defects liability period), the contractor would be obliged to make good the materials and goods at his own cost.
[51] The contractor remains liable for the cost of making good physical loss or damage arising out of a patent
defect in such materials or goods, and obviously materials or goods that are patently defective ought not to be

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
built into the works but returned to the supplier for replacement. Where a latent defect becomes apparent
some time later, causing loss or damage, the employer, who bears the cost of making good, would have no
recourse against the supplier or manufacturer, having no contractual nexus with him, if it were not for the
proviso that the contractor cedes to the employer whatever right of action he might have against the supplier or
manufacturer concerned.
[52] A third party, in the present context, is someone other than the parties to the contract (the employer and
the contractor and their agents, employees and others for whom they are legally responsible) and could
include a building inspector visiting the site, a passer-by injured by falling scaffolding, or a neighbour whose
building cracks due to loss of lateral support from the building site. The principal agent and the other agents
appointed in terms of the agreement are therefore not third parties and the indemnity and insurance provisions
of the agreement do not cover them.
[53] This is as far as we need take the principles of delictual liability for our present purpose, although the
concept of harm extends to harm to personality, reputation and self-esteem.
[54] The Americans refer to this, rather picturesquely, as a ‘duck-shoot’.
[55] By clause 9.1. of the NSSA.
[56] The employer expressly indemnifies the contractor against any claims in this regard unless arising from
the negligence of the contractor or his subcontractors.
[57] This clause requires such support insurance to be taken out, effective until the date of final completion,
and requires the employer to engage a professional engineer or professional technologist to design and
supervise the installation of adequate temporary support.
[58] Clause 9.1.2 of the NSSA.
[59] Clause 9.1.3 of the NSSA.
[60] To be specified in the tender enquiry documents and recorded in the CD.
[61] The definition of ‘works’ in clause 1.1 includes temporary works and all materials and goods delivered to
the contractor, whether on or off site, and includes materials and goods supplied by the employer. It excludes
temporary works, such as formwork and scaffolding, as well as the contractor’s plant such as cranes, concrete
mixers and vehicles, as well as site offices for all of which the contractor is responsible and for which he
indemnifies the employer against any claims for loss or damage in terms of clause 9.1.3. Any work performed
by direct contractors in terms of clause 16.0 is to be covered in the contract works insurance policy.
[62] CD.
[63] The first portion of the claim, which is to be paid by the party who is entitled to indemnity. During the
construction period this will be the contractor unless one of the exceptions listed in clause 8.5 applies. Where
the physical loss or damage occurs to the work of a subcontractor, it would be the subcontractor who would be
entitled to indemnity and who would therefore be liable for the deductible. Generally speaking, the greater the
amount of the deductible, the lower would be the premium.
[64] CD.
[65] South African Special Risks Insurance Association (SASRIA) insurance to cover damage caused by riot
and civil commotion.
[66] This clause states that such insurance shall continue until the contractor’s responsibility in terms of
Copyright © 2019. Juta & Company, Limited. All rights reserved.

clause 8.0 has ended. In terms of clause 8.2, the contractor’s responsibility for the cost of making good loss or
damage ends on the date of practical completion, except for a small residual responsibility referred to in clause
8.2. Clause 8.2.2 requires the contractor to make good any physical loss and repair any damage that may
arise from the contractor or his subcontractors carrying out any of their contractual obligations, such as making
good defects, after practical completion, but this would be at the cost of the employer to whom the risk has
now passed unless covered by an extended insurance policy.
[67] Where the completed portion of the works has been substantially destroyed or where the contract is for
alterations and additions to an existing building which is substantially destroyed.
[68] It makes very little difference from the point of view of cost which party effects the insurance. If the
employer takes out the insurance, he pays the premium, whereas if the contractor takes it out he adds the cost
of the premium to the tender price.
[69] Clauses 10.1, 10.1.1 and 10.1.3 of the NSSA state that the contract works insurance and, where

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
applicable, SASRIA insurance, would be taken out by the employer or the contractor, as the case might be,
inclusive of the value of subcontractors’ work, materials and goods.
[70] Clause 10.4 of the NSSA.
[71] The employer may recover from the contractor in terms of clause 10.6, the contractor may recover from
the employer in terms of clause 10.7 and the subcontractor may suspend the n/s subcontract works after
having given notice to the contractor in terms of clause 10.7 of the NSSA.
[72] A surety is a third party who undertakes to the second party that should the first party default in his
contractual obligations to the second party, he will himself perform the outstanding work or, more commonly
these days, make good the second party’s financial loss caused by the default.
[73] For example by clause 25.4 of the Agreement and Schedule of Conditions of Building Contract which
was the predecessor of the JBCC PBA.
[74] As provided in clause 25.4 of the Agreement and Schedule of Conditions of Building Contract.
[75] Until the issue of the first interim payment certificate, the retention fund did not exist; thereafter it grew
slowly until, by the time that half of the contract sum had been certified, it had reached a maximum value of 5%
of the contract sum.
[76] Despite its shortcomings, many employers, principal agents and contractors feel more comfortable with
a retention clause with which they are familiar and experienced, and attempt to re-introduce a retention clause
of their own devising in the contracts with which they are concerned which call for another form of security. The
inherent shortcomings of the traditional retention provisions are usually aggravated by poor legal
draftsmanship, with unfortunate results!
[77] Thomas Construction (Pty) Ltd (in liquidation) v Grafton Furniture Manufacturers (Pty) Ltd 1988 (2) SA
546 (A). See also Graham NO v Williams Hunt (Pty) Ltd 1995 (1) SA 371 (D).
[78] Such damages might be the additional cost of employing someone else to complete the work which the
contractor has left unfinished, or to rectify defective work performed by the contractor. Moreover, there would
almost inevitably be a delay of practical completion, entailing further financial loss by the employer.
[79] One of the principal problems associated with the surety is that it does not provide quick relief; the
employer is usually required to prove his damages, the full extent of which might only be known some time
after the breach.
[80] In other words, if the contractor could not or would not complete the works or remedy defects, the surety
would himself come onto site and do so. Such surety was often the supplier of building materials, who, in
exchange for standing surety for the contractor, required him to undertake to purchase his materials only from
himself. If he was not in a position to do the work himself, the merchant was usually in a good position to
arrange that one of his other customers do so. The standard of work was generally not good, and this
arrangement was seldom satisfactory to the employer.
[81] Generally a financial institution.
[82] For example, where the contractor has provided a fixed construction guarantee and the principal agent
has failed to allow in interim payment certificates for the reduction of payment in terms of clause 25.3.3.
[83] A standard form, published by JBCC, was to be used for the purpose, which embodied the terms and
conditions of the guarantee. These terms and conditions had been negotiated by JBCC with the technical
Copyright © 2019. Juta & Company, Limited. All rights reserved.

committees of the banking and insurance institutions and had been fully approved by them.
[84] For commentary on the situations in which, at the conclusion of the contract, the contractor could be
found to be indebted to the employer, see section 18.1. It is because of the possibility that, after the date of
final completion, the employer might need to recover money from the contractor that the construction
guarantee did not lapse on the date of final completion but remained in force, albeit for a reduced amount, until
the settlement of the final account.
[85] Such contractors usually pledged negotiable assets, such as mortgage bonds on fixed property, shares,
etc., to create a permanent facility for the furnishing of construction guarantees up to an agreed amount. The
cost of obtaining a construction guarantee in a particular instance would then be fairly nominal.
[86] The choice between the alternative forms of security rests with the contractor, who is required to indicate
in his tender which form of security he proposes to provide. Should he fail to indicate his choice, he shall be
deemed to have chosen to provide the variable construction guarantee.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
[87] The various amounts of cover, and the respective stages at which they change, are to be found, not in
the Agreements themselves, but in clause 1.1 of the JBCC Guarantee for Construction, which should be used
in all cases.
[88] Using the JBCC guarantee for construction form. The same form is used for both variable and fixed
construction guarantees, clause 1.0 being applicable in the former case and clause 2.0 in the latter.
[89] In terms of clause 11.1.2 the amount withheld should not exceed 5% of the contract sum.
[90] Compare clause 25.4 of the Agreement and Schedule of Conditions of Building Contract.
[91] It is generally accepted that if the contract is terminated in the first half of the construction period, due to
the insolvency or default of the contractor, the cost to the employer of engaging a new contractor to complete
the works will be greater than if the termination occurred during the second half. Part of the explanation of this
is that, in the first half of the construction period, most of the work is likely to be done by the contractor himself
while in the second half, most of the work will be performed by subcontractors, who will probably be able to
continue with a new contractor who will have a comparatively small amount of builder’s work to complete.
[92] Where he has not indicated a choice in his tender, his choice is deemed to be a variable construction
guarantee.
[93] As he would have been required to do with the retention fund in terms of clause 25.4.5 of the Agreement
and Schedule of Conditions of Building Contract and with the cash deposit in terms of clause 14.2.1 of earlier
editions of JBCC PBA.
[94] CD.
[95] When drafting this provision, the constituents of JBCC were unable to agree on the amount, and it is left
to the tenderer to state his requirement. Little guidance can be offered to a tenderer as to what would be an
appropriate amount. If the tenderer stipulates for an amount disproportionately higher than his competitors, he
runs the risk of the rejection of his tender.
[96] Clause 11.5.1 of NSSA.
[97] Failure by the contractor to do so would entitle the subcontractor to terminate the subcontract agreement
in terms of NSSA clause 29.14. Clause 25.7 refers to the contractor’s obligation to make payments of amounts
included in interim payment certificates, whereas clause 26.12 refers to his obligation to make payment in
terms of amounts included in the final payment certificate.
[98] The construction period is defined in clause 1.1 as commencing on the intended date of possession of
the site by the contractor and ending on the certified date of practical completion,
[99] ‘Possession is the physical control by a person of a corporeal thing with the intention of keeping the
control of it for his own benefit’ (Wille’s Principles of South African Law, 9th edition).
[100] ‘Ownership is the most comprehensive right which a person can have over a property; no person can
have more rights over a property than an owner’ (Johannesburg Municipal Council v Rand Townships
Registrar 1910 TPD 1314 at 1319). ‘It entitles the owner to deal with the thing as he pleases within the limits
allowed by law’ (Wille’s Principles of South African Law, 9th edition). The owner can sell or donate his land or
mortgage it; a possessor can do none of these things.
[101] Such precautions might, in certain circumstances, constitute improvements to the site. If, for example,
a danger of flooding had been created by work on an adjoining site, and the contractor constructed a drainage
Copyright © 2019. Juta & Company, Limited. All rights reserved.

channel to divert flood waters to avoid damage to the site, such channel would constitute an improvement for
which the contractor would be entitled to be recompensed.
[102] A contractor’s lien is his legal right to retain possession of the site until the employer has paid to him
monies which are lawfully due to him (Ploughall (Edms) Bpk v Rae 1971 (1) SA 887 (W)). But he may exercise
a lien only in respect of a debt that is due, not in respect of some future debt (Conress (Pty) Ltd and Another v
Gallic Construction (Pty) Ltd 1981 (3) SA 73 (W)). The contractor does not acquire ownership of the site, and
remains liable for any loss or damage to the site and the works while he remains in occupation and exercising
his lien. He must remain in effective control over the site and the buildings, which may be achieved by keeping
locked any gate that gives access to the site, providing security guards or keeping locked or barricaded all
doors that give access to the buildings. Lien must be maintained continuously, and once the contractor has
permitted the employer possession of the site or the buildings, his lien will have been lost and cannot be
regained. If the employer disputes the amount alleged to be owing to the contractor and wishes to repossess
the site, he may apply to court for a spoliation order, which would probably be granted on condition that he

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
pays into trust an amount, determined by the court, that would be sufficient to meet any award or judgment that
might be made by an arbitrator or the court.
[103] It is recommended that the JBCC site possession certificate be used to record the handing over of the
site.
[104] Fritsch v Eckrats (Pty) Ltd t/a Wally Pools 1990 (3) SA 242 (N).
[105] Clause 12.2.2 requires that he does so within 15 working days of acceptance of his tender.
[106] This will normally be done by the quantity surveyor on behalf of the principal agent who is concerned to
see that the document is arithmetically correct. Any arithmetic errors shall not affect the contract sum, and shall
be rectified by adjusting rates in consultation with the contractor so that the various items correctly total the
contract sum. Where the principal agent or the quantity surveyor considers that the rates are imbalanced or
unreasonable, usually to create ‘front end loading’, a process in which the contractor prices work that will occur
in the early stages of the contract disproportionately high and work that will occur in the later stages
correspondingly low so that he will enjoy a good cash flow on interim payment certificates in the early stages of
the contract, he may require the contractor to adjust his rates, the final amount of the contract sum remaining
unchanged.
[107] The definition of ‘priced document’ in clause 1.1 defines the documents used for pricing the contract
sum.
[108] The provisions of clause 11.0 are discussed in greater detail in Section 2 at 11.
[109] Clause 7 of the Agreement and Schedule of Conditions of Building Contract (the ‘white’ and ‘blue’
forms) required the contractor to keep a competent foreman on site at all times to whom the architect could
give instructions.
[110] See the definition of ‘programme’ in clause 1.1.
[111] In Ovcon (Pty) Ltd v Administrator, Natal 1991 (4) SA 71 (D) the contractor produced a programme
showing an intention to complete the works four months earlier than the contractual completion date, and then
complained that drawings were not supplied in time to enable him to meet this early completion date. In fact,
he managed to finish by the contractual completion date. The court, in deciding that that the employer’s
obligation was to supply drawings at such time as would enable the contractor to fulfil his contractual
obligation, which was to complete the works by the contractual completion date, held that approval of the
programme had not varied that date.
[112] Clause 2.3 of the General Preliminaries.
[113] Clause 12.2.7 obliges the contractor to ‘commence the works on being given possession of the site and
proceed with due diligence, regularity, expedition, skill and appropriate resources to bring the works to practical
completion and final completion.’
[114] In the absence of a penalties clause he would be liable to damages for breach of his obligation to
complete the works by the stipulated date.
[115] Clause 5.4 warns that the priced document shall not be used as a specification of materials and goods
or methods. This emphasises the need for architects to prepare and provide specifications.
[116] See also clause 12.3.15 of the NSSA, in which the subcontractor is obliged to provide, at his own
expense, temporary offices, storage sheds and workshops and shall provide, erect and dismantle such
Copyright © 2019. Juta & Company, Limited. All rights reserved.

scaffolding, and provide such hoisting, as he may need to carry out his work. It is customary for the contractor
to permit the subcontractor, if available and convenient, to use the scaffolding and hoisting provided by the
contractor for his own use.
[117] Clause 2.2 of the 1991 edition.
[118] Clause 29.14.4 entitles the contractor to terminate the contract if the employer influences the principal
agent in this manner.
[119] He cannot initiate the dispute resolution provisions of clause 30.0. His remedy, if he can show that his
agent has breached his mandate, is to sue him for damages.
[120] Nevertheless, it would be incorrect for the principal agent to include in an interim payment certificate
the value of work or materials which were defective or in any way unsatisfactory.
[121] The principal agent and/or agent is required to declare such interest in the CD.
[122] This is a right implied by law.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
[123] Note that ‘latent’ has a special meaning in the context of the agreement; it is defined as ‘A defect that a
reasonable inspection of the works by the principal agent and/or agents would not have revealed’. A defect that
appears before that time would be a patent defect and would be included in the list for practical completion or
list for final completion in terms of clauses 19.3.1, 19.3.2 and 21.6.1.
[124] Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd 1977 (3) SA 670 (A). This obligation to
replace specified materials and goods that contain latent defects is limited by clause 8.5.5, which relieves him
of this obligation after the issue of the list in terms of clause 21.6.1.
[125] Young and Marten Ltd v McManus Childs Ltd (1968) 2 All ER 1169.
[126] There is no legal obligation on the contractor to advise the principal agent and/or agents that he
considers the particular material unsuitable.
[127] In practice, principal agents often overcome this difficulty by requiring the contractor, at the
commencement of the construction period, to furnish samples of workmanship in various selected items of
work, such as brickwork, plastering, etc., which, on approval, serve as a standard against which subsequent
work is measured.
[128] That is to say, patent at the time of issue of the certificate for final completion.
[129] In terms of the Prescription Act 68 of 1969, the employer must call upon the contractor to remedy such
defects within three years of the date when he could reasonably have become aware of the existence of such
defects, failing which he loses this right against the contractor.
[130] Clause 20.1.1 of the NSSA.
[131] Clauses 14.4.5 and 15.2.5 of the NSSA.
[132] Clause 5.6 of the NSSA.
[133] Clause 14.4.2 and 15.2.2 of the NSSA.
[134] Clauses 25.13.1; 25.13.2; 25.13.3 of the NSSA.
[135] Such information would in all probability be complete and accurately dimensioned drawings with setting
out points relative to the site boundaries and a fixed datum point to establish the floor levels of the building.
Frequently, the contractor will use the structural engineer’s drawings for the initial setting out because the
concrete foundations will frequently have been designed by the engineer.
[136] Fritsch v Eckrats (Pty) Ltd t/a Wally Pools 1990 (3) SA 242 (N).
[137] Essentially concrete, both plain and reinforced, and brickwork. Plastering, although strictly speaking
also a ‘wet trade’, is frequently subcontracted.
[138] This is a fairly recent trend. For example, when James Thompson Ltd (now part of L T A Ltd), built the
Anglo-American Building at 44 Main Street, Johannesburg, it employed very few subcontractors. Nearly all the
trades, including plumbing and joinery, were carried out by its own employees. It even set up its own stone-
working department to prepare the stone facings with which the entire building is clad. This was not, at the
time, exceptional.
[139] Which entitles him to an extension of the date for practical completion – see clause 23.2.9.
[140] In Westminster Corporation v Jarvis [1970] 1 WLR 637 (HL), Lord Salmon stated ‘It is in my view unjust
and absurd because ... it leaves the employer to bear the loss caused by delay for which they are in no way to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

blame, and allows the party at fault to escape from the liability which they would otherwise justly have to bear’.
[141] Such delays would not entitle him to an extension of the date for practical completion.
[142] The existence and amount of this price could be established by a principal agent inviting two alternative
tenders for the principal contract, the first containing monetary allowances for work to be done by nominated
subcontractors and the second alternative containing the same monetary allowances for the same work to be
done by selected subcontractors. The comparison between the alternative tenders would be interesting, and
should reveal the extent to which the tenderer has recognised the risk of working with selected subcontractors
and has priced accordingly. A principal agent who has provided a nominated subcontract amount in the bills of
quantities cannot instruct the contractor to accept a successful tenderer as a selected subcontractor, firstly
because he cannot unilaterally change a provision of the agreement, and secondly because this could
prejudice the contractor and probably give rise to a claim for damages.
[143] See definition in clause 1.1. It follows from this definition that a principal agent may not omit work that
had been measured and billed as contractor’s work and instruct that it be done by a nominated subcontractor.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
This conclusion is in line with the court’s reasoning in Hydro Holdings (Edms) Bpk v Minister of Public Works
and Another 1977 (2) SA 778 (T).
[144] The same form of agreement is used for both nominated and selected subcontracts, as the contractual
relationship between the contractor and the subcontractor is the same whether the subcontractor is nominated
or selected. The differences between the two forms of subcontract are dealt with in the PBA, as they affect the
contractor’s liability to the employer for the consequences of the subcontractor’s default or insolvency.
[145] It would be advisable to use the JBCC NSSA CD which includes the tender form for completion by the
subcontractor. The CD contains the various conditions relating to the tender.
[146] The recommendation is normally made after evaluation of the tenders received by the agent appointed
for the particular discipline.
[147] It is very important that the principal agent does not advise the subcontractor that either his employer or
even he himself accepts the subcontractor’s tender, as this action might well bring about a contract between
the tenderer and either the employer or himself.
[148] See definition in clause 1.1. The principal agent cannot order the omission of work designated in the
contract documents to be done by the contractor, or even a nominated subcontractor, and instruct that it be
done by a selected subcontractor.
[149] Although the contractor will have approved the list of prospective tenderers, circumstances may have
changed in respect of the chosen tenderer. He may have taken on substantial work in the interim and be
unable to handle further work satisfactorily, his tender price may be unreasonably low, thus exposing the
contractor to the risks attendant on his possible non-performance, and his financial position may have
deteriorated.
[150] Tenants, particularly of shops and offices, may lease undivided and unfitted space in the building and
then engage their own contractors to install partitioning, wall and floor finishes, fittings, possibly mechanical
equipment, catering equipment in kitchens, etc.
[151] CD. This is information which the contractor will be given when tendering, and which he will be able to
take into account in pricing his tender, and subsequently when preparing his construction programme.
[152] Clause 22.3 in the PBA Edition 5.0 made provision for a direct contractor to be subject to the
reasonable controls as required by the contractor. For example, he may give them instructions regarding the
storage of their materials on site, clearing of rubbish and conformity to security requirements. It is submitted
that he is not obliged to provide them with hoisting, scaffolding, water, electric power, or any of the other
facilities that he is obliged to provide to his subcontractors. This provision has been omitted from Edition 6.2.
[153] The employer indemnifies the contractor from all claims and the cost of making good physical loss or
repairing damage to the works caused by direct contractors.
[154] Such as adverse ground conditions affecting foundations, which may only become apparent during
excavations for foundations.
[155] This has led to the widespread use of provisional bills of quantities.
[156] Who, in terms of clause 6.1, is the only person empowered to issue contract instructions, although he
may delegate such authority to other agents in respect of those portions of the works which they have
designed in terms of clause 6.2. The employer cannot himself issue contract instructions to the contractor,
Copyright © 2019. Juta & Company, Limited. All rights reserved.

although he can, of course, instruct the principal agent to do so on his behalf.

[157] Contractors sometimes consider that, where they perceive a discrepancy, they should work in
accordance with what is stated in the bills of quantities, because that is what they priced for. But this will not
necessarily be what the principal agent requires. The bills of quantities should not be used as a specification of
materials and goods unless so instructed by the principal agent (clause 5.4). If the principal agent requires
something different from what has been stated in the bills of quantities, and this involves a difference in cost,
the contract value is required by clause 26.2 to be appropriately adjusted.
[158] It is quite common, in projects such as regional shopping centres, that the levelling and profiling of the
site is carried out under a separate contract before the principal contract is let.
[159] In Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration 1974 (3) SA 506 (A), the
Appeal Court interpreted the words very widely indeed.
[160] ‘Contract value’ is defined in clause 1.1 as being a monetary value initially equal to the contract sum
that is subject to adjustment in terms of this agreement.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
[161] This repeats the provisions of clause 2.1.
[162] It is standard practice that samples of concrete are regularly tested by an approved laboratory to
ensure that it is of the required strength. Some materials and goods which are manufactured in compliance
with SA Bureau of Standards specifications might bear the SABS mark signifying that they comply and would
not need to be tested, but others may be tested by appropriate testing authorities.
[163] If the tests reveal that the materials or goods conform to specification, the cost of testing would be
borne by the employer, but if not, the cost would be to the contractor’s account. The same applies in respect of
the cost of opening up work that has been covered up – see clause 26.4.2.
[164] This would occur, for example, where the contractor has laid drainage pipes in trenches and then filled
them in before the work could be inspected or, if necessary, remeasured. The Preliminaries requires the
contractor to give timeous notice of his intention to cover up any work that the principal agent may wish to
inspect or remeasure. Should he fail to do so, the principal agent may require him to expose such work and
later make good at his own expense. It is standard procedure that the contractor notifies the principal agent
when reinforcing steel is ready for inspection before the concrete that it reinforces is cast.
[165] See Section 1, chapter 5.2 above.
[166] Frequently referred to as P C amounts.
[167] See definitions in clause 1.1.
[168] A contingency sum is to cater for unforeseen items. Such unforeseen items may, for example, include
rock in excavations where the nature of the ground is believed to be free of rock and large boulders. A contract
instruction will need to be issued to cover this item with an adjustment to the contract value.
[169] Further drawings issued from time to time during the construction period rank as contract instructions in
terms of clause 17.1.2.
[170] This is the essence of locatio conductio operis – a contract for the letting and hiring of work.
[171] Where the employer requires various portions of a building project to be carried out in a particular
sequence (this is often a requirement in a contract for alterations and additions to an existing building) this
must be clearly stipulated in the tender documents so that it becomes a contractual requirement. Working out
of a preferred sequence could well be more expensive for the contractor.
[172] See Hydro Holdings (Edms) Bpk v Minister of Public Works and Another 1977 (2) SA 778 (T) in which
McEwan J held that omitting work to enable the employer to engage someone else to carry it out was a breach
of contract entitling the contractor to damages.
[173] Clause 17.4. provides that the contractor is not obliged to execute any contract instruction for additional
work issued after the certified date of practical completion, and it is submitted that if the principal agent
nevertheless issued a contract instruction for additional work after the certified date of practical completion, the
contractor would not be obliged to carry it out. One would like to think that a reasonable contractor would
nevertheless execute a reasonable contract instruction even if given out of time if it would not cause him undue
inconvenience.
[174] ‘Writing’ includes drawings, faxes, e-mails and computer discs in which words and drawings may have
been electronically recorded and are capable of being converted to text and drawings on paper or other similar
media.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[175] If the contractor, in good faith, executed an oral contract instruction, he would not, it is submitted, be
legally entitled to demand payment for any cost that he may thereby have incurred. A contractor, on receipt of
an oral instruction, would be well advised to confirm it in writing to the principal agent before giving effect to it.
[176] The word ‘notify’ denotes an act that is required to be carried out in writing – see clause 1.2.1. The
same applies to ‘accept, allow, appoint, approve, authorise, certify, decide, demand, designate, grant, instruct,
issue, list, notice, object, record, reduce, refuse, request, state’ and their derivatives. For modes of delivery of
such notice, and when such notice is deemed to have been received, see clause 2.4.
[177] In this context, ‘defective’ has a wide meaning and applies not only to materials and goods which are
not fit for their purpose but those which, although intrinsically sound, are not in conformity with the stated
requirements of the contract; see the definition of ‘defect’ in clause 1.
[178] The circumstances in which he is not at risk for loss or damage are those set out in clause 8.5
Furthermore, with certain minor exceptions, he is not at risk for loss or damage to the works after the date of
practical completion.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
[179] NSSA Clause 17.1.
[180] Obviously, if it is not, he should not give notice to the principal agent to inspect the works. It is a
frequent complaint of principal agents that contractors request them to make an inspection for practical
completion when the works are manifestly incomplete, and expect them to issue a list for practical completion
that they can use as a check list to achieve practical completion. Justifiably, they feel that they are being
conned into doing the job of a snagging foreman which is the contractor’s responsibility. It is submitted that, if
they consider that the works are clearly incomplete, they may refuse to make the inspection on the grounds
that the contractor has not complied with this clause.
[181] Defined in clause 1.1 as ‘A certificate issued by the principal agent . . . stating the date on which
practical completion of the works . . . was achieved’. JBCC publishes special completion certificate forms for
this and for final completion.
[182] This certificate would certify practical completion of work carried out under nominated and selected
subcontractors as well as work carried out by the contractor himself. The principal agent should therefore
ensure that, where such work has been carried out under the direction of other agents, they make similar
inspections and satisfy themselves that the subcontract work under their direction has reached practical
completion.
[183] With the consequence that on this date the responsibility for the works passes from the contractor to
the employer, the contractor ceases to be liable for penalties, and the other consequences of practical
completion ensue. However, this provision does not relieve the contractor of any of his obligations in respect of
incomplete or defective work. Such work would be specified on the list for completion that the principal agent
would be obliged to issue to the contractor in terms of clause 19.3.4.
[184] Strijdom Park Extension 6 (Pty) Ltd v Abcon (Pty) Ltd 1998 (4) SA 844 (SCA).
[185] The intention of this provision is to avoid the possible situation in which the principal agent fails to
condemn unsatisfactory work until the works are offered by the contractor as practically complete, at which
time the rectification of the defective work would probably cause the contractor to run into penalty time. This
provision does not require the principal agent to instruct the contractor how to build, only to indicate what
would be the required standard of construction and completion.
[186] On a major project, such inspection could take a number of days or even several weeks, and the
contractor, who would not be entitled to receive a certificate of practical completion until the inspection had
been satisfactorily completed, would need to allow appropriate time for the inspection in his programme if he is
to achieve practical completion on or before the date for practical completion as recorded in the contract data.
[187] It may not suit the employer to accept responsibility for the building earlier than the date for practical
completion. The contractor’s obligation was to complete and hand over the works on that date, not earlier. In
the event of the works being complete earlier, the employer would need to agree to an earlier handover only if
it suited him.
[188] This period is referred to as the ‘defects liability period’. As it is quite possible that no rain may fall in
this period and no leaks in the roof would be evident, many building agreements make special provision for an
extended period in respect of roofs and waterproofing. There is no need for this arrangement in the JBCC
Agreements as such roof leaks, if they do not occur within the defects liability period, would be held to be latent
defects, for which the contractor would be liable in terms of clause 22.0.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[189] It is submitted that this definition of ‘defect’ is sufficiently wide to include incomplete work. This would
rescue a principal agent who had overlooked an incomplete item of work when issuing his final completion list.
[190] This clause, on a strict interpretation, excludes defects which may have occurred earlier but which have
inadvertently been overlooked by the principal agent and not included on the list for completion. The principal
agent is not rescued by clause 21.6.1 which permits him to issue a list ‘detailing all outstanding work or defects
that must be attended to or rectified’. Such defects and outstanding work have not become apparent, they
were previously apparent if one had been careful to observe them. Thus if a negligent principal agent
overlooks a defect when he compiles his list for completion, he cannot compel the contractor to rectify it!
[191] This has very serious consequences, because the certificate of final completion releases the contractor
from any further contractual obligations save for the rectification of latent defects.
[192] Smith v Mouton 1977 (3) SA 9 (W) at 13. It might be alleged that the principal agent had issued it
prematurely, before previous contractual requirements had been complied with, or that his appointment had

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
been terminated before the certificate had been issued.
[193] As when he had been bribed by the contractor. See Hoffman v Meyer 1956 (2) SA 752 (C), Smith v
Mouton 1977 (3) SA 9 (W).
[194] Cone Textiles v Mather & Platt (SA) (Pty) Ltd 1981 (3) SA 565 (A), Ocean Diners (Pty) Ltd v Golden Hill
Construction CC 1993 (3) SA 331 (A). The only respect in which finality is not conferred on the certificate is the
exception in respect of latent defects. A latent defect is defined in clause 1.1 as ‘A defect that a reasonable
inspection of the works by the principal agent and/or agents would not have revealed’. What constitutes a
‘reasonable’ inspection is debatable. The test of professional negligence would appear to be applicable; the
principal agent should conduct the inspection with the skill and diligence normally displayed by other members
of his profession, but not necessarily more so.
[195] The test of professional negligence would appear to be applicable; the principal agent should conduct
the inspection with the skill and diligence normally displayed by other members of his profession, but not
necessarily more so.
[196] At this stage, the principal agent no longer has the power to issue a contract instruction omitting such
work, which could be valued in terms of clause 26.2.4.
[197] While this appears to be a very onerous liability, in practice it is often very difficult, after the lapse of a
few years, to say with any certainty that a defect is due to the contractor’s failure to carry out the work in
accordance with the agreement and not to fair wear and tear or even defective design by the employer’s
agents. The architect and engineer remain liable to the employer for latent defects arising from defective
design for the life of the building unless they contractually limit the period of liability in their Client/Consultant
Professional Services Agreement.
[198] The employer is not, in law, obliged to permit the contractor to repair the defect, and may instead
engage someone else to do so and claim the cost from the contractor.
[199] Christie The Law of Contract 7th edition, McKenzie’s Law of Building and Engineering Contract and
Arbitration 7th edition pages 116–125.
[200] Should the contractor dispute liability, such dispute may be referred to the dispute resolution procedure
provided in clause 30.0, which would still be alive for the purpose, and such reference would be required to be
initiated within three years of the employer becoming aware of the existence of the defect.
[201] The liability of the principal agent and/or agents for latent defects due to defective design would remain
unless contractually limited, and they could find themselves facing claims in respect of defects allegedly due to
defective design while the contractor would no longer be liable for defective workmanship.
[202] Peters, Flamman and Co v Kokstad Municipality 1919 AD 427.
[203] Sometimes referred to as vis major or force majeure—some superior power or force which cannot be
resisted or controlled—or casus fortuitis—A happening so exceptional or extraordinary as not to be
foreseeable.
[204] Dodd v Churton [1897] 1 QB 562; Kelly and Hingle’s Trustees v Union Government (Minister of Public
Works) 1928 TPD 272.
[205] Wells v Army and Navy Co-operative Society [1902] HBC 4 ed vol II 346, 86 LT 764, in which the
learned judge said ‘[I]n the contract one finds the time limited within which the builder is to do this work. That
Copyright © 2019. Juta & Company, Limited. All rights reserved.

means, not only that he is to do it within that time, but it means also that he is to have that time within which to
do it’.
[206] Barker v Townsend (1903) 24 NLR 145. The determination of what would constitute a ‘reasonable time’
would almost certainly give rise to difficulties and disputes. If he does not complete within ‘reasonable time’ he
would be liable for damages, but not penalties.
[207] Kelly and Hingle’s Trustees v Union Government (Minister of Public Works) 1928 TPD 272.
[208] Applying the eiusdem generis rule of interpretation.
[209] Kelly and Hingle’s Trustees v Union Government (Minister of Public Works) 1928 TPD 272, in which
Feetham J said ‘[W]here a building owner by his own act prevents performance he is not, apart from special
stipulation, entitled to take advantage of his own wrong’. He went on to say that any special stipulation should
be restrictively interpreted. See also Group Five Building Ltd v Minister of Community Development 1993 (3)
SA 629 (A).

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
[210] Law of Building and Engineering Contracts and Arbitration, 7 ed at p 181.
[211] The Building Contract 2 ed, at p 160.
[212] Malherbe & Lipshitz Building Contracts p 221.
[213] Kelly and Hingle’s trustees v Union Government (Minister of Public Works) 1928 TPD 272.
[214] This refers to an unallocated period of time in the programme between one operation and another, or
(as in Ovcon’s case) at the end of the programme before the date for practical completion. It is provided to
permit one operation to overrun its allotted time to a limited extent before it impinges on the succeeding
operation.
[215] Ovcon (Pty) Ltd v Administrator, Natal 1991 (4) SA 71 (D).
[216] The 4-month difference between these two periods is generally referred to as the ‘float time’; it would
enable the contractor to overrun his programme without incurring penalties.
[217] As it completed within the contractual time limit, penalties were not incurred, and the extension of time
was claimed solely to gain the additional preliminaries.
[218] Holding, in effect, that the float period may be appropriated by the employer.
[219] In response to a number of quotations from the works of learned authorities cited by the claimant in
support of his claim, the court stated ‘These statements from these authors are well-nigh useless unless they
are reduced to their particular contractual setting’ (at 75J).
[220] CD.
[221] If it were true, there could be instances of grave injustice. For example, delay caused by a contract
instruction to a paving subcontractor to perform additional work would entitle him to an extension of time and
additional preliminaries provided he complied with clause 23.4.2 of the subcontract. Such work might delay the
principal contractor and similarly entitle him to a revision of the date for practical completion. If, however, the
contractor failed to comply with clauses 23.4.2 or 23.5 he would lose such entitlement. Such forfeiture should
not prejudice the subcontractor. Moreover, if this were held to be a valid interpretation, it would render clauses
23.2.12 and 23.2.13 inoperable, as these are circumstances of delay for which there is no provision in the PBA
entitling the contractor to an extension of time.
[222] In certain instances, a delay caused by a circumstance, such as a contract instruction to perform
additional work, which could entitle a subcontractor to an extension of time in terms of the subcontract
agreement, could also entitle the contractor to an extension of time in terms of the principal agreement.
However the delays to interim completion and practical completion respectively, might not be the same, and
the extensions of time would equally not be the same.
[223] The Conventional Penalties Act 15 of 1962.
[224] S 2(1) of the Conventional Penalties Act. Clause 29.7 of the PBA contains such express provision
entitling the employer to claim damages in lieu of penalties on the termination of the agreement due to the
contractor’s default and it is submitted that clause 29.8 provides for the payment of penalties up to the date of
termination.
[225] This was not the case prior to the enactment of the Conventional Penalties Act, when English law was
followed. Then penalties had to be a reasonable close assessment of the employer’s prospective loss, and in
fact, the word ‘penalties’ was not used; one spoke of ‘liquidated and ascertained damages’. This is still the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

position under English law, and would be the case where this Agreement is used in a country where English
law is followed in this respect. Under English law, the difference may briefly be stated thus: if the object of the
‘penalty’ is to compel performance by fear of the consequences, it would be held to be a penalty and would be
unenforceable, but if it is genuinely to pre-estimate damages, it would not be held to be a penalty, and would
be enforceable. See McKenzie The Law of Building Contracts and Arbitration in South Africa 7th edition 2014
pp 184–187.
[226] Van Staden v Central South African Lands and Mines 1969 (4) SA 349 (W).
[227] S 3 of the Conventional Penalties Act.
[228] PBA CD.
[229] The intended date for interim completion is stated in the CD of the NSSA, but this yields to the date
indicated in the programme prepared by the contractor and agreed by the subcontractor.
[230] NSSA CD.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
[231] In Victoria Falls & Transvaal Power Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD 122, Innes
CJ stated: ‘The sufferer by such breach should be placed in the position he would have occupied had the
contract been performed, so far as can be done by the payment of money, and without undue hardship to the
defaulting party’.
[232] In Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd 1977 (3) SA 670 (A) 687, Corbett CJ
stated ‘Where two parties have made a contract which one of them has broken, the damages which the other
party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be
considered either arising naturally, i.e. according to the natural course of things, from such breach of contract
itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time
they made the contract, as the probable result of the breach of it’.
[233] This could be a very difficult exercise for the contractor. When a contractor himself completes after the
intended or revised date for practical completion and becomes liable to the employer for penalties, such
lateness is seldom the fault of one subcontractor alone; probably several subcontractors and possibly the
contractor himself may have contributed to the breach. A subcontractor would be liable only for damages for
the extent to which he himself contributed to the contractor’s breach. This may be established by conjecturing
how much earlier the contractor might have achieved practical completion if the subcontractor had not himself
been in breach. This would then be the extent of the subcontractor’s liability for damages.
[234] McKenzie The Law of Building and Engineering Contracts and Arbitration 7th ed 2014; p 221.
[235] Thomas Construction (Pty) Ltd (in liquidation) v Grafton Furniture Manufacturers (Pty) Ltd 1988 (2) SA
546 (A), B K Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk 1979 (1) SA 391 (A).
[236] Thomas Construction (Pty) Ltd (in liquidation) v Grafton Furniture Manufacturers (Pty) Ltd 1988 (2) SA
546 (A), in which the court refused to compel the employer to pay an interim certificate that had been issued
before the contractor had been declared insolvent.
[237] Because he has none.
[238] JBCC publishes Payment Certificate forms for the purpose, which clearly identify the various elements
of the certificate.
[239] The certificate must be issued not later than the date stipulated in the CD, clause 25.2, and the
valuation must be made within the period stipulated in the CD.
[240] This would oblige the contractor to pay the employer the amount certified.
[241] Clause 2.3. of the JBCC guarantee for payment.
[242] The corresponding provision of the 1991 edition of the PBA spoke of ‘the total value of the works
satisfactorily executed’. Despite the absence of the qualification ‘satisfactorily’ in the present clause, it is
submitted that the principal agent would be acting correctly in excluding from the valuation the value of any
work that was unsatisfactory.
[243] In South Africa such tax would be VAT. The ‘VAT exclusive’ method is followed throughout the contract.
The various amounts in the bills of quantities do not include VAT, nor do the various monetary allowances nor
the valuation of work done and materials on or off site. VAT is added at the end of the certificate, as is done in
the case of the original tender and the summary in the bills of quantities.
[244] CD 25.3.2. This provision, in certain cases, may be overridden by a provision in the CD which requires
Copyright © 2019. Juta & Company, Limited. All rights reserved.

him to include such value where the materials and goods have been prematurely delivered or offered for
delivery as a consequence of placing of an order on the instructions of the principal agent.
[245] The provision in clause 31.6.3. in the PBA Edition 5 for the payment of materials and goods stored
either on or off site has been omitted from Edition 6.2 and is required to be stipulated in the CD. The
description in the CD should include the provision that where materials and goods are stored off site in leased
premises, the owner of the premises would have a landlord’s hypothec (a lien to secure payment of arrear
rental), which should be required to be waived.
[246] The works insurance required by this clause should cover not only the actual works themselves but
also the free issue and materials and goods intended for the works, whether on or off site— see the definition
of ‘works’ in clause 1.1.
[247] This will be related to measurements and rates in the contract bills of quantities.
[248] That is, one without bills of quantities. In such instances, valuations are frequently performed using
priced documents in which percentages of the contract sum are allocated to various stages of the building

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
process, i.e. foundations, surface bed, brickwork to wallplate level, etc.
[249] Clause 25.1 of the NSSA.
[250] Clause 25.1 of the NSSA. Where the subcontract is being administered by a specialist agent, such as a
structural, electrical or mechanical engineering consultant, the subcontractor will, in practice, usually submit his
claim to the specialist agent for assessment, and, having made such enquiries and adjustment as he considers
necessary, the agent will forward his recommendation to the principal agent for inclusion in the valuation of the
certificate concerned. The subcontractor should nevertheless submit a copy of his claim to the contractor in
compliance with this clause.
[251] In RSA this would be VAT; other countries may require some other form of tax.
[252] Some principal agents, in a misguided attempt to assist the contractor, present the certificate on his
behalf to the employer for payment. This practice is to be deprecated. If the employer were to fail to pay, the
contractor would not then have the original certificate to support an application to court for provisional sentence
to compel payment. It is further submitted that where a principal agent issues a payment certificate to the
contractor with a copy to the employer via e-mail, a prudent principal agent would nevertheless issue an
original hardcopy of the certificate to the contractor.
[253] It is important that the amounts included in respect of the subcontractors are stated, as their entitlement
to interim payments depends on this information. There is no indication how detailed the rest of the information
needs to be, and it is submitted that, if the principal agent certifies substantially what the contractor has
claimed, there is no need for detail.
[254] Clause 25.7.3. The subcontractor needs to know what he should be getting, and when, so that he can
take appropriate steps if he does not receive the correct payment at the right time from the contractor.
[255] This is the Recovery Statement.
[256] Clause 25.3 of the NSSA. A payment advice is a statement issued by the contractor certifying the
amount due and payable by the contractor to the subcontractor, or vice versa (clause 1.1 of the NSSA).
[257] Clause 25.3.1 of the NSSA.
[258] Clause 25.3.7 of the NSSA.
[259] VAT in South Africa.
[260] Clause 25.3.8 of the NSSA. Once again, VAT would be calculated on the resulting amount less any
interest payable.
[261] The words ‘Signed by the contractor who certifies that the amount stated is due and payable to the
named subcontractor’ that appear at the foot of the subcontractor’s payment advice form under D16.0 render it
a liquid document. Many contractors neglect to furnish their subcontractors with payment advices This would
be a breach of clause 28.1.2 which would entitle the subcontractor to suspend the subcontract works.
[262] It will not necessarily happen that the subcontractor will be indebted to the contractor. A likely reason
that the contractor would be indebted to the employer would be that he has become liable for heavy penalties
for non-completion. However, the subcontractor might not have contributed to this delay, in which case he
would not be liable to the contractor for damages. He would be entitled to be paid by the contractor the full
amount certified in respect of his subcontract, notwithstanding that the contractor might not receive any
payment in terms of that certificate because the certificate might be for a negative amount.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[263] Clause 25.3.9 of the NSSA.

[264] The comments in this section are equally applicable to final payment certificates, except where
otherwise stated.
[265] This provision is not intended to protect a principal agent who negligently certifies the value of defective
work or materials. Should such negligence cause the employer expense or loss, he could be held liable for
damages.
[266] Delivery of a motor vehicle may be made symbolically by handing over the keys, which denotes that
the recipient has assumed control over the vehicle.
[267] By a legal process known as constitutum possessorium, a form of fictitious delivery which the law
accepts as being the equivalent to actual delivery although no physical handover takes place. Transfer of
possession and consequently of ownership is intended to take place through a contractual change of intention
on the part of the person who retains the physical control throughout. The JBCC Transfer of Ownership of

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
Materials Off Site form was formerly published to facilitate this process. However, the process is fraught with
difficulties and is not to be recommended, and the Transfer of Ownership form is no longer published.
[268] Saflec Security Systems (Pty) Ltd v Group Five Building (East Cape) (Pty) Ltd 1990 (4) SA 626 (E).
[269] The risk of including in an interim payment certificate the value of goods stored off site becomes much
more serious when such goods are substantial pieces of machinery ordered from foreign suppliers and paid for
by a subcontractor who wants to be paid even before such goods arrive in the country. There is no way such
goods can become the property of the employer when he honours a payment certificate that includes their
value, and such payment can only be regarded as an advance payment to the subcontractor. To safeguard the
employer’s interests, a Guarantee for Advance Payment should be provided by the subcontractor to the
employer in terms of clause 11.2.2 of the NSSA.
[270] Except, of course, where the contractor has provided a fixed construction guarantee and a small
percentage of the value of each certificate has been withheld, portion of the withheld amount being certified at
final completion and the balance in the final certificate.
[271] As the fault, if indeed there can be said to be fault, is usually fairly evenly divided between the
contractor and the employer’s agents, this interest is termed ‘compensatory’ to distinguish it from ‘default’
interest applicable to late payment and is awarded at a lower rate.
[272] See the definition of ‘interest’ in clause 1.1. The bank rate, which used to change comparatively
infrequently, has since been replaced by the ‘Repo Rate’ which fluctuates as announced by the Reserve Bank.
[273] Clause 27.1.5 of the NSSA.
[274] Hoffman v Meyer 1956 (2) SA 752 (C) Sutcliffe v Thackrah [1974] AC 727; 4 BLR 16.
[275] It is uncertain whether a contractor, who had been prejudiced by a principal agent’s negligence in
issuing a certificate, would have a cause of action, although in theory there appears to be no reason why he
should not. Of course, there would be no uncertainty if he could prove fraud on the part of the principal agent.
[276] The wording on the face of the JBCC Interim Payment Certificate form contains a clear admission by
the employer’s agent, made on behalf of the employer, that the employer owes the contractor the amount
certified. The application to court would be one for provisional sentence.
[277] This issue would only arise if he found that he had certified an excessive amount in error.
[278] If he needs to correct an over-valuation, he should promptly issue a subsequent certificate for an
appropriate negative amount to correct the error.
[279] Likewise in respect of a final payment certificate—see clause 25.10.
[280] The Agreements refer to a tax invoice in deference to those states which have some other form of tax
than VAT. But it is only VAT legislation that requires the vendor to furnish a tax invoice.
[281] A payment certificate is not a VAT invoice, and does not conform to the requirements for a VAT invoice
set down in the Value-Added Tax Act 89 of 1991. It would seem that the furnishing of a VAT invoice is a
condition precedent to the right to payment, and that the employer may refuse to pay unless and until a VAT
invoice is furnished.
[282] See the definition of ‘interest’ in clause 1.1. The bank rate, the rate applicable to registered banks when
borrowing money from the Reserve Bank of South Africa, is considerably lower than the rate that such banks
charge to their clients. The rate of interest that one party may charge another may not exceed a rate that is
Copyright © 2019. Juta & Company, Limited. All rights reserved.

prescribed in terms of the Limitation and Disclosure of Finance Charges Act 76 of 1970. Interest ceases to run
when the amount of interest equals the capital amount on which it is being charged—see Coppenhagen v Van
Coppenhagen 1947 (1) SA 576 (T), Stroebel v Stroebel 1973 (2) SA 137 (T). VAT is not payable on interest
charges.
[283] Clause 28.1.3 entitles the contractor to suspend the works on the failure of the employer to pay any
payment certificate until such default has been remedied.
[284] In Inter-Union Finance Ltd v Frankraalstrand (Edms) Bpk and Others 1965 (4) SA 180 (W) the court
stated that ‘provisional sentence may only be granted on a liquid document wherein a debtor acknowledges
over his signature, or that of a duly authorised agent, or is in law regarded as having acknowledged without his
signature having been affixed thereto, his indebtedness in a fixed and determinate sum of money’. In
considering an application for provisional sentence, the court will generally refuse to have regard to any
extrinsic evidence, such as the building agreement. It is therefore necessary that, to ensure liquidity, the
certificate should contain wording, as does the JBCC Interim Payment Certificate form, that is a clear and

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
unequivocal admission by the employer’s duly appointed agent of the employer’s indebtedness to the
contractor. It is probable that the courts would not consider a certificate that lacked such admission to be liquid
despite clause 25.17. For an enlightening discussion on provisional sentence see the judgment of Magid J in
LTA Natal v Terblanche NO and Others 1 CLD 329 (DCLD).
[285] The certificate contains the wording: ‘Signed by the principal agent who, as an agent for the employer,
certifies that the positive or negative amount stated in D.16.0 is due and payable by the date stated,
irrespective of the date of signature of this certificate’.
[286] There are limited defences available to the employer, such as that the certificate was issued
fraudulently or without authority.
[287] The JBCC guarantee for payment requires the contractor, if he wishes to call up the payment
guarantee, to give the employer seven calendar days’ notice to pay an amount certified by the principal agent
and warning of his intention to call up the guarantee if such payment is not made. If such payment has not
been made by the end of this time, the contractor, on furnishing the guarantor with a copy of the payment
certificate and of the notice of demand, shall be entitled to be paid the certified amount by the guarantor,
provided that the limit of the guarantee is not exceeded.
[288] This could be playing with fire, and the contractor must be certain that the employer does not have
valid, although undisclosed, grounds for refusing to pay the certificate. In Hydro Holdings (Edms) Bpk v
Minister of Public Works and Another 1977 (2) SA 778 (T), the employer’s reason for refusing to pay the
certificate was because it had been issued by an unauthorised employee of the architect, and not the architect
himself. If the contractor were to terminate the agreement on invalid grounds, he could find himself facing a
claim for damages for repudiation.
[289] This would occur when the amount that has accrued to the employer in the recovery statement since
the previous interim payment certificate exceeds the value of work and materials for the same period. This
could typically occur where the contractor has failed to complete by the intended date for practical completion
and is incurring heavy penalties.
[290] This is a process known as ‘set-off’, and was described by Innes CJ thus: ‘When two parties are
mutually indebted to each other, both debts being liquidated and fully due, then the doctrine of compensation
comes into operation. The one debt extinguishes the other pro tanto as effectively as if payment had been
made.’ (Schierhout v Union Government 1926 AD 286)
[291] If this is the form of guarantee provided by the contractor in terms of clause 11.0.
[292] Clause 27.2.5 of the PBA, clause 4.1 of the Guarantee for Construction form.
[293] Clause 27.3.2 of the PBA, clauses 4.2 and 4.3 of the Guarantee for Construction form. The prescribed
steps should be strictly followed. Failure by the employer to do so would not only invalidate his demand for
payment but, it may be argued, would entitle the contractor to hold that the employer had repudiated the
construction guarantee thus rendering it null and void.
[294] Guarantee for Construction form.
[295] Clause 2.4 states when a notice may be deemed to have been received.
[296] Clause 25.7 and 25.10 of the NSSA. The significance of this provision is that, if payment is not made
by the latest date for payment, interest is calculated from this due date, in terms of the NSSA CD.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[297] The amount may, however, be reduced by the amount of the NSSA Recovery Statement issued by the
contractor simultaneously with the payment advice.
[298] Clause 25.11 of the NSSA. This retains, to a limited extent, the ‘pay when paid’ provision that was a
feature of earlier agreements. Contractors have long maintained that they are builders, not bankers, and
should not be required to pay subcontractors for work done by them when they themselves have not yet been
paid for such work. This leaves subcontractors in a very invidious position; as they have no privity of contract
with the employer, they cannot sue for payment.
[299] Clause 25.13 of the NSSA.
[300] Clause 25.13 of the NSSA. This should give the contractor adequate time to enforce payment of the
interim payment certificate by the employer.
[301] Clause 25.13.1 of the NSSA.
[302] Clauses 25.12.1 of the NSSA. This will not assist the subcontractor if he has completed his work, or

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
completed a stage of work and would not, in terms of the programme, be required on site in the immediate
future.
[303] Clause 28.1 of the NSSA.
[304] In accordance with clause 11.5.1 of the NSSA. This should be on the JBCC N/SS Guarantee for
Payment form.
[305] Clauses 25.12.1; 25.12.2 and 25.12.3 of the NSSA.
[306] Clause 25.10 of the NSSA.
[307] Clause 25.13 of the NSSA.
[308] Clause 25.13 of the NSSA.
[309] This remedy is only available in respect of money which the contractor had been obliged to pay to the
subcontractor and had failed to pay. It does not entitle the employer to instruct the principal agent to certify
direct payments to a subcontractor of amounts that become due in the future.
[310] In terms of clause 15.5 of the PBA. An employer should be cautious when approaching this issue, and
should be sure that, if the contractor should become insolvent or go into liquidation, he would be able to
recover fully the amount concerned. It is very possible that he would be considered to be a concurrent creditor
for the amount, and recover only a small portion of it, if anything at all.
[311] This situation would arise where the amount due to the subcontractor in terms of the interim payment
certificate was exceeded by the amount stated in the n/s recovery statement, perhaps due to expense or loss
incurred by the contractor as a result of default by the subcontractor.
[312] Clause 25.11 of the NSSA.
[313] A statement of amounts that become owing by the contractor to the employer, or vice versa; see the
definition in clause 1.1.
[314] Notice detailing such default must have been given to the contractor at least five working days prior to
the date of issue of the next recovery statement to afford the contractor the opportunity to remedy the default. It
is submitted that such expense or loss must have been quantified, and cannot be speculative.
[315] It could well happen that, particularly in the early stages of a contract, a number of months could pass
without any items of expense or loss being incurred, and the issue of a recovery statement in such
circumstances would appear to be pointless. The principal agent is, however still obligated to issue such
recovery statement which will indicate zero recovery.
[316] Clause 27.1.10 of the NSSA. Contractor’s instructions that are issued as a consequence of contract
instructions will form part of the subcontract final account in terms of clause 26.0. The type of variation that
could arise here could, for example, be work which the contractor had originally intended to carry out himself
but subsequently decided to entrust to the subcontractor.
[317] Clause 27.1 of the NSSA. This would then coincide with the issue of the payment advice which, in
terms of clause 25.3, should include the amount shown on the n/s recovery statement as being due by one
party to the other.
[318] See definition in clause 1.1.
[319] CPAP method in terms of clause 26.9.5.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[320] This is of importance to a contractor seeking additional payment. His claim for additional payment must
be based on one of these categories, failing which his claim must be based on damages for alleged breach of
contract. As most forms of breach of contract have remedies prescribed for them, damages are not available in
such instances. The scope for claiming damages based on breach of the JBCC PBA is very limited.
[321] The rates in the bills of quantities are the rates on which the contractor has calculated his tender price,
and so the value of variations based on these rates will be directly comparable to the value of similar work in
the contract. The situation is different with a schedule of rates included in a lump-sum document. There is no
direct relationship between these rates and the contractor’s tender price, and it is entirely possible that if the
tender had been priced at these rates, a very different tender price would result. Consequently the use of such
rates in valuing variations cannot ensure that the value of such variations is related to the value of similar work
in the contract.
[322] For example, the quantity of bulk excavation may be considerably reduced, making it uneconomical to
use earth-moving machinery on the small amount of excavation remaining. The rate for excavation, which had

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
originally been based on the use of earth-moving machinery, would now be re-calculated on the basis of hand-
excavation.
[323] This work will usually be delegated by the principal agent to the quantity surveyor.
[324] This is usual in the case of excavations for foundations and installations of water supply piping and
waste and soil water drainage piping.
[325] For example, if it becomes necessary to remove metered parking bays alongside the site during the
construction period, the local authority may require the contractor to pay for the loss of revenue on such
parking bays.
[326] This provision is not intended to deal with a complaint that the compensation awarded in terms of
clauses 26.4, 26.4.1 to 26.4.3 is inadequate.
[327] A possible example might be where the principal agent instructs the contractor, who has delivered a
load of facebricks to site, to remove these and deliver others of a different colour or texture. The contract value
would be adjusted by substituting the delivered cost of the first load of bricks with the delivered cost of the
second, but this calculation would not take into account the cost of loading and transport of the first load of
bricks back to the brickyard for which he would be entitled to claim in terms of this provision.
[328] This request must be in writing—see clause 1.2.1.
[329] Clause 32.5.3 in the NSSA Edition 4.1 has not been carried over to the NSSA Edition 6.2 and it is
submitted that the principal agent or contractor would need to draw the tenderer’s attention to any changes
made to the standard documentation which are to be included in Bill no 1 or in the priced document. Failure to
point out changes to the standard documentation could lead to a claim for damages by the subcontractor.
[330] This is one of the items of pre-tender information, set out in the CD, which should be conveyed to
tenderers in the tender documents.
[331] See definition in clause 1.1. The nature of the work should be stated, but is not quantifiable. This differs
from a contingency sum, which may be allowed for unforeseen work.
[332] Nominated and selected subcontract amounts are net and do not include a 5% builder’s discount, as
was the case in the Agreement and Schedule of Conditions of Building Contract. It was often thought,
erroneously, that this ‘discount’ was to compensate the contractor for attendance and profit on a subcontractor.
In the JBCC Agreements, the contractor must price for whatever attendance he considers may be necessary,
and for whatever profit he requires.
[333] Any discounts offered by the supplier are to the benefit of the employer, not the contractor.
[334] The prime cost amount in respect of floor tiles, for example, would be a price per square metre as
supplied, and in laying the tiles, the necessary cutting and fitting could result in a wastage of as much as 10 to
15%, particularly if the tiles are being laid to a pattern.
[335] See Tenderer’s Selections in CD section D 4.0 and PBA 26.9.4.
[336] The compilation of the statistics is still undertaken by the Central Bureau of Statistics, but JBCC no
longer publishes the indices.
[337] If applicable. Now referred to as cost fluctuations.
[338] This practice raises difficulties where the date for practical completion is revised due to contract
Copyright © 2019. Juta & Company, Limited. All rights reserved.

instructions for variations, or the action or default of the employer and/or his agents. The contractor is then at
risk for cost increases for an extended period, and the circumstance could well warrant the payment of
compensation in terms of clause 26.2.
[339] Clause 26.1 of the NSSA.
[340] Where the administration of the subcontract is carried out by a specialist consultant, it is usual for the
principal agent to delegate this task to him.
[341] Clause 26.5 and 26.6 of the NSSA.
[342] The amount of the accepted tender is referred to as the contract sum; when this amount has been
adjusted to take account of variations, etc., it is referred to as the contract value.
[343] All such adjustments are made nett, that is, exclusive of VAT, and VAT is deducted from the contract
sum. VAT is then added to the final contract value.
[344] It is not always a good idea to ask the contractor to quote a price for additional work; he will be in a

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
strong bargaining position to quote an unreasonably high price and will be aggrieved when his quotation is
rejected and he is instructed to proceed with the instruction anyway. There are other satisfactory ways of
reaching a fair price for additional work.
[345] The term ‘preliminaries’ refers to that portion of the contract price which relates to the cost to the
contractor of maintaining a presence on site and which is time-variable; hire-charges of plant and scaffolding,
salaries of site managers and insurance premiums are typical examples of such costs. The amount of such
costs may have been identified in the bills of quantities; if not, the adjustment of preliminaries shall be as
indicated in clause D 4.0 in the CD.
[346] General preliminaries clause D 4.0 Option B.
[347] Employer allowances mean monetary allowances which the contractor is required to include in his
tender price for work which is anticipated will be required but the exact nature of which is not known at the time
of tendering. It also includes allowances for unforeseen requirements.
[348] Ceramic floor and wall tiles are frequently the subject of prime cost items. The wastage when cutting,
fitting and fixing such tiles can be high, especially when the tiles are large and where the tiles are required to
be laid to patterns.
[349] Where it is found on opening up and testing work that the work is not in compliance with the
agreement, the cost of such opening up and testing would be to the contractor’s account.
[350] Most, if not all of the work necessary to compile this final account will have been progressively done in
the preparation of the monthly statements in terms of clause 25.3.
[351] Clause 28.1.2 of the NSSA.
[352] Clause 28.1.3 of the NSSA.
[353] Clauses 28.1.4 and 28.1.5 of the NSSA.
[354] Strictly speaking, this is not the default of the employer but of his principal agent. But the employer is
vicariously responsible for the defaults of an agent.
[355] A breach of a material term of the agreement would, among others, be one of the breaches that would
entitle the employer or the contractor to terminate in terms of clause 29.0.
[356] Such circumstances could include a strike for a lengthy period, the site being expropriated, or rejection
of the plans by the local authority on the grounds that the site was not zoned for the type of building being
erected. The impossibility must be total impossibility and not merely that performance by one of the parties had
become particularly difficult.
[357] Hamilton Turner, an eminent London quantity surveyor, writing in 1929 in ‘Architectural Practice and
Procedure’ (Batsford, London), stated that he had never been professionally involved in an arbitration, and
attributed this to the ability of parties to building contracts to settle their differences in an intelligent and
amicable fashion. How things have changed!
[358] Provisional bill of quantities were devised to meet the demand for fast-tracking and have now almost
completely taken the place of conventional bills of quantities, other than in OoS contracts.
[359] At the time of writing, the construction industry is experiencing a slowdown of work, but other factors,
such as the scarcity and increased cost of labour and materials also contribute to trading losses which in turn
give rise to disputes.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[360] Kathmer Investments (Pty) Ltd v Woolworths (Pty) Ltd 1970 (2) SA 498 (A).
[361] Wayland v Everite Group Ltd 1993 (3) SA 946 (W). In such case, the remedy for the party who wishes
to uphold the contract and avail himself of the benefit of arbitration would be to apply to court for a declaratory
order that the contract, and with it, the arbitration agreement, was valid.
[362] Withinshaw Properties (Pty) Ltd v Dura Construction Co (SA) (Pty) Ltd 1989 (4) SA 1073 (A); Telecall
(Pty) Ltd v Logan 2000 (2) 782 (SCA).
[363] It is said to be res judicata. This state of finality is, of course, subject to any right of appeal that the
unsuccessful party may have to a higher court.
[364] S 6 of the Arbitration Act 42 of 1965. In Universiteit van Stellenbosch v J A Louw (Edms) Bpk 1983 (4)
SA 321 (A) the court decided, for policy reasons, to overrule an application for a stay of proceedings, thereby
denying the parties the right to submit their dispute to arbitration in terms of the agreement.
[365] This time lapse had clearly not been the intention of the legislature when it enacted the Arbitration Act

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
in 1965. S 23(a) of the Act requires the arbitrator to make his award within four months of entering on the
reference, although there is provision for such time to be extended by the parties or the court on good cause
shown.
[366] In this respect the procedure is fundamentally different from the position where there is an appeal
against a judgment in litigation or against an award in an arbitration. Where an appeal is lodged against a
judgment or an award, the judgment or award is not executed until the appeal either upholds or varies the
original judgment or award. But in adjudication, if an adjudicator awards payment to the contractor, the
employer must pay at once and dispute the decision later. If in the subsequent arbitration it is held that the
contractor had been entitled to a lesser amount, the contractor would be required to refund to the employer the
amount of the over-payment.
[367] He is not an officer of the court—he may be an architect, engineer, quantity surveyor or even a retired
judge.
[368] A rare exception is provided by Management Rule 71 under the Sectional Titles Act 95 of 1986 as
amended, which requires that any dispute between the body corporate and any owner, or between owners
relating to any matter regulated by the Act shall be determined by arbitration.
[369] But once he has agreed to submit the dispute to arbitration, he will be bound by his agreement and
would not be permitted unilaterally to withdraw it.
[370] It has even been suggested that the traditional African custom of submitting disputes to be determined
by the elders of the tribe gathered in the shade of a tree is a form of arbitration.
[371] This is the common-law position—Johannes Voet: Commentarius ad Pandectas. The Arbitration Act
makes no stipulation about the qualifications to act as arbitrator.
[372] The Association of Arbitrators (Southern Africa) NPC, which is concerned with the promotion of
arbitration and the training of arbitrators, is in a position to offer advice on the appointment of suitable, well-
qualified and experienced arbitrators.
[373] See Section 1 — chapter 1.3 above.
[374] Curiously, the Arbitration Act does not require the written agreement to be signed by the parties—see
Fassler Kamstra & Holmes v Stallion Group of Companies (Pty) Ltd 1992 (3) SA 825 (W). An agreement may
be partly in writing and partly oral, as when in oral negotiations it is agreed that the terms of a standard form
agreement, such as JBCC PBA, which contains an arbitration clause, shall apply, and in Zambia Steel &
Building Supplies Ltd v James Clark & Eaton Ltd [1986] 2 Lloyds Rep 225 (CA) it was held that such arbitration
clause constituted a valid and binding arbitration agreement.
[375] S 6(1) of the Arbitration Act.
[376] S 5(1) of the Arbitration Act.
[377] S 4(1) of the Arbitration Act.
[378] S 12 of the Arbitration Act.
[379] S 20 of the Arbitration Act.
[380] S 28 of the Arbitration Act. A provision in an arbitration agreement for an appeal against the award is
very rarely encountered. If so, the appeal must be to another arbitrator; the court will not hear the appeal —
see Goldschmidt v Folb 1974 (1) SA 576 (T).
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[381] S 31(1) of the Arbitration Act.

[382] S 32 of the Arbitration Act.
[383] S 33 of the Arbitration Act.
[384] In Dickinson & Brown v Fisher’s Executors 1915 AD 166, Solomon JA stated: ‘Where an arbitrator has
given fair consideration to the matter which has been submitted to him for decision, I think it would be
impossible to hold that he had been guilty of misconduct merely because he made a bona fide mistake of law
or of fact’.
[385] The Association of Arbitrators (Southern Africa) NPC publishes rules for the conduct of arbitrations
which are normally used by arbitrators. These rules are updated and revised from time to time and at the time
of writing the current rules aplicable are Edition 7. The Standard Procedure Rules are closely based on the
UNCITRAL Arbitration Rules (2010) and shall apply to the conduct of an arbitration under the Association’s
Rules, unless the parties agree to vary these Rules or to adopt the Restricted Representation Arbitration Rules

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
(formerly the Summary Procedure Rules). These Rules provide for ad hoc arbitration based on the UNCITRAL
Arbitration Rules (2010), with the Association of Arbitrators (Southern Africa) NPC assuming the role of the
parties’ chosen appointing authority. Certain changes and additions have been made to facilitate the
application of the Rules in the context of current arbitration legislation in Southern Africa.
[386] An arbitrator who fails to permit a party to present its case or is biased or has an interest in the
proceedings may, on the application of one of the parties, be removed by the courts in terms of s 13(2) of the
Arbitration Act. The parties may agree on the appointment of a new arbitrator, or follow the original
appointment procedure, or apply to court for the appointment of an arbitrator in terms of s 12 of the Arbitration
Act.
[387] The Association of Arbitrators conducts training courses for arbitrators, and the Chairman has lists of
suitably qualified arbitrators that he can draw on, who are expert in various fields and who practise in various
parts of the country.
[388] The audi alteram partem rule.
[389] Herein lies a strong argument for appointing as arbitrator someone who is well versed in the conduct of
arbitrations, who can guide the proceedings along appropriate and cost-effective lines and who will not allow
himself to be manipulated by a party who wishes to subvert the process.
[390] It is not unusual for parties in arbitrations to be represented by architects, quantity surveyors or other
non-legal professionals, rather than by advocates or attorneys.
[391] Unlike the manner in which an adjudicator should deal with a dispute. Thus, for example, a quantity
surveyor appointed as arbitrator may not value disputed work on the basis of his own expert knowledge,
unless specifically authorised to do so; he must make his valuation on the basis of the evidence that is put
before him.
[392] This is the standard of proof in civil cases in the courts. It is not necessary for the claimant to prove his
claim ‘beyond all reasonable doubt’, it is sufficient if the arbitrator considers that his version of the dispute is
more likely to be correct than the defendant’s.
[393] The Agreement is silent on the requirement for a reasoned award and the arbitrator will be required to
follow the terms of his appointment as agreed by the parties and the rules under which the arbitration is
conducted
[394] In accordance with s 35 of the Arbitration Act.
[395] A party does not have to win on all points to be substantially successful, and even if he wins on only a
portion of his claims, he will be held to be substantially successful and entitled to his costs. In John Sisk & Son
(Pty) Ltd v Urban Foundation 1987 (3) SA 190 (N) the arbitrator awarded the contractor approximately half of
what he claimed. The court held that the contractor had been substantially successful and ordered the other
party to pay his costs.
[396] Unless specifically agreed by the parties—s 28 of the Arbitration Act.
[397] S 32 of the Arbitration Act.
[398] Such as receiving a bribe—s 33 of the Arbitration Act. In Steeledale Cladding (Pty) Ltd v Parsons NO
and Another 2001 (2) SA 663 (D), the arbitrator’s award was set aside because he based it on evidence and
legal argument that had not been put to him in the proceedings.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[399] Clause 30.8.2.

[400] This is not laid down in the Agreements, but is frequently a rule laid down by the mediator. Under the
common law, evidence of discussions and negotiatiions between the parties with the bona fide intention of
trying to reach a settlement, may not be admitted at any subsequent hearing in litigation or arbitration. The law
encourages disputants to attempt to resolve their differences by casting a veil of confidentiality over offers that
a party might make in settlement discussions which might be turned to his disadvantage in subsequent
proceedings if the negotiations failed. By the same token, either party may object to a mediator giving evidence
in subsequent proceedings about anything that was said or done in the mediation.
[401] Fassler, Kamstra & Holmes v Stallion Group of Companies (Pty) Ltd 1992 (3) SA 825 (W).
[402] Provided that an adjudicator has already been appointed or that agreement can quickly be reached on
the appointment of an adjudicator, it might be possible to have the adjudicator inspect the work and make a
determination at very short notice, possibly only a few days, thus resolving the dispute on the quality of the
work before the contractor is obliged to carry out the instruction. But the possibility remains that the adjudicator

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
might reject the work and the contractor might reject the adjudicator’s determination, leaving the dispute
unresolved and the evidence required to be destroyed.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 293

Minor Works Agreement (MWA)

3.1 Introduction
After the first democratic elections in 1994, the State adopted a policy of channelling
construction work on State projects [1] towards historically disadvantaged and
emerging contractors wherever possible.
It quickly became apparent that existing standard form construction agreements
were inadequate for the purpose: they were too complex for unsophisticated and
inexperienced contractors to understand, they required them to be liable for risks
which they were incapable of handling, and they required a level of organisation and
management that lay beyond their capabilities.
JBCC sought to fill the need with the first edition of the MWA which was published
in 1999. In this Agreement many of the usual contractual provisions were simplified
or even eliminated:
(a) The risks of loss or damage to the works and to the property of third parties
and the risk of injury to or death of third parties were borne by the employer
who was required to take out the necessary insurances.
(b) Payments were to be made to the contractor at fortnightly intervals to improve
his cash flow.
(c) There was no provision for nominated or selected subcontractors nor
Copyright © 2019. Juta & Company, Limited. All rights reserved.

provision for any agent other than the principal agent.

(d) There was no provision for bills of quantities.
Unfortunately there were features of the document which the State found
unacceptable, and despite the need for a simplified form of agreement it was seldom
used for State projects. But in the private sector it found ready acceptance for small
projects, particularly alterations and additions, and despite its limitations it has been
quite extensively used.

Page 294

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
Since then there have been many discussions with State officials and much fine-
tuning of the initial proposals, culminating in the publication in September 2005 of
the third edition.
Much of the original approach and content of the first edition remains, but
inevitably some of the simplicity of the first edition has been lost. Nor has it been
possible to produce a single set of contractual terms that is wholly acceptable to both
the public and the private sectors, with the result that, like the PBA, some of the
provisions that are applicable when the agreement used in the private sector are
replaced with alternative provisions where it is used for State work.

3.2 When to use it; when not to use it

The JBCC PBA is a comprehensive building agreement that makes provision for
almost every conceivable contractual situation. Contrary to what is sometimes
thought, its use is not intended to be limited to major building projects; it is entirely
satisfactory for small industrial and commercial buildings, domestic dwelling houses
and even alteration and addition projects. But while on the larger projects the
members of the professional team and the contractor’s management personnel can
be expected to be thoroughly familiar with its provisions and adept at applying them
in appropriate circumstances, those who are regularly involved in the smaller and
simpler projects may lack the knowledge and experience to understand and apply it,
and this is especially true of emerging contractors.
The decision, in any particular instance, whether to use the PBA or the MWA
should involve a critical examination of the complexity of the project and an
assessment whether the MWA can be expected to deal with the type of situations
that may be expected to arise. The size of the project is one of the criteria but by no
means the only one—a large building of very simple design and the minimum of
mechanical and electrical equipment might be a much more appropriate subject for
the MWA than a much smaller but technically involved building extensively serviced
with electrical and mechanical installations.
Some of the criteria that should be considered are the following:
Copyright © 2019. Juta & Company, Limited. All rights reserved.

• The MWA makes no provision for nominated or selected subcontractors, and

items of specialised work that would otherwise be done by them must perforce
be carried out by independent direct contractors employed by the employer.
While this arrangement might be tolerable where there are only a few such
direct contractors employed, the situation would become unmanageable
where there are many.

Page 295

• There is no provision for the adjustment of the contract amount to compensate

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
the contractor for cost increases due to inflation. The Agreement should not
therefore be used when a long construction period is anticipated.
• The employer is at risk for the cost of making good any loss or damage to the
works. [2]
• The requirements in the MWA for the contractor to apply for and receive an
extension of time are considerably easier than in the PBA. This may be
significant where the construction period is short and the penalties for non-
completion are high.
• The option of retention rather than a construction guarantee is a great
attraction to smaller and less sophisticated contractors, and also to some
employers and principal agents, but it must be borne in mind that it offers less
protection to the employer than does a guarantee for construction. Moreover,
the MWA Guarantee for Construction provides the employer with somewhat
less protection than does the Variable Guarantee for Construction used with
the PBA. [3]

3.3 The structure of the Agreement

There is a strong family resemblance between the MWA and the PBA. The
document starts with definitions, and these are, as far as possible, identical with
those used in the PBA, and bold typeface has been used to indicate where words
used in the text have the particular meaning conferred on them by the definitions.
The interpretations and usages set out in clauses 1.2.1 to 1.2.5 of the MWA are
substantially the same as clauses 1.2.1 to 1.2.5 of the PBA; thus, for example, the
words ‘approve’, ‘appoint’, ‘certify’, ‘notify’, etc., denote acts to be carried out in
writing.
Clause 4.4 precludes the parties from publishing or disclosing the content of the
priced document without the written consent of the parties. [4]
Finally, the variables that are specific to a particular contract are set out in the CD,
and these are divided into the variables that comprise information that is provided to
tenderers, [5] and information provided by the tenderer. [6]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 296

The Agreement is intended to be used with its own forms, such as the MWA
Payment Certificate, the MWA Guarantee for Construction (variable), the MWA
Guarantee for Payment, the MWA Guarantee for Advance Payment, Certificates of
Practical and Final Completion, etc. On no account should forms designed for use
with the PBA be used in conjunction with the MWA except in the case of the
Certificate of Site Possession and Waiver of Contractor’s Lien where these forms are
designated for use by both the PBA and the MWA.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
3.4 Entering into the contract and signing the Agreement
Although the Agreement envisages the possibility that a quantity surveyor may be
engaged and that bills of quantities may be prepared, it is submitted that when the
project is sufficiently large and complex to warrant the use of bills of quantities, it
may well be preferable to use the PBA rather than the MWA.
The tender documents should comprise the bills of quantities, [7] or in their
absence a complete set of drawings, specification where applicable, and the priced
document. [8]
Tenders for the work should be submitted on the JBCC Tender Form which forms
part of the CD and makes provision for the contractor to furnish the items of
information that will be necessary for the completion of the Agreement.
The agreement comes into full legal force when the contractor receives notice in
writing from the employer or the principal agent that his tender has been accepted
[clause 3.3]. The Agreement will be signed later by the parties when certain
requirements have been attended to.
Within 15 working days of the acceptance of the tender, the employer, if so
stipulated by the contractor in his tender, is required to furnish the contractor with a
payment guarantee for an amount specified by the contractor [clause 9.2]. The
guarantee shall be issued on the JBCC MWA Guarantee for Payment form by a
financial institution reasonably satisfactory to the contractor. When the Guarantee for
Payment has been furnished to him, the contractor shall furnish the employer with a
JBCC Waiver of Contractor’s Lien [clause 9.2].
Should the contractor state in his tender that he requires a cash advance, he is
required to provide the employer with a JBCC Guarantee for Deposit [clause 9.4].
Within 15 working days of acceptance of his tender, the contractor must submit to
the principal agent a copy of the priced document whether it is the bills of

Page 297
Copyright © 2019. Juta & Company, Limited. All rights reserved.

quantities with all his prices filled in or, where bills of quantities have not been use for
obtaining tenders, the schedule of rates or other pricing document [clause 11.3.1].
Although not specifically stated, as was the case in the JBCC MWA Edition 4.0,
the principal agent is required to complete the Agreement and prepare the contract
documents for signature. [9] The documents will comprise the MWA, the drawings, [10]
and the bills of quantities or the priced document. The original signed documents will
be held by the principal agent [clause 4.2] and he is required to furnish the employer
and the contractor each with a copy of signed documents [clause 4.2].
It is advisable that the contract only be signed by the parties once the security
[clause 9.0], insurances [clause 8.0] have been provided by the respective parties

Minor Works Agreement (MWA)

The Joint Building Contracts Committee®—NPC

Minor Works Agreement
Edition 5.2 – May 2018

©Copyright reserved: JBCC® Minor Works Agreement, Edition 5.2—May 2018.

This page does not form part of the JBCC® Minor Works Agreement, Edition 5.2—May 2018. Agreement,
Edition 5.2—May 2018

Page 298

Minor Works Agreement structure

The agreement clauses follow the project execution sequence. The documents aim
Copyright © 2019. Juta & Company, Limited. All rights reserved.

to set out clear, balanced and enforceable procedures, rights and obligations which,
when competently managed and administered, protect the employer, contractor and
subcontractors alike. The following additional documents form part of the suite of
contract agreements:
• The JBCC® Minor Works Agreement Contract Data that incorporates specific
employer and contractor requirements
• The JBCC® General Preliminaries that covers all aspects of preliminaries for
most types of projects
This agreement is intended for use where:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
• The works are not complex
The employer appoints:
• A principal agent to administer the agreement and or other agents for specific
aspects of the works
• Direct contractors for specialised work or installation not undertaken by the
contractor
This agreement is suitable but not limited for use where:
• The contractor is a small to medium enterprise
• The employer carries the major liabilities related to the works
• The employer is responsible for the primary insurances related to the works
This agreement is not suitable where the works requires:
• The appointment of nominated or selected subcontractors
• Cost fluctuations
and is not considered suitable where:
• The anticipated construction period is longer than nine months
• The necessary contract documentation is not complete and available at tender
stage
• Completion in sections is required

Page 299

Warning
This JBCC® Minor Works Agreement Edition 5.2 has been coordinated with the
JBCC® General Preliminaries and the certificate forms and support documents.
Forms from previous editions are not compatible with the JBCC® Minor Works
Agreement Edition 5.2
Persons entering into or preparing contracts using the JBCC® suite of contract
agreements and support documents are warned of the dangers inherent in modifying
any part of it.
Experience has shown that changes drafted by others, including members of the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

building professions, often have results that may be prejudicial to either, or both,
parties
Disclaimer
While the JBCC® aims to ensure that its publications represent best practice, it does
not accept or assume any liability or responsibility for any events or consequences
which derive from the use of the JBCC® documents
Copyright reserved

® ®

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
The name ‘The Joint Building Contracts Committee® NPC’, the abbreviation JBCC®,
the electronic version e-JBCC® and the JBCC® logo are registered trademarks. The
JBCC® claims authorship of this work. All rights are reserved. No part of this
publication may be reproduced, stored in any retrieval system or transmitted in any
form or by any means, electronic, mechanical, photocopying, scanning, recording, or
otherwise, without the prior permission in writing of the JBCC®
Unauthorised reproduction of the work is an infringement of the copyright. Judicial
proceedings can and will be instituted to obtain relief and recovery of damages

Page 300

Actions by the parties/principal agent within a given time

Clause Time period Action Purpose

2.4 1–7 CD WD parties or principal agent notices deemed to be received
5.4 5 WD contractor > PA > employer non-performance of an agent i.t.o. this
agreement
5.5 5 WD contractor > PA > employer non-performance of an agent i.t.o. this
agreement
5.5 10 WD employer inability to act, replace/appoint another
agent i.t.o. this agreement
8.0 before start employer works risk/public liability/supplementary
insurance
9.3.1 15 WD parties provide securities
9.3.2 20 WD parties provide replacement securities

9.3.3 parties adjust security value if contract value
increased by 10%+
9.3.4 10 WD parties return original security form on expiry
11.1 15 WD contractor provide security/priced
document/programme
11.2.6 10 WD contractor commence works
12.0 before start principal agent + agents setting out information
14.3 5 WD contractor carry out a contract instruction, where
practical
Copyright © 2019. Juta & Company, Limited. All rights reserved.

15.2.2 5 WD contractor > principal agent notice to inspect for practical completion

15.3 principal agent > contractor list for practical completion after
inspection
15.4 5 + 5 WD contractor > principal agent no ‘list’ > notice > deemed practically
complete
16.3 5 WD principal agent > contractor updated list for final completion after
inspection
17.4.1 10 WD principal agent revised date for practical completion
17.4.2 10 WD principal agent adjustment of the contract value
19.2 date [CD] PA > contractor/employer issue payment certificate and support
forms

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
19.9 14 CD employer pay contractor make payment from date of payment
certificate
19.10 21 CD contractor pay employer i.t.o. schedule from principal agent
19.11 3 WD notice contractor > employer no payment, notice to suspend/call on
security/termination
19.12 5 WD principal agent > contractor final payment certificate after certificate
of final completion/accept final account
20.5 notice contractor > principal agent notice of possible expense and loss
20.8 30 WD principal agent prepare final account after date of
practical completion
20.9 15 WD Contractor accept final account
20.10 10 WD contractor > principal agent notice dispute final account/resolve
issues and issue final account
21.2 5 WD notice employer (PA) > contractor list of defaults to be remedied g suspend
works
21.45 SWD notice employer > contractor intention to terminate if default not
remedied
21.5 forthwith employer > contractor termination
21.7 10 WD contractor > employer intention to suspend/terminate if defaults
not remedied
21.14.1 10 WD Contractor remove construction equipment after
termination
21.20 20 WD principal agent (+ contractor?) prepare status report
21.22 30 WD principal agent (+ contractor?) complete and agree final account
22.1 notice either party notice of a disagreement
22.2 10 WD either party disagreement not resolved > dispute
22.5.4 10 + 10 WD either party no determination > notice, no
determination > arbitration

Page 301

Minor Works Agreement

Table of Contents
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Section Clause No Description

INTERPRETATION 1.0 Definitions and Interpretation

2.0 Law, regulations and notices

3.0 Offer, acceptance and assignment

4.0 Documents

5.0 Employer’s agents

6.0 Principal agent

7.0 Design responsibility

INSURANCES AND SECURITIES 8.0 Risks, indemnities and insurances

9.0 Securities

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.

EXECUTION 10.0 Obligations of the employer

11.0 Obligations of the contractor

12.0 Setting out

13.0 Direct contractors

14.0 Contract instructions

COMPLETION 15.0 Practical completion

16.0 Defects liability period and Final completion

17.0 Revision of the date for practical Completion

18.0 Penalty for late or non-completion

PAYMENT 19.0 Payment

20.0 Adjustment of the contract value and final account

SUSPENSION AND TERMINATION 21.0 Suspension or termination

DISPUTE RESOLUTION 22.0 Dispute resolution

AGREEMENT MVA Contract Data

Page 302

Interpretation
Chapter 1
Definitions and interpretation

1.1 Definitions
A word or phrase in bold type in this agreement shall have the meaning assigned to
it in these definitions
A word or phrase not in bold type shall be interpreted in the context of its usage
AGENT: An entity [CD] appointed by the employer to deal with specific aspects
Copyright © 2019. Juta & Company, Limited. All rights reserved.

of the works
AGREEMENT: The JBCC® Minor Works Agreement and the JBCC® contract
data, the contract drawings, the specification, the priced document and any other
documents reduced to writing and signed by the authorised representatives of the
parties
BILLS OF QUANTITIES: The document drawn up in accordance with the
measuring system [CD]
CALENDAR DAYS: Twenty four (24) hour days commencing at midnight (00:00)

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
which include Saturdays, Sundays, proclaimed public holidays and recorded
contractor’s annual holiday periods [CD]
CERTIFICATE of FINAL COMPLETION: A certificate issued by the principal
agent to the contractor with a copy to the employer stating the date on which final
completion of the works was achieved
CERTIFICATE of PRACTICAL COMPLETION: A certificate issued by the
principal agent to the contractor with a copy to the employer stating the date on
which practical completion of the works was achieved
CONSTRUCTION EQUIPMENT: Equipment and/or plant provided by or
belonging to the contractor used during the construction period
CONSTRUCTION INFORMATION: All information issued by the principal agent
and/or agents including this agreement, specifications, drawings, schedules,
notices and contract instructions required for the execution of the works
CONSTRUCTION PERIOD: The period commencing on the date [CD] of
possession of the site by the contractor and ending on the date of practical
completion

Page 303

CONTRACT DATA: The document listing the project specific information

[CD]: The notation used where additional information is recorded in the contract
data
CONTRACT DRAWINGS: The drawings listed [CD]
CONTRACT INSTRUCTION: A written instruction issued by or under the
authority of the principal agent to the contractor, which may include drawings,
photographs and other construction information
CONTRACT MINUTES: A comprehensive set of minutes prepared by the
principal agent in which all pertinent contractual information that arises at meetings
is progressively recorded
Copyright © 2019. Juta & Company, Limited. All rights reserved.

CONTRACT SUM: The accepted tender amount, inclusive of tax [CD] that is not
subject to adjustment
CONTRACT VALUE: A monetary value initially equal to the contract sum,
inclusive of tax that is subject to adjustment in terms of this agreement
CONTRACTOR: The party [CD] contracting with the employer for the execution
of the works
DEFAULT INTEREST: Interest at six (6) percentage points per annum above the
ruling rate of interest where payment has not been received within the stipulated

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
period compounded monthly from the due date for payment until the date of payment
DEFECT: Any aspect of materials and workmanship forming part of the works
that does not conform to the agreement and/or construction information
DIRECT CONTRACTOR: An entity appointed under separate agreement by the
employer to do work on site prior to practical completion [CD]
EMPLOYER: The party [CD] contracting with the contractor
EMPLOYER’S ALLOWANCE: An amount excluding the contractor’s mark-up
included in the contract sum for work intended for execution by the contractor, or
by others, the extent of which is identified but not detailed
FINAL ACCOUNT: The document prepared by the principal agent that reflects
the final contract value of the works at final completion or termination
FINAL COMPLETION: The stage of completion of the works as certified by the
principal agent where the works has been completed and is free of defects

Page 304

FINAL PAYMENT CERTIFICATE: The certificate issued by the principal agent

after the issue of the certificate of final completion and after the final account has
been agreed
FORCE MAJEURE: An exceptional event or circumstance that:
• Could not have been reasonably foreseen
• Is beyond the control of the parties, and
• Could not reasonably have been avoided or overcome
Such an event may include but is not limited to:
• Acts of war (declared or not), invasion, and/or hostile acts of foreign enemies
• Insurrection, rebellion, revolution, military or usurped power, war and terrorism
• Civil commotion, disorder, riots, strike, lockout by persons other than the
contractor’s employees or his subcontractors
• Sonic shock waves caused by aircraft or other aerial devices, and ionising or
Copyright © 2019. Juta & Company, Limited. All rights reserved.

radioactive contamination
• Explosive materials, except where attributable to the contractor’s use of such
technology
• Natural catastrophes including earthquakes, floods, hurricanes, or volcanic
activity
FREE ISSUE: Materials and goods provided at no cost to the contractor by the
employer for inclusion in the works [CD]
GUARANTEE for ADVANCE PAYMENT: A security in terms of the JBCC®
Guarantee for Advance Payment form, obtained by the contractor from an

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
institution approved by the employer
GUARANTEE for CONSTRUCTION: A security in terms of the JBCC®
Guarantee for Construction form, obtained by the contractor from an institution
approved by the employer
GUARANTEE for PAYMENT: A security in terms of the JBCC® Guarantee for
Payment form obtained by the employer from an institution approved by the
contractor
INTEREST: The bank rate applicable from time to time to registered banks
borrowing money from the Central or Reserve Bank of the country [CD]. The ruling
bank rate on the first calendar day of each month shall be used in calculating the
interest due for such month
JBCC®: The Joint Building Contracts Committee® NPC

Page 305

LATENT DEFECT: A defect that a reasonable inspection of the works by the

principal agent and/or agents would not have revealed
LAW: The law of the country [CD]
LIST FOR COMPLETION: A list that may include marked up drawings and
photographs issued by the principal agent where practical completion has been
certified, listing defects and/or outstanding work to be completed
LIST FOR FINAL COMPLETION: A list that may include marked up drawing and
photographs issued by the principal agent after the inspection of the works for
final completion, where final completion has not been achieved, listing defects
and/or outstanding work to be completed to achieve final completion
LIST FOR PRACTICAL COMPLETION: A comprehensive and conclusive list that
may include marked up drawings and photographs issued by the principal agent
after the inspection of the works for practical completion, where practical
completion has not been achieved, listing the defects and/or outstanding work to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

be completed to achieve practical completion

MATERIALS AND GOODS: Unfixed materials, goods and/or items prefabricated
for inclusion in the works whether stored on or off the site or in transit
NOTICE: A written communication, excluding social media, issued by either
party, the principal agent and/or agents to the other party, the principal agent
and/or agents to, inter alia, record an event, request outstanding construction
information and/or where suspension and or resumption of the works and/or
termination of this agreement is contemplated
PARTY: The employer and/or the contractor and ‘parties’ shall refer to both of

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
them
PAYMENT CERTIFICATE: A certificate issued at regular agreed intervals [CD] by
the principal agent to the parties certifying the amount due and payable in terms of
the JBCC® Payment Certificate format
PAYMENT REDUCTION: The security selected by the contractor as a payment
reduction from the value certified in a payment certificate. The principal agent
shall withhold ten per cent (10%) of each payment certificate until five per cent
(5%) of the contract sum is reached. Half this amount is released at practical
completion and the remainder included in the final payment certificate

Page 306

PENALTY: The stipulated amount per calendar day [CD] payable by the
contractor to the employer where the date or the revised date for practical
completion, whichever is the later, has not been met
PRACTICAL COMPLETION: The stage of completion as certified by the
principal agent where the works has been completed and is free of patent defects
other than minor defects identified in the list for completion and can be used for
the intended purpose [CD]
PRELIMINARIES: The JBCC® General Preliminaries and/or the items listed in
the preliminaries section of the priced document
PRICED DOCUMENT: The document incorporating quantities and/or rates used
in the compilation of the contract sum such as bills of quantities, preliminaries
and schedule of rates
PRIME COST AMOUNT: An amount included in the contract sum for the
delivered cost of materials and goods obtained from a supplier as instructed by the
principal agent
PRINCIPAL AGENT: The entity [CD] appointed by the employer with full
authority and obligation to act in terms of this agreement
Copyright © 2019. Juta & Company, Limited. All rights reserved.

PROGRAMME: A diagrammatic representation of the planned execution of units

of work or activities indicating the dates for commencement and completion
prepared and maintained by the contractor
SECURITY: A monetary guarantee [CD] provided by the employer to the
contractor, or vice versa, in terms of this agreement [CD] from which either party
may recover expense and loss in the event of default
SITE: The land, or place, where the works is to be executed [CD]
STATUS REPORT: A report compiled by the principal agent and/or agents in
the event of termination of the agreement, or where the works has been suspended

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
due to a force majeure event, to record the state of completion or otherwise of the
works. Such status report may include marked up drawings and photographs
SUSPENSION: The temporary cessation of the works by the contractor
TAX: Value-added tax, general sales tax or similar consumption tax applicable by
law
WORKING DAYS: Calendar days which exclude Saturdays, Sundays,
proclaimed public holidays and recorded annual contractor’s holiday periods [CD]

Page 307

WORKS: The extent of work to be executed by the contractor described in this

agreement and contract instructions, which includes free issue, and materials
and goods. Work or installations to be executed by direct contractors and others
responsible to the employer are excluded [CD]

Commentary
1.0 Definitions
The definitions in the MWA closely follow those found in the PBA, with a few
exceptions where defined items are not applicable or where new definitions have
been introduced. The new definitions introduced and those existing definitions which
have either been reworded or omitted altogether are highlighted hereunder. As an
example, budgetary allowance, provisional sum, recovery statement, section and
subcontractor have been omitted and the previous definition for Construction
Guarantee is now defined under the heading of Guarantee for Construction and has
been grouped with definitions for Guarantee for Payment and Guarantee for
Advance Payment.
The definition of Agreement has been expanded to include the contract data, the
contract drawings, the specifications, the priced document and any other documents
reduced to writing and signed by the authorised representatives of the parties. The
definition of contract documents has been omitted as the term Agreement now
Copyright © 2019. Juta & Company, Limited. All rights reserved.

replaces contract documents. Similarly, the previous definition for Practical

Completion Certificate is now defined under the heading of Certificate for Practical
Completion and grouped with Certificate for Final Completion.
New definitions include Construction equipment, Construction information, [CD],
Employer’s allowance, Final payment certificate, Force Majeure, Free Issue,
Guarantee for Advance Payment as in the PBA, Guarantee for Construction,
Guarantee for Payment, List for completion, List for final completion, List for practical
completion, Notice, Preliminaries, Status report and Suspension. The definition for
Practical Completion has been revised in that the words ’in the opinion of the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
principal agent’ have been omitted and a detailed description as to the stage of
practical completion required for the specific building type and employer’s
requirements is to be described in the CD to enable tenderers to price for such stage
of completion in their tenders —recommended examples of the description for
practical completion for various building types are to be found in Section 5.

Page 308

1.2 Interpretation
1.2.1 The words ‘accept, allow, appoint, approve, authorise, certify, decide,
demand, designate, grant, inform, instruct, issue, list, notice, notify, object,
record, reduce, refuse, request, state’ and their derivatives require such
acts to be in writing
1.2.2 The masculine gender includes the feminine and neuter genders and vice
versa, the singular includes the plural vice versa, and a person includes
juristic or artificial persons
1.2.3 The headings of clauses are for reference purposes only and shall not be
used in interpretation
1.2.4 Reference to a clause number written as [54.3.2] means that specific
clause; clause [54.3.2–4] means sub-clauses 2 to 4 inclusively; or clause
[54.3.2 & 4] means the sub-clauses 2 and 4 only
1.2.5 The word ‘deemed’ shall be conclusive that something is fact, regardless
of the objective truth

Page 309

Chapter 2
Law, Regulations and notices
2.1 The parties shall comply with the law [CD], obtain permits, licences and
approvals and pay related charges for the execution of the works. The
employer shall obtain permits, planning, building or similar permissions
and pay charges for the works other than those which are the
responsibility of the contractor
2.2 All communication or notices between the parties shall be in the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
language of this agreement and in a form that can be read, copied and
recorded
2.3 Legal processes arising out of or concerning this agreement may validly
be delivered to and served on the parties at the physical address of the
parties recorded in this agreement. Either party may, at any time, by notice
to the other, change his physical address provided that it is in the same
country
2.4 Notices given in terms of this agreement shall be deemed to have been
received where:
2.4.1 Delivered by hand – on the day of delivery
2.4.2 Sent by electronic mail, excluding social media – within one
(1) working day
2.4.3 Sent by registered post – within seven (7) calendar days
after posting

Commentary
2.0 The obligation to comply with statutory requirements
The contractor is required to carry out the works in strict compliance with the
drawings, specifications and any further drawings and contract instructions that may
be issued from time to time by the principal agent. He must comply with all the
relevant laws, regulations and bylaws when doing so, and where such compliance
requires a variation to the works, such change or variation shall be deemed to be a
contract instruction with which he shall comply. It may happen that the drawings may
require the contractor to carry out work which does not comply with such regulations
in one or other respect. In such case, the contractor must depart from the drawings
to the extent necessary to comply with the statutory requirements—he cannot be
compelled by contract to break the law. It cannot be expected that emerging
contractors, who would most likely carry out the building work in terms of the MWA,
would be fully conversant with the applicable regulations and the onus is on the
employer to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 310

furnish drawings and specifications of work that conform to the regulations, and if it
does not, to amend them to the extent necessary.
When the contractor becomes aware that the work as shown on the drawings
does not conform to a particular statutory regulation, he must request a contract
instruction as to how to proceed. If this is not forthcoming he must proceed in
accordance with what the regulation requires.
Contractors who contract for the erection of residential units are required by the
[11]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
Housing Consumers Protection Measures Act [11] to register as home builders with
the National Home Builders’ Registration Council, to enroll each house that they
contract to build, and to build in conformity with good building practice as set out in
the NHBRC Home Building Manual. This legislation is intended to safeguard the
interests of home owners, more particularly those who do not employ architects as
principal agents and do not use the JBCC documents but deal directly with the
contractor on his own terms.

Page 311

Chapter 3
Offer, Acceptance and assignment
3.1 The objective of this agreement is the execution of and payment for the
works for which there has been an offer by the contractor and an
acceptance by the employer
3.2 The currency applicable to this agreement is as recorded [CD]
3.3 This agreement shall come into force on the date of acceptance by the
employer and continue to be of force and effect until the end of the latent
defects liability period [16.0] – notwithstanding termination [21.0] or the
certification of final completion [16.2.2] and final payment [19.8]
3.4 Should any provision of this agreement be unenforceable the parties
shall act in good faith to agree to alternative provisions in terms of this
agreement
3.5 Failure or omission by a party to enforce any provision of this agreement
shall not constitute a waiver of such provision or affect such party’s rights
to require the performance of such provision in the future
3.6 Neither party shall assign or cede rights or assign rights and obligations
under this agreement without the prior written consent of the other party,
which consent shall not be unreasonably withheld

Commentary
Copyright © 2019. Juta & Company, Limited. All rights reserved.

3.0 Offer, acceptance and assignment

The tender documents should comprise the bills of quantities where applicable, or in
their absence, a complete set of drawings, the specification which is to include the
preliminaries and the contract data which includes the form of tender. The tenderers
will be required to complete their portion of the contract data for submission with a
priced document with their tenders. The priced document means the document
providing the lump-sum amount priced by the tenderer to reflect the contract sum
and is based on the contract documents where bills of quantities are not used. Such
a document may include the general preliminaries and a schedule of rates drawn up

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
according to the measuring system stated in the contract data.
The agreement comes into full legal force when the contractor receives notice in
writing from the employer or principal agent, on his behalf, that his tender has been
accepted [clause 3.3].
Clause 3.6 prohibits either party from assigning or ceding their rights and or
obligations under this agreement without prior written consent of the other party,
which consent shall not be withheld without good reason.

Page 312

Chapter 4
Documents
4.1 Documents referred to in this agreement shall mean the current edition
thereof with all amendments thereto as at the date of submission of the
contractor’s tender
4.2 The parties shall sign the original agreement and shall each be issued
with a copy thereof. The original signed agreement shall be held by the
principal agent [CD]
4.3 The priced documents shall not be used as a specification of materials
and goods or methods
4.4 The content of this agreement shall not be published or disclosed or used
for any purpose other than that specified in this agreement
4.5 The principal agent and/or agents shall timeously provide the number of
copies of drawings, un-priced bills of quantities and other construction
information at no cost to the contractor [CD]

Commentary
4.0 Documents
The agreement will consist of the MWA, the drawings on which the accepted tender
or negotiated amount was based, the bills of quantities where applicable or the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

priced document, the specification, general preliminaries and any other documents
identified in the CD. The principal agent will prepare the contract documents for
signature by the parties, and once signed, he will issue a copy of the signed contract
documents to each party and will retain the original signed documents for
safekeeping [clause 4.2]. The principal agent and/or agents shall timeously issue to
the contractor the number of copies of drawings, un-priced bills of quantities and
other construction information to the contractor free of charge in terms of the CD
[clause 4.5].
The priced documents shall not be used as a specification of materials and goods

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
or methods [clause 4.3]. It is submitted that the words in this clause could be
interpreted as to forbid the contractor from using the document for the purpose of
ordering materials and goods. In the absence of such wording in the MWA, it would
be prudent for the architect/principal agent to include wording to this effect in the CD
so as to obviate any misunderstanding in this regard.

Page 313

Chapter 5
Employer’s agents
5.1 The employer warrants that the principal agent has full authority and
obligation to act and bind the employer in terms of this agreement. The
principal agent has no authority to amend this agreement
5.2 The employer may appoint agents to deal with specific aspects of the
works in terms of this agreement [CD]. The principal agent shall give
notice to the contractor where such authority is delegated to issue
contract instructions and perform duties for specific aspects of the
works
5.3 The principal agent and/or agents shall declare any interest or
involvement in the works other than a professional interest, where
applicable [CD]
5.4 Where the principal agent fails to act in terms of this agreement and/or
any agent fails to act in terms of delegated authority, the contractor shall
give notice to the principal agent with a copy to the employer to rectify
such default within five (5) working days. Where such default has not
been rectified, the contractor may give notice to suspend the works
5.5 Where the principal agent or any agent fails to act or is unable to act, or
ceases to be the principal agent or an agent in terms of this agreement,
the employer shall appoint another principal agent or agent within ten
(10) working days of the date of such notice from the contractor. The
employer shall not appoint a principal agent or an agent against whom
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the contractor makes reasonable objection within five (5) working days
of receipt of notice of intention to make such an appointment
5.6 The employer shall not interfere with or prevent the principal agent or an
agent from exercising fair and reasonable judgement when performing
their obligations in terms of this agreement

Commentary
5.0 Administering the contract
The administration of the contract is in the hands of the principal agent, appointed by

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
the employer, to whom the employer relinquishes all authority. The employer may
not issue any instructions to the contractor, nor may he attempt to influence the
principal agent in exercising his independent judgment nor prevent nor

Page 314

interfere with his doing so [clause 5.6]. [12] If the principal agent becomes unable to
act, the employer must appoint a new principal agent who meets with the reasonable
approval of the contractor [clause 5.5].
The employer may appoint other agents as well [clause 5.2], and may need to
appoint as agent a structural engineer for the structural aspects of the building.

Page 315

Chapter 6
Principal agent
6.1 The principal agent shall:
6.1.1 Administer this agreement
6.1.2 Meet regularly with the contractor and agents to monitor
progress of the works, and to deal with technical and
coordination matters. The principal agent shall record and
timeously distribute the contract minutes of such meetings
6.1.3 Issue construction information timeously
6.1.4 Give the contractor interpretations and direction on the
standard of work and the state of completion of the works
required of the contractor to achieve practical completion
and final completion
6.1.5 Revise the date for practical completion [17.0]
6.1.6 Issue a certificate of practical completion and a certificate
of final completion where the works has reached the
specified standard of completion [15.3.3; 16.2.2]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

6.1.7 Issue interim payment certificates to the contractor by the

due date [CD] with a copy to the employer until the issue of
the final payment certificate [19.2]
6.1.8 Adjust the contract value and prepare the final account
[20.0]

Commentary
6.0 Principal agent
The MWA is much more specific than is the PBA about the principal agent’s duties

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
with regard to administering the contract and interacting with the contractor. He is
required to ‘meet regularly with the contractor to monitor progress of the works, and
to deal with technical and coordination matters’ and to ‘record and timeously
distribute the contract minutes of such meetings’ [clause 6.1.2]. He is furthermore
required to timeously issue construction information, give the contractor
interpretations and direction on the standard of work and the state of completion
required to achieve practical completion, revise the date for practical completion
where this is required, issue the certificates of practical and final completion where
the works has reached the specified standard of completion, issue interim and the
final payment certificates, and adjust the contract value and prepare the final
account [clauses 6.1.3–6.1.8] What is envisaged here goes far beyond the
customary fortnightly site visit with a walk around the works and a formal or informal

Page 316

meeting in the site office, followed by a terse record of the main points of discussion.
The principal agent is expected to assist the contractor in planning and arranging the
various activities on site, [13] and on him falls the responsibility of maintaining in the
contract minutes a complete and comprehensive record of all events affecting the
progress and completion of the works. [14] The responsibility is awesome and will
probably prove to be very time consuming. [15]

Page 317

Chapter 7
Design responsibility
7.1 The contractor shall not be responsible for the design of the works other
than the contractor’s temporary works. The contractor shall not be
responsible for the coordination of design elements

Commentary
Copyright © 2019. Juta & Company, Limited. All rights reserved.

7.0 Design responsibility

Where the design is prepared by an architect or engineer, the contractor’s
contractual obligation is to build in strict accordance with that design, and any
deviation from it would amount to breach of contract. He cannot warrant that the
design, over which he has no control, or even the materials that he is directed to
use, would be fit for their purpose. To resolve this conflict between the contractor’s
contractual obligation and his liability under common law, the MWA expressly states
that the contractor shall not be liable for the design of the works.

Page 318

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
Insurances and securities
Chapter 8
Risks, indemnities and insurances
8.1 The employer shall be at risk for and indemnifies and holds the
contractor harmless from claims or proceedings for damages, expenses
and/or loss (including legal fees and expenses) in respect of or arising
from or out of the execution of the works or occupation of the site by the
contractor due to:
8.1.1 Physical loss and repairing damage to the works including
existing structures and the contents thereof
8.1.2 The support of structures being altered or added to and/or
the removal of or weakening of or interference with the
support of land and/or property adjacent to or within the site
8.1.3 A defect in free issue and/or work to be executed and/or
installed in the works by a direct contractor
8.1.4 Design of the works (other than contractor’s temporary
works)
8.1.5 Force majeure
8.2 The employer shall effect and keep in force in the joint names of the
parties the following insurances from the date of possession of the site
until the issue of the certificate of practical completion
8.2.1 Contract works insurance [CD] for the works that shall make
provision for direct contractors [CD], free issue [CD],
materials and goods, professional fees, temporary works,
the clearing away and removing of all debris, any other costs
to reinstate the works and where required and damage to
employer owned surrounding property [CD]
8.2.2 Supplementary insurance [CD] for the works against loss or
damage caused by civil commotion, riot, strike, labour
disturbances and lockout to the extent not insured under the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contract works insurance

8.2.3 Public liability insurance [CD] providing indemnity in respect
of accidental death or injury to any person and accidental
loss of or physical damage to tangible property to remain in
force to final completion

Page 319

8.2.4 Removal of lateral support insurance [CD] where the

employer considers that the execution of the works could

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
cause the removal of or weakening of or interference with the
support of land or property adjacent to or within the site
(including employer owned surrounding property) and the
consequences thereof. The employer shall appoint an agent
to design and monitor appropriate support structures for use
in excavations and/or in an existing property that forms part
of the works and/or the site
8.2.5 Other insurances [CD]
8.3 The employer shall provide the contractor with the entire policy wording
of such policies
8.4 The employer shall give notice to the insurers of any relevant changes in
respect of this agreement
8.5 The contractor shall effect and keep in force until the contractor’s
responsibility has ended insurances in respect of his:
8.5.1 Employees
8.5.2 Construction equipment
8.6 The contractor shall be responsible for the policy deductibles [CD] in
respect of the insurances arranged by the employer where an action or
inaction by the contractor is the cause of a claim
8.7 Should any incident or event occur which could give rise to a potential
claim in terms of the insurances arranged by the employer, the
contractor shall give notice to the principal agent

Commentary
8.0 Risks, indemnities and insurances
8.1 Works risk and insurance
The two principal areas of risk in a construction project are the risk of loss or
damage to the works, and risk of injury to or death of third parties or loss or damage
to their property.
In a private sector contract the employer is at risk for the cost of making good
Copyright © 2019. Juta & Company, Limited. All rights reserved.

physical loss and repairing damage to the works, and this includes existing buildings
which are being altered, extended or renovated, and their contents, [16]

Page 320

and the support of structures being altered or added to [clause 8.1]. The employer is
also responsible for any damage to the works that may be caused by direct
contractors engaged by him to carry out work and installations in the works [clause
8.1.3].
To cover these risks, contract works insurance is to be taken out by the employer

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
[clause 8.2] in the joint names of the employer and the contractor for the amount and
the deductible stated in the contract data [clause 8.6]. [17] Where applicable such
insurance is also to cover existing buildings and their contents. The insurance shall
remain in force from the date on which possession of the site is given to the
contractor to the date when the contractor’s responsibility has ended [clause 8.2]. A
copy of the entire policy wording is to be provided by the employer to the contractor
[clause 8.3].
Where the loss or damage is due to the negligence or fault of the contractor the
employer shall be entitled to recover the deductible from the contractor [clause 20.7].
8.2 Third party risks and insurance
A third party is someone other than the parties to the contract—the employer and the
contractor—and their employees and agents. A third party would have no business
to be on the site, [18] which is a dangerous place, but even someone in close
proximity to the site—a passer-by, for instance—could be exposed to the risk of
injury or even death due to some negligent act on the part of the contractor—
something falling off the scaffolding, for example.
Were this to happen, and the passer-by to sustain injury, he would probably sue
the employer and the contractor jointly, and were he to be awarded damages against
them, they would have to sort out between themselves who would pay.
The PBA holds the contractor liable for all such claims while he is in possession of
the site, but the MWA anticipates the possibility that the contractor might not be able
to sustain a claim against himself nor be able to effect adequate insurance, and
therefore requires the employer to effect and keep in force public liability insurance
from site handover until the contractor’s responsibility has ended [clause 8.2.3].

Page 321

The employer indemnifies the contractor against any loss due to the occupation of
the site by the contractor and the execution of the works and consequent upon the
death, illness or bodily injury of any person [clause 8.2.3] or the physical loss and
Copyright © 2019. Juta & Company, Limited. All rights reserved.

damages to any property other than the works [clause 8.1.1]. The contractor, when
carrying out excavations on the site, may endanger the stability of structures on
neighbouring property, and the employer accepts full liability for such risk [clause
8.1.2 & 8.2.4]. The employer is required to effect removal of lateral support
insurance for the amount of cover stipulated in the CD [clause 8.2.4].
8.3 Contractor’s risk
The contractor is at risk for claims in respect of injury to or death of his workers and
must take out the insurance required by the Compensation for Occupational Injuries
and Diseases (COID) Act 130 of 1993. He is further at risk of loss or damage to his

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
construction equipment and vehicles and is required [clause 8.5; 8.5.1 & 8.5.2] to
effect and keep in force the necessary insurance until his responsibility has ended.
The contractor is required to notify the principal agent should any incident or event
occur which could give rise to a potential claim in terms of the insurance arranged by
the employer where an action or inaction of the contractor is the cause of a claim.
[clause 8.7]. The document is silent on when the contractor is to give such notice
and it is submitted that the period for such notice would be forthwith.

Page 322

Chapter 9
Securities
9.1 The contractor shall offer one of the following to the employer:
9.1.1 A guarantee for construction
or . . .
9.1.2 Payment reduction
9.2 The employer shall provide to the contractor a guarantee for payment
where required in the accepted tender [CD]. On receipt of such security
the contractor shall waive his lien or right of continuing possession of the
works, where this has not been waived
9.3 The parties shall:
9.3.1 Provide to the other party the security [CD] within fifteen
(15) working days of acceptance of the tender
9.3.2 Provide to the other party a replacement security where the
date for practical completion is extended to suit the revised
construction period for an appropriate value at least twenty
(20) working days prior to its expiry date
9.3.3 Where the contract value exceeds the contract sum by
more than ten per cent (10%), provide an adjusted security
at the employer’s expense and provide written proof of such
adjustment to the respective parties
Copyright © 2019. Juta & Company, Limited. All rights reserved.

9.3.4 Return the original (adjusted) security form within ten (10)
working days after its expiry date
9.4 Where an advanced payment is required for work prior to installation or for
materials and goods stored off site, the contractor shall provide a
guarantee for advance payment equal in value to the aggregate amount
of all such advanced payments [CD]
9.5 Where a party makes an unjustified call on a security, the amount paid
and default interest shall be paid to the other party

Commentary

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
9.0 Securities
9.1 Security
The contractor is required to provide the employer with some form of security that
will recompense him, to some extent, for any loss or expense the latter

Page 323

may sustain due to the former’s failure to comply with his contractual obligations. [19]
There are two alternative forms of security that the contractor may provide: a
guarantee for construction or a payment reduction on the value of each payment
certificate until practical completion as discussed below; the choice between these
lies with the contractor who must indicate his choice in his tender. It is submitted that
if he fails to state his choice in his tender, it will be taken that he has chosen the
payment reduction option [clause 9.1.2].
The MWA Guarantee for Construction is a variable guarantee similar to that used
with the PBA but the initial guaranteed amount is somewhat less: initially it is 6% of
the contract sum, but it decreases to 4% of the contract sum on the day after the
certified date of practical completion; thereafter it decreases to 2% of the contract
sum on the day after the certified date of final completion, and the guarantee expires
on the date of issue of the final payment certificate where this reflects an amount
due by the employer to the contractor or, where the final payment certificate reflects
an amount payable by the contractor to the employer, on the payment of such
amount whereupon it shall expire [clause 9.3.4].
The alternative form of security is a payment reduction, in which the principal
agent deducts 10% of the value of each interim payment certificate until the total
amount so deducted reaches 5% of the contract sum. After certification of practical
completion the amount so deducted shall be reduced to 2.5% of the contract sum,
the balance being included in the next interim payment certificate. Finally, when the
final payment certificate is issued, no deduction shall be made [clause 1.1]. There is
no requirement, as there was in the Agreement and Schedule of Conditions of
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Building Contract, that the amount so retained by the employer be paid into a bank
account, and the employer retains possession of this money. Nor is there any
provision for interest to be paid on it.
If the contractor elects to provide a guarantee for construction, he must do so
within 15 working days of acceptance of his tender [clause 9.3.1]. If he should fail to
do so, the employer may allow him to proceed with the works and apply a payment
reduction or he may terminate the contract [clause 21.9.1].
Of these alternative forms of security, a payment reduction is far more popular
than the guarantee for construction. There are several reason for this. A payment

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
reduction (formerly known as retention) has for a very long time been the established
form of security and is well-known and understood by both parties, whereas the
guarantee for construction is a comparatively recent

Page 324

innovation, [20] and has still to earn the confidence of the parties. But probably the
main reason is that many small contractors are not able to furnish the guarantors
with adequate collateral that will be required for a guarantee for construction to be
issued. They prefer to opt for a payment reduction and deal with the reduced cash
flow that it entails in the early stages of the contract by paying bills late.
9.2 Guarantees
Where the contractor requires the employer to provide a guarantee for payment as
stated in the CD of the accepted tender, this security shall be provided within 15
working days of acceptance of the tender. Once the contractor has received this
security, he shall waive his lien or right of continuing posession of the works. If the
parties fail to do so, the employer may give the contractor notice of his intention to
terminate the agreement [clause 21.9.1] and such failure would entitle the contractor,
if he so wished, to suspend or terminate the agreement [clauses 21.1.1].
The contractor is required to furnish a Guarantee for Advance Payment if he has
stated in his tender that he will require an advanced payment [clause 9.4]. No time
limit has been specified within which the guarantee must be furnished.

Page 325

Execution
Chapter 10
Obligations of the employer
10.1 The employer shall:
Copyright © 2019. Juta & Company, Limited. All rights reserved.

10.1.1 Appoint agents to deal with specific aspects of the works in

terms of this agreement
10.1.2 Ensure the principal agent and/or agents provide all
construction information timeously to the contractor
10.1.3 Record specific requirements [CD] where the existing
premises will be in use and occupied during the execution of
the works including restriction of working hours [CD]
10.1.4 Record and describe relevant natural features and known
services [CD] where the contractor shall be responsible for
their preservation

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
10.1.5 Define any restrictions to the site or areas that the
contractor may not occupy [CD]
10.1.6 Give possession of the site to the contractor on the agreed
date [CD]
10.1.7 Effect and keep in force insurances in the joint names of the
parties [CD]
10.1.8 Provide a guarantee for payment [9.2], where applicable
[CD]
10.1.9 Make payments by the due date [19.9] [CD]
10.1.10 Make advance payment(s) where required [9.4] [CD]
10.1.11 Permit reasonable access to the works by the contractor
subsequent to practical completion to fulfil outstanding
obligations [15.6]
10.1.12 Supply free issue to suit the programme [CD]
10.1.13 Define the extent of work to be carried out by a direct
contractor [13.0] [CD]
10.2 The employer may employ:
10.2.1 Direct contractors [CD]
10.2.2 Others to rectify any default of the contractor and recover
expense and loss resulting from such action

Page 326

Commentary
Execution
10.0 Obligations of the employer
10.1 Handing over the site and executing the works
In a contract in the private sector, the employer is required to give the contractor
possession [21] of the site not later than the date specified in the CD [clause 10.1.6]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

and the construction period and the latent defects period start to run on this date.
The handing over of the site is conditional on the contractor having provided a
guarantee for construction, if this is the form of security that he has chosen, a JBCC
Waiver of Contractor’s Lien if the employer has furnished a guarantee for payment,
his priced bills of quantities or priced document and, where he is responsible for
effecting insurances, proof that he has done so.
On the appointed day the employer shall arrange to have the boundary pegs or
beacons that define the site, and the datum level, pointed out to the contractor and
shall furnish the contractor with a JBCC Site Possession Certificate [clause
10.1.6]. [22]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
The principal agent is required to furnish the contractor free of charge with as
many copies of drawings, specifications and any additional drawings as are
reasonably necessary for carrying out the works [clause 4.5].
The contractor is required to keep one copy of each drawing, and one copy of
each contract instruction and contract minutes, on site at all times for reference by
the principal agent [clause 11.2.7].
The contractor is required to carry out the works in strict compliance with the
drawings and any further drawings and contract instructions that may be issued from
time to time by the principal agent. He must comply with all relevant laws,
regulations and bylaws when doing so [clauses 2.1–2.5], and where such
compliance requires a change or variation to the works, such change or variation
shall be deemed to be a contract instruction [clause 14.1.4] with which he shall
comply.

Page 327

The contractor shall not be responsible for the design of the works [clause 7.1].
Where so stipulated in the CD, all arrangements for the supply of power and
water and for a sewer connection shall be made by the employer who shall pay all
related charges and the contractor shall be entitled to a free supply of water and
electricity for the works [if so recorded in the CD]. The contractor and his workers
may use toilet facilities where these are provided by the employer; where they are
not, the contractor must make his own arrangements [CD].

Page 328

Chapter 11
Obligations of the contractor
11.1 The contractor shall submit to the principal agent within fifteen (15)
working days of acceptance of tender:
11.1.1 The priced document [CD]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

11.1.2 A programme for the works in sufficient detail to monitor the

progress of the works
11.1.3 A guarantee for construction [9.1.1] [CD]
11.1.4 A JBCC® format Waiver of Lien, where applicable [CD]
11.2 The contractor, on appointment, shall:
11.2.1 Forthwith submit statutory notices for the works
11.2.2 Designate a competent person to continuously administer
and control the works as the contractor’s representative. A
contract instruction given to the contractor’s
representative shall be deemed to be given to the contractor

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
11.2.3 Maintain daily records in compliance with the law and provide
regular copies to the principal agent
11.2.4 Provide everything necessary for the proper execution of the
works in compliance with the agreement, using materials
and workmanship of the quality and standards specified to
the approval of the principal agent
11.2.5 Provide, maintain and remove on completion any temporary
structures and construction equipment
11.2.6 Commence the works within ten (10) working days and
proceed with due diligence, regularity, expedition, skill and
appropriate resources to bring the works to practical
completion and to final completion
11.2.7 Keep on site a copy of all construction information
required for execution of the works to which the employer
and principal agent and/or agents shall have reasonable
access
11.2.8 Assist the principal agent in the preparation of payment
certificates [19.1]
11.2.9 Allow the employer and agents reasonable access to the
works, workshops and other places where work is being
prepared, executed or stored

Page 329

11.2.10 On achievement of practical completion hand over to the

principal agent all information for the preparation of ‘as built’
documentation and applicable statutory/regulatory approval
certificates
11.2.11 On achievement of final completion hand over to the
principal agent all operating and instruction manuals,
product guarantees and the like
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Commentary
11.0 Obligations of the contractor
On being given possession of the site the contractor is required to carry out the
works in strict compliance with the drawings and any further drawings and contract
instructions that may be issued from time to time by the principal agent and to
commence the works within ten (10) working days and proceed with due diligence,
regularity, expedition, skill and appropriate resources to bring the works to practical
completion and to final completion. Should the contractor fail to proceed on this
basis, the employer may give notice to the contractor of his intention to terminate the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
agreement [clause 21.9]. Additional duties, responsibilities and obligations are
imposed on the contractor [clauses 11.1 to 11.2.11]. He must comply with all relevant
laws, regulations and bylaws when doing so [clauses 2.1–2.5], and where such
compliance requires a change or variation to the works, such change or variation
shall be deemed to be a contract instruction [clause 14.1.4] with which he shall
comply.
The contractor shall not be responsible for the design of the works [clause 7.1].
Where so stipulated in the CD, all arrangements for the supply of power and
water and for a sewer connection shall be made by the employer, who shall pay all
related charges and the contractor shall be entitled to a free supply of water and
electricity for the works [CD]. The contractor and his workers may use toilet facilities
where these are provided by the employer; where they are not, the contractor must
make his own arrangements.

Page 330

Chapter 12
Setting out
12.1 The principal agent, or an agent with delegated authority shall:
12.1.1 Point out boundary pegs or beacons identifying the site and
the datum level
12.1.2 Define the setting out points and levels required for the
execution of the works
12.2 The contractor shall:
12.2.1 Be responsible for the accurate setting out of the works
notwithstanding checking by others
12.2.2 Be responsible for the preservation and the reinstatement of
boundary pegs, beacons and other survey information
12.2.3 Not be responsible for incorrect setting out if incorrect
information was issued to the contractor
12.3 The contractor shall immediately suspend affected work to an appropriate
Copyright © 2019. Juta & Company, Limited. All rights reserved.

extent where encroachments of adjoining structures occur and where

undocumented services, natural features, articles of value or relics are
uncovered on the site, and notify the principal agent who shall issue a
contract instruction on how to proceed with the works. Any relics or
other articles found on the site shall remain the property of the employer

Commentary
12.0 Setting out
The contractor is responsible for the accurate setting out of the works based on the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
construction information issued to him by the principal agent. The principal agent, or
other delegated agent, usually a registered land surveyor, is required to point out the
boundary pegs identifying the site, the datum level, setting out points and levels
required for the works [clause 12.1] and the contractor is to preserve such boundary
pegs or beacons and, if disturbed, to reinstate at his own cost. The contractor is to
suspend any work affected by the uncovering of undocumented services, natural
features, relics or articles of value and to immediately notify the principal agent of
such items [clause 12.3]. The principal agent is to issue a contract instruction to the
contractor as to how to proceed with the works [clause 12.3]. The contractor would
be entitled to submit a claim for the revision of the date for practical completion
where such occurrence delays the works [clause 17.2.3].

Page 331

Chapter 13
Direct contractors
13.1 The contractor shall:
13.1.1 In accordance with a contract instruction from the principal
agent permit direct contractors [CD] to execute and/or
install work as part of the works. Such access to the works
shall not constitute deemed achievement of practical
completion or occupation by the employer
13.1.2 Make reasonable allowance in the programme for such work
or installation
13.1.3 Be entitled to claim expense and/or loss caused by direct
contractors [20.0]
13.2 Payment of direct contractors shall be the responsibility of the employer
outside this agreement
13.3 There shall be no privity of contract between the contractor and a direct
contractor appointed by the employer

Commentary
Copyright © 2019. Juta & Company, Limited. All rights reserved.

13.0 Direct contractors

The MWA makes no provision for nominated or selected subcontractors. There are
several reasons for this. The Agreement is intended for simple projects with little or
no specialised construction or installations that would require to be carried out by
such specialist subcontractors. It was thought that the relatively unsophisticated and
inexperienced contractors who would work under a MWA would not be capable of
co-ordinating the work of such subcontractors with their own work. It was also
thought that such subcontractors would be reluctant to subcontract to such a

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
contractor; they would fear that they would not be able to work efficiently with such a
contractor and would fear that they would have difficulty in getting paid.
Thus, if the project is one in which it is desired to engage nominated or selected
subcontractors, it would be advisable to use the PBA in preference to the MWA. If
such work is of a very limited nature, and does not integrate with the contractor’s
work to a significant extent, the employment of direct contractors would be a viable
option.
Where it is proposed to arrange for a portion of the contract works to be done by
one or more direct contractors, the nature, extent and estimated value of

Page 332

such work shall be stated in the contract data. [23] The contractor shall make
reasonable allowance in his construction programme for such work to be carried out
[clause 13.1.2], and shall allow such contractors reasonable access to the portions
of the works on which they will be engaged. But he shall not be responsible for their
performance, and he will be entitled to be compensated for making good any
damage that they may cause and for any delays to his rate of progress that they may
occasion [clause 13.1.3].
Such direct contractors will be employed by the employer and will be paid by him
[clause 13.2] and will be liable to him for any default. The responsibility for making
these contractual arrangements will probably fall on the principal agent, who is likely
also to be responsible for ensuring that these contractors arrive on site when their
presence is required, that they proceed with their work with little or no inconvenience
to the contractor, and that all points of friction between them and the contractor are
eliminated or at least minimised. There shall be no privity of contract between the
contractor and a direct contractor appointed by the employer [clause 13.3].

Page 333

Chapter 14
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Contract instructions
14.1 The principal agent may issue contract instructions to the contractor
regarding:
14.1.1 Rectification of discrepancies, errors in description or quantity
or omissions in this agreement other than in the JBCC®
Minor Works Agreement
14.1.2 Alteration to design, quality or quantity of the works provided
that such contract instructions shall not substantially
change the scope of the works
14.1.3 The site [12.0]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
14.1.4 Compliance with the law, regulations and bylaws [2.1]
14.1.5 Provision and testing of samples of materials and goods
and/or finishes or assemblies of elements of the works
14.1.6 Opening up of work for inspection, removal or re-execution
14.1.7 Removal or re-execution of work
14.1.8 Removal or substitution of any materials and goods
14.1.9 Protection of the works
14.1.10 Making good physical loss and repairing damage to the
works [17.2.2]
14.1.11 Rectification of defects [16.4, 16.8]
14.1.12 A list for practical completion specifying outstanding or
defective work to be rectified to achieve practical
completion and a list for completion and a list for final
completion specifying outstanding or defective work to be
rectified to achieve final completion
14.1.13 Expenditure of employer allowances and/or prime cost
amounts
14.1.14 Work by direct contractors [13.0]
14.1.15 Access by other or previous contractors to remedy defective
work
14.1.16 Removal from the site of any person employed on the works
14.1.17 Removal from the site of any person not engaged on or
connected with the works
14.1.18 On suspension or termination, protection of the works,
removal of construction equipment and surplus materials
and goods [21.6.1]

Page 334

14.2 The contractor shall comply with and duly execute all contract
instructions
14.3 Should the contractor fail to proceed with a contract instruction with
Copyright © 2019. Juta & Company, Limited. All rights reserved.

due diligence, the principal agent may give notice to the contractor to
proceed within five (5) working days of receipt of such notice. Where the
contractor remains in default, the employer may engage others to carry
out such contract instruction and may recover expense and/or loss
incurred [20.7]
14.4 The contractor shall not be obliged to carry out a contract instruction
for additional work issued after the certified date of practical completion
14.5 Oral instructions shall be of no force or effect

Commentary

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
14.0 Contract instructions
As in the PBA, the principal agent is empowered to issue contract instructions, which
must, in this case, be recorded in the contract minutes. Such instructions follow
broadly the same scope as do those in the PBA and include:
• rectification of discrepancies, errors in description or omissions in contract
documents [clause 14.1.1];
• alterations to the design, quality or quantity of the works, provided that they do
not substantially change the scope of the works [clause 14.1.2];
• the site [clause 14.1.3];
• compliance with the law, regulations and bylaws [clause 14.1.4];
• provision and testing of samples of materials and goods, finishes or
assemblies of elements of the works [clause 14.1.5];
• opening up of work for inspection, removal or re-execution [clause 14.1.6];
• removal or re-execution of any work [clause 14.1.7];
• removal or substitution of any materials and goods [clause 14.1.8];
• protection of the works [clause 14.1.9];
• making good physical loss and repairing damage to the works [clause
14.1.10];
• rectification of defects [clause 14.1.11];
• the lists for practical completion, final completion and defects [clause 14.1.12];
• expenditure of employer allowances and/or prime cost amounts [clause
14.1.13];
• work by direct contractors [clause 14.1.14];

Page 335

• access by other or previous contractors to remedy defective work [clause

14.1.15];
• removal from the site of any person employed on the works [clause 14.1.16];
• removal from the site of any person not engaged on or connected with the
works [clause 14.1.17];
Copyright © 2019. Juta & Company, Limited. All rights reserved.

• on suspension or termination, protection of the works, removal of construction

equipment and surplus materials and goods [clause14.1.18].
Clause 14.2 requires the contractor to comply with and duly execute all contract
instructions. No time limit is specified within which the contractor must carry out a
contract instruction, however, he must do so within a reasonable time depending on
circumstances. If the principal agent believes that the contractor is being tardy about
carrying out a contract instruction, he may give him notice to proceed with the
instruction within five working days; if the contractor fails to do so, the employer may
engage others to do so and recover expense or loss incurred from the contractor
[clause 14.3].

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
The contractor shall not be obliged to carry out a contract instruction for additional
work issued after the certified date of practical completion [clause 14.4]. In practice
the contractor may carry out some minor additional work which the principal agent
may wish him to do provided that he is compensated for the additional work and that
the employer/contractor/principal agent relationship is on a friendly footing.
All contract instructions are to be recorded in the minutes of the site meetings and
oral instructions shall be of no force or effect [clause 14.5].

Page 336

Completion
Chapter 15
Practical completion
15.1 The principal agent shall:
15.1.1 Inspect the works at appropriate intervals to give the
contractor interpretations and direction on the standard of
work and the state of completion of the works that the
contractor will be required to achieve for practical
completion [CD]
15.1.2 Issue a contract instruction [14.0] consequent on such
inspection, where necessary
15.2 The contractor shall:
15.2.1 Inspect the works in advance of the anticipated date for
practical completion to confirm that the standard of work
required and the state of completion of the works for
practical completion [CD] has been achieved
15.2.2 Give at least five (5) working days notice to the principal
agent of the anticipated date for the inspection for practical
completion of the works to meet the anticipated date for
practical completion
Copyright © 2019. Juta & Company, Limited. All rights reserved.

15.3 The principal agent shall inspect the works, within the period stated [CD]
and forthwith issue to the contractor:
15.3.1 A comprehensive and conclusive list for practical
completion [14.1.12] where the works has not reached
practical completion specifying the defects to be rectified
and work to be completed to achieve practical completion
15.3.2 An updated list for practical completion limited to items on
the list for practical completion that have not been
attended to satisfactorily. The contractor shall repeat the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
procedure until all items on the list for practical completion
have been attended to satisfactorily before the certificate of
practical completion is issued by the principal agent
or . . .
15.3.3 A certificate of practical completion with a copy to the
employer stating the date on which practical completion of
the works was achieved

Page 337

15.3.4 A list for completion with a copy to the employer of items

to be rectified and work to be completed
15.4 Should the principal agent not issue a list for practical completion or
the updated list within five (5) working days after the inspection period,
[15.3] the contractor shall give notice to the employer and the principal
agent. Should the principal agent not issue such list within a further five
(5) working days of receipt of such notice, practical completion shall be
deemed to have been achieved on the date of such notice and the
principal agent shall issue the certificate of practical completion
forthwith
15.5 Where the employer takes possession of the whole or a portion of the
works by agreement with the contractor, practical completion shall be
deemed to have occurred [15.3.3–4]
15.6 On issue of the certificate of practical completion the employer shall
be entitled to possession of the works and the site subject to the
contractor’s lien, or right of continuing possession of the works where
this has not been waived

Commentary
15.0 Practical completion
The concept of practical completion is the same in the MWA as in the PBA and the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

process of certifying practical completion is almost identical. [24]

The principal agent shall inspect the works from time to time and inform the
contractor of the standard of work and the state of completion of the works he will
require in order to certify practical completion [clause 15.1.1]. The contractor shall
give at least five working days’ notice to the principal agent of the anticipated date for
the inspection for practical completion of the works to meet the date for practical
completion [clause 15.2.2].
The principal agent shall inspect the works on or before the date requested by the
contractor.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
Where he considers that the works are practically complete, he shall forthwith
issue a certificate of practical completion [clause 15.3.3]. Where he considers that
the works are not practically complete, he shall issue a comprehensive and
conclusive list for practical completion to the contractor in which he specifies the
defects to be rectified and work to be completed to achieve practical completion
[clause 15.3.1].

Page 338

The time period for the issuing of the list for practical completion or for the issuing
of the certificate of practical completion whichever is applicable after the principal
agent has inspected the works for practical completion is to be stated in the CD
[clause 15.3].
Should the principal agent not issue the list for practical completion or the
updated list within five working days after the inspection period, the contractor is to
give notice to the employer and the principal agent and if the list is not issued within
a further five working day period, practical completion will be deemed to have been
achieved on the date of such notice and the principal agent is required to issue the
certificate of practical completion forthwith [clause 15.4].
Where the employer takes possession of the whole or a portion of the works by
agreement with the contractor, practical completion is deemed to have occurred and
the principal agent will be required to issue the certificate of practical completion
[15.5].
When practical completion has been achieved, the employer shall be entitled to
take possession of the site and works, subject to the contractor’s right, if any, to
retain possession in the exercise of his lien [clause 15.6]. [25]

Page 339

Chapter 16
Defects liability period and final completion
Copyright © 2019. Juta & Company, Limited. All rights reserved.

16.1 The defects liability period for the works shall commence on the calendar
day following the date of practical completion and end at midnight
(00:00) ninety (90) calendar days from the date of practical completion
[CD] or when work on the list for completion has been satisfactorily
completed [16.4], whichever is the later
16.2 On expiry of the defects liability period the principal agent shall inspect
the works and forthwith issue:
16.2.1 A list for final completion specifying all outstanding work to
be completed and/or defects to be rectified to achieve final
completion where the works has not reached final

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
completion. The contractor shall promptly attend to the
items listed, and repeat the procedure until the certificate of
final completion is issued by the principal agent
or . . .
16.2.2 A certificate of final completion to the contractor with a
copy to the employer where the works has reached final
completion
16.3 Where the principal agent has not issued the list for final completion or
the updated list within five (5) working days after the inspection period
[16.2.1], the contractor shall give notice to the employer and the
principal agent. Should the principal agent not issue such list within a
further five (5) working days of receipt of such notice, final completion
shall be deemed to have been achieved on the date of expiry of the notice
16.4 A certificate of final completion shall be conclusive as to the sufficiency
of the works and that the contractor’s obligations [11.2.6] have been
fulfilled other than for latent defects
16.5 The latent defects liability period for the works shall commence at the
start of the construction period and end five (5) years from the date of
final completion [16.2.2]
16.6 Where termination of this agreement occurs before the date of final
completion, the latent defects liability period shall end:
16.6.1 Five (5) years from the date of termination [21.11]
or . . .

Page 340

16.6.2 On the date of termination where execution of the works has

become impossible due to circumstances beyond the control
of either party [21.17], or on the date of termination by the
contractor due to default by the employer the principal
agent and/or agents [21.6]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

16.7 Where the contractor or a supplier is required to give a guarantee,

warranty or indemnity, other than a security to the contractor, the rights
under such guarantee, warranty or indemnity shall be ceded to the
employer on the date of issue of the certificate of final completion. This
cession shall not prejudice any other rights the employer may have
16.8 The contractor shall make good all latent defects that appear up to the
date of expiry of the latent defects liability period [3.3]

Commentary

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
16.0 Defects liability period and final completion
After practical completion, the next and final stage of completion is final completion.
Where practical completion has been achieved, the principal agent is required to
issue a list for completion to the contractor listing items to be rectified and work to be
completed with a copy to the employer [clause 15.3.4]. [26]
The defects liability period for the works commences on the calendar day
following the certified date of practical completion and ends at midnight 90 calendar
days from the date of practical completion or when the work on the list for final
completion has been satisfactorily completed, whichever is the later [clause 16.1].
On expiry of the defects liability period, the principal agent shall inspect the works.
Where he finds the works complete in all respects and free from patent defects, he
shall forthwith issue a certificate of final completion [clause 16.2.2]. If not, he shall
forthwith issue an updated list for completion, specifying all outstanding work that
must be completed and/or defects which must be rectified to achieve final
completion [clause 16.2.1].
In the event of the principal agent not issuing the list for final completion or the
updated list within five working days after the inspection period the

Page 341

contractor is entitled to notify the employer and the principal agent forthwith. Should
the principal agent fail to issue such list within a further five working days of receipt
of the contractor’s notice, final completion shall be deemed to have been achieved
on the date of expiry of the notice [clause 16.3].
The issue of a certificate of final completion shall be conclusive as to the
sufficiency of the works and that the contractor’s obligations [clause 11.2.6] have
been fulfilled other than for latent defects. The contractor shall be liable for the
rectification of latent defects for a period of five years after the date of final
completion [clause 16.5].
Where termination of the agreement occurs before the date of final completion,
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the latent defects liability period shall end either five years from the date of
termination or on the date of termination where execution of the works has become
impossible due to circumstances beyond the control of either party or on the date of
termination by the contractor due to default by the employer [clauses 16.6.1; 16.6.2].
Where the contractor or a supplier is required to give a guarantee, warranty or
indemnity, other than a security to the contractor, the rights under such guarantee,
warranty or indemnity shall be ceded to the employer on the date of issue of the
certificate of final completion. This cession shall not prejudice any other rights the
employer may have [clause 16.7]. Such warranty would include for example the

Page 342

Chapter 17
Revision of the date for practical completion
17.1 The contractor is entitled to a revision of the date for practical
completion by the principal agent without an adjustment of the contract
value [20.0], for a delay to practical completion caused by one or more
of the following events:
17.1.1 Adverse weather conditions
17.1.2 Inability to obtain materials and goods where the
contractor has taken reasonable steps to avoid or reduce
such delay
17.1.3 Making good physical loss and repairing damage to the
works [8.0] where such risk is beyond the reasonable control
of the parties
17.1.4 Exercise of statutory power by a body of state, public or local
authority that affects the execution of the works
17.1.5 Force majeure
17.2 The contractor is entitled to a revision of the date for practical
completion by the principal agent with an adjustment of the contract
value [20.0], for a delay to practical completion caused by one or more
of the following events:
17.2.1 Delayed possession of the site [10.1.6]
17.2.2 Making good physical loss and repairing damage to the
works where the contractor is not at risk
17.2.3 Contract instructions [14.0] not occasioned by the
contractor’s default
17.2.4 Opening up [14.1.6] and testing of work and materials and
Copyright © 2019. Juta & Company, Limited. All rights reserved.

goods [14.1.5] where such work is in accordance with the

agreement
17.2.5 Late or incorrect issue of construction information [10.1.2;
12.1; 14.1]
17.2.6 Late supply of free issue, materials and goods for which
the employer is responsible
17.2.7 An act or omission of a direct contractor [13.0]
17.2.8 Suspension of the works
17.3 Where the circumstances in 17.1 or 17.2 do not apply or due to any other
cause beyond the contractor’s control the contractor may give notice of

Page 343

17.4 The contractor shall give notice at the next site meeting of the cause of
such delay and the working days claimed and expense and loss incurred
where applicable
17.5 The principal agent shall:
17.5.1 Determine the revised date for practical completion by
granting, reducing or refusing each extension claimed at
intervals no greater than ten (10) working days
17.5.2 Determine the adjustment of the contract value where
claimed at intervals no greater than ten (10) working days
17.5.3 Record the details of the delay and adjustment to the
contract value in the contract minutes
17.6 Where the contractor disagrees with such a decision, the principal agent
shall give reasons for his decision to revise the date for practical
completion and/or to adjust the contract value and shall record such
information in the contract minutes. The contractor may dispute such
reasons and the effects thereof

Commentary
17.0 Revision of the date for practical completion
The date by which the works are required to reach practical completion and when he
may take occupation is usually a matter of great importance to an employer. Late
completion by the contractor is breach of contract, entitling the employer to claim
damages or penalties, unless the contractor was delayed by circumstances beyond
his control and which he could not have anticipated. Where the contractor is delayed
by such circumstances he is relieved of his obligation to achieve practical completion
by the stipulated date and must do so within a reasonable time. What constitutes a
‘reasonable’ time is invariably a matter on which opinions differ.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Most construction contracts contain a provision to set a new date for practical
completion where the contractor is delayed by circumstances beyond his control and
which he could not have anticipated, and from which date penalties may be levied,
and, like the PBA, the MWA contains such provision [clause 17.1].
Much like clause 23.0 of the PBA, which sets out in detail the various
circumstances causing delay which would entitle the contractor to additional time,
the MWA sets out similar circumstances under which the contractor is entitled to
submit a claim for the revision of the date for practical completion either without an
adjustment of the contract value [clause 17.1] or with an adjustment to the contract

Page 344

revision of the date for practical completion, he is required to report at the next site
meeting the cause of such delay and the working days claimed and expense and
loss incurred where applicable [clause 17.4]. The MWA differs substantially from the
PBA in that no time barring for the submission of delay claims is imposed on the
contractor other than that he shall give notice to the principal agent of the cause of
the delay at the next site meeting.
The principal agent is required to determine the revised date for practical
completion by granting, reducing or refusing the working days claimed at intervals no
greater than ten working days [clause 17.5.1] and to record the details of the delay,
the revised date for practical completion and any adjustment to the contract value,
where applicable in the contract minutes [clause 17.5.3].
A delay will usually involve the contractor in extra expenses, such as extended
hire charges for scaffolding and plant, extended salaries for administrative staff
involved in the project, extended insurance premiums, etc, and the contractor will
expect to be reimbursed for such extra expenses. Some circumstances causing
delay will entitle him to such reimbursement and others will not. The circumstances
which will entitle him to additional payment as well as additional time are set out in
clause 17.2.
Where the contractor disagrees with the principal agent’s decision and/or reasons
for his decision, he may dispute such reasons and the effects thereof [clause 17.6],
which information shall be recorded in the contract minutes.

Page 345

Chapter 18
Penalty for late or non-completion
18.1 Where the contractor fails to bring the works to practical completion by
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the date for practical completion or the revised date for practical
completion, the contractor shall be liable to the employer for the
penalty [CD]
18.2 Where the employer elects to levy such penalty, the employer, or the
principal agent on instruction from the employer, shall give notice
thereof to the contractor. The principal agent shall determine the
penalty due from the later of the date for practical completion [CD], or
the revised date for practical completion up to and including the earlier
of:
18.2.1 The actual or deemed date of practical completion of the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
works [15.3.3]
18.2.2 The date of termination [21.6]
18.3 The principal agent shall include the penalty in regular interim payment
certificates from the date on which the employer’s entitlement to
penalties commences

Commentary
18.0 Penalty for non-completion
Failure to achieve practical completion by the date for practical completion is a
breach by the contractor which entitles the employer to claim damages or a penalty.
Like the PBA, the MWA makes provision for penalties to be levied, the rate being
stated in the CD [clause 18.1].
Where the contractor fails to achieve practical completion by the date for practical
completion or the revised date for practical completion, the principal agent on
instruction from the employer shall determine the amount of the penalty and deduct
such amount in a future interim payment certificate [clause 18.2]. Where this results
in a certificate with a negative amount, the contractor’s debt to the employer may be
deducted from a future interim payment certificate. It is submitted that, in the event of
there being insufficient value to be deducted from a future payment certificate, the
debt may be recovered from the security provided by the contractor, or the employer
may seek to recover this amount by legal process.

Page 346

Payment
Chapter 19
Payment
19.1 The contractor shall cooperate with and assist the principal agent in the
preparation of payment valuations by providing all required documents
Copyright © 2019. Juta & Company, Limited. All rights reserved.

and quantified amounts of work duly executed. Where the contractor has
not provided such information the principal agent shall make a fair
estimate of the work executed
19.2 The principal agent shall regularly by the due date [CD] issue payment
certificates to the contractor with a copy to the employer until and
including the issue of the final payment certificate. A payment
certificate may be for a nil or negative amount.
19.3 Each payment certificate shall separately include:
19.3.1 A fair estimate of the value of work executed
19.3.2 A fair estimate of materials and goods [CD]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
19.3.3 Security adjustment [9.1.2]
19.3.4 The gross amount certified
19.3.5 The amount previously certified
19.3.6 Amounts due to either party
19.3.7 Tax
19.3.8 Interest due [19.9]
19.3.9 Other non-taxable amounts
19.3.10 The net amount certified due to the contractor or the
employer
19.4 The value of materials and goods [19.3.2] (excluding materials and
goods off site or in transit) shall be included in the amount certified, only
where:
19.4.1 Not prematurely delivered or offered for delivery in terms of
the programme
19.4.2 Stored and suitably protected against loss and damage
19.5 The value of materials and goods [19.3.2] stored off site and/or in transit
shall be included in the amount certified only where covered by a
guarantee for advance payment or such other security as may be
acceptable to the employer [CD]

Page 347

19.6 Materials and goods when certified [19.4] and paid for shall become the
property of the employer and shall not be removed without the written
authority of the principal agent
19.7 An interim payment certificate shall not be evidence that the works and
materials and goods are in terms of the agreement
19.8 The principal agent shall certify one hundred per cent (100%) of the
amount of the final account including adjustments in the final payment
certificate
19.9 The employer shall pay the contractor the amount certified in an issued
payment certificate including default interest, if due, within fourteen (14)
Copyright © 2019. Juta & Company, Limited. All rights reserved.

calendar days of the date of issue of the payment certificate [CD]

19.10 The contractor shall pay the employer the amount certified in an issued
payment certificate including default interest, if due, within twenty one
(21) calendar days of the date of issue of the payment certificate [CD]
19.11 Where the employer has made a partial or no payment of the amount due
in an issued payment certificate by due date or where the principal
agent fails to issue a payment certificate, the contractor may give three
(3) working days’ notice to comply, failing which the contractor may:
19.11.1 Suspend the works [21.1]
19.11.2 Exercise the lien, or right of continuing possession of the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
works, where this has not been waived
19.11.3 Call up the guarantee for payment [9.2]
19.12 The principal agent shall issue the final payment certificate to the
contractor with a copy to the employer within five (5) working days’ of
acceptance of the final account by the contractor but not before the
issue of the certificate of final completion, other than on termination
[20.8]
19.13 Where the contractor disputes the correctness of the final account within
the period allowed [20.9], the principal agent shall issue interim payment
certificates to the contractor with a copy to the employer by the due
date [CD] for the undisputed amount(s)
19.14 For the purposes of provisional sentence in relation to a payment
certificate only, the parties consent to the jurisdiction of any court of law
of the country [CD]

Page 348

Commentary
19.0 Payment
There will probably be many instances where the contractor will have limited
resources to fund the works and will require interim payments at frequent intervals to
keep going. In most construction contracts, including the JBCC PBA, such intervals
are monthly, but the MWA allows for shorter intervals: fortnightly or even weekly.
Where the contract has been based on bills of quantities, the information
contained in them will enable the principal agent to make valuations for interim
payment certificates. Where there are no bills of quantities, the contractor is
required, within 15 working days of the date of acceptance of his tender, to submit to
the principal agent his priced document [clause 11.1.1].
The contractor is obliged to cooperate and assist the principal agent in the
preparation of valuations for payment certificates by providing relevant documents
Copyright © 2019. Juta & Company, Limited. All rights reserved.

and assessments of the value of work done and materials and goods delivered to
site for use in the works [clause 19.1]. If the contractor should fail to provide such
information, the principal agent must make his valuation to the best of his ability and
issue a payment certificate; he cannot refuse to issue a certificate on the grounds
that the contractor has failed to give him the required information. He must issue
interim payments at the stipulated intervals even if the certificate is for a nil or
negative amount, until the issue of the final payment certificate [clause 19.2].
The valuation of a payment certificate shall comprise a fair estimate of the value
of work executed to the date of valuation [clause 19.3.1], which estimate is to include
additional work ordered as per contract instructions, a fair estimate of materials and

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
goods [clause 19.3.2], security adjustment [clauses 19.3.3], the gross amount
certified [clause 19.3.4], the amount previously certified [clause 19.3.5], amounts due
to either party excluding interest amounts and other non-taxable amounts [clause
19.3.6], tax applicable [clause 19.3.7], interest due [clause 19.3.8], other non-taxable
amounts [clause 19.3.9] and the net amount certified due to the contractor or the
employer [clause 19.3.10].
The amount so certified is subject to various adjustments and/or deductions
including the value of work done by other contractors employed where the contractor
has failed to carry out a contract instruction in terms of clause [14.3], deduction of
penalties where these are due, deduction of expense or loss incurred by the
employer due to loss or damage to the works arising from the contractor’s
negligence, deduction of expense or loss incurred by the employer due to
termination of the contract as a consequence of the

Page 349

contractor’ default [clause 21.11], damages incurred by the contractor due to

termination of the contract as a consequence of the employer’s default [clause 21.5].
The principal agent shall issue the certificate to the contractor by due date as
stated in the contract data with a copy to the employer [clause 19.2].
The employer is required to pay the contractor the certified amount within 14
calendar days of the date of issue of the payment certificate [clause 19.9].
Conversely, if the certificate is for a negative amount, the contractor shall pay the
employer the certified amount within 21 calendar days of the date of issue of the
certificate [clause 19.10]. Where either party fails to pay a due amount by due date,
the other shall be entitled to default interest [clauses 19.9; 19.10] on the overdue
amount from due date for payment until the date of payment, and the principal agent
shall, in the next payment certificate, add or subtract the amount of interest, as the
case may be.
A contractor may suspend work after giving the employer three working days’
notice of his intention to do so where the employer has made a partial or no payment
Copyright © 2019. Juta & Company, Limited. All rights reserved.

of the amount due in an issued payment certificate and has not complied with the
notice given by the contractor [clause 19.11]. In addition, the contractor may exercise
the lien where this has not been waived or call up the JBCC guarantee for payment
[clauses 19.11.2, 19.11.3].

Page 350

Chapter 20
Adjustment to the contract value and final account

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
20.1 The principal agent shall determine the value of adjustments to the
contract value in cooperation with the contractor in the preparation of
the final account. Where such adjustments require measurement on site,
the contractor shall have the right to be present
20.2 The principal agent shall rectify discrepancies, errors in description or
quantity, or omission of items in the agreement other than in this
agreement [14.1.1]
20.3 The principal agent shall adjust the contract value resulting from a
contract instruction [14.1.2] determined as follows:
20.3.1 Work of a similar character executed under similar conditions
shall be priced at the rates in the priced document
20.3.2 Work not of a similar character shall be priced at rates based
on those in the priced document and adjusted to suit the
changed circumstances
20.3.3 If the above methods do not apply, work shall be priced at
rates based on the necessary use of labour, construction
equipment and or materials and goods for executing the
work plus an allowance of ten per cent (10%) mark-up
20.4 Where the contractor has made payment for items not included in the
priced document, the actual amounts paid plus a ten per cent (10%)
mark-up shall be added to the contract value limited to:
20.4.1 Charges by authorities
20.4.2 The cost of opening up and testing [14.1.6] where the work is
according to the agreement
20.5 The contractor shall give notice to the principal agent on becoming
aware of expense and/or loss for which provision was not required in the
contract sum
20.6 The principal agent shall:
20.6.1 Omit employer allowances [14.1.13] and prime cost
amounts from the contract sum and determine the actual
value of such work to be added to the contract value
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 351

20.6.2 Prorate the contractor’s allowances for profit and

attendance on employer allowances and prime cost
amounts
20.6.3 Adjust the preliminaries in the priced document
20.7 Where the employer has incurred expense and loss arising from an
insurance claim for which the contractor was responsible the employer
shall provide details thereof to the principal agent for adjustment of the
contract value in the amount stated

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
20.8 The principal agent shall prepare and issue the final account to the
contractor within thirty (30) working days of the date of practical
completion
20.9 The contractor shall accept the final account or object with substantiated
reasons within fifteen (15) working days of receipt thereof failing which
the final account shall be deemed to be accepted
20.10 Should the contractor give notice objecting to the correctness of the final
account within the period [20.9] and such objection not be resolved within
ten (10) working days, or such an extended period as the principal
agent may allow on request from the contractor, the contractor may give
notice of a disagreement

Commentary
20.0 Adjusting the contract value and preparing the final account
The contract value may be adjusted in respect of the value of additional work
performed or work omitted, additional preliminaries consequent on a revision of the
date for practical completion, prime cost allowances and employer’s allowances, and
sundry other circumstances. [27]
The principal agent shall determine the value of adjustments to the contract value
in cooperation with the contractor in preparation of the final account. Adjustments to
the contract value resulting from a contract instruction shall be valued in terms of
clauses [clauses 20.3.1; 20.3.2; 20.3.3].
In certain instances a revision of the date for practical completion will entitle the
contractor to additional payment in the form of additional preliminaries. [28]

Page 352

Where this applies, the preliminaries amount shall be adjusted pro rata the
variation in the construction period [clause 20.6.3].
Where the contract sum includes employer allowances, [29] the amount so allowed
Copyright © 2019. Juta & Company, Limited. All rights reserved.

shall be deducted from the contract value and the actual value of such work as
determined in terms of clauses 1.1 and 20.6.1 shall be added to the contract value.
Where the contract sum includes prime cost amounts [clause 1.1] the principal
agent shall similarly deduct all such amounts from the contract value and add back
the actual delivered cost of such items, making reasonable allowance for waste
where necessary. [30] If the contractor has made allowance for overheads and profit
on prime cost amounts in his bills of quantities or priced document, such allowance
shall be adjusted pro rata to the adjustment of prime cost amounts [clause 20.6.2].
Any charges that the contractor has paid for items that were not required to be

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
included in the contract sum shall be added to the contract value, plus a 10% mark-
up [clause 20.4]. This shall apply where he has been obliged to comply with
regulations regarding the works [clause 14.1.4], and where he has opened up and
tested work that was found to be in accordance with the agreement [clause
14.1.6]. [31]
Where the contractor has incurred expense or loss which arises from a
circumstance for which he was not required to make provision in his tender price, he
shall submit details thereof to the principal agent, who, if he approves the claim, shall
include the amount in the contract value. The circumstances are limited to the
following:
• unreasonable delay or failure to issue a contract instruction which has been
requested by the contractor [clause 17.2.3]; [32]

Page 353

• extension of the construction period [clause 17.2]; [33]

• work by a direct contractor appointed [clause 13.0];
• default by the employer or principal agent.
Where the employer has incurred expense or loss arising from an insurance claim
under a contract works insurance policy for which the contractor was responsible, he
shall submit details thereof to the principal agent, who, if he approves the claim, shall
include the amount in the contract value [clause 20.7].
Simultaneously with the issuing of a payment certificate, the principal agent shall
issue a detailed statement determining the current contract value of the works. To do
so, he will have to value all variations [clause 20.1], adjust preliminaries [clause
20.6.3], employer allowances [clause 20.6.1], prime cost amounts [clause 20.6.2]
and sundry contractor’s claims for additional charges and expense or loss [clause
20.4]. This will, in effect, constitute a progressive preparation of the final account,
which will keep the employer regularly informed of the variations to the contract
value and avoid unpleasant surprises at the end of the contract.
Within 30 working days of the date of practical completion the principal agent
Copyright © 2019. Juta & Company, Limited. All rights reserved.

must submit to the contractor a detailed final account reflecting the total value due in
terms of the agreement [clause 20.8]. [34] If the contractor accepts this final account
the principal agent will be in a position to issue the final payment certificate
concurrently with the certificate of final completion when the latter falls due to be
issued [clause 19.12]. If the contractor does not accept the final account he shall
give substantiated reasons for such rejection within 15 working days of receipt
thereof, failing which the final account shall be deemed to be accepted [clause 20.9].
The contractor may give notice objecting to the correctness of the final account
within the 10 working day period or such extended period as the principal agent may

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
allow on request from the contractor and if his objection has not been resolved within
10 days, he may give notice of a disagreement [clause 20.10].

Page 354

Suspension and Termination

Chapter 21
Suspension or termination
Suspension or termination by the contractor
21.1 The contractor may give notice of intention to suspend or terminate this
agreement where the employer has failed to timeously:
21.1.1 Provide and/or maintain a guarantee for payment [CD] [9.2]
21.1.2 Give possession of the site to the contractor [10.1.6]
21.1.3 Pay the amount certified [19.9]
21.1.4 Appoint another principal agent and/or agents [5.5]
21.1.5 Allow the principal agent and/or agents to exercise fair
judgement [5.6]
21.1.6 Effect insurances [8.2]
or . . .
21.1.7 Where the principal agent has failed to timeously issue to
the contractor construction information [10.1.2] or a
payment certificate [19.2]
21.2 Where the employer or principal agent is in default [21.1.1–7] the
contractor may give five (5) working days’ notice to the employer of
intention to suspend the works. Where a specified default in terms of the
notice has not been remedied the contractor may suspend execution of
the works until such default has been remedied without prejudice to any
rights the contractor may have
21.3 Where the works has been suspended [21.1] the principal agent shall
Copyright © 2019. Juta & Company, Limited. All rights reserved.

revise the date for practical completion on resumption of the works

[17.2.8]
21.4 Where the contractor decides to terminate this agreement the
contractor shall give notice to the employer and/or the principal agent
of a specified default [21.1.1–7] to be remedied within five (5) working
days of the date of receipt of such notice
21.5 Where a specified default has not been remedied within such period [21.4]
the contractor may give notice to the employer and the principal agent
of the termination of this agreement forthwith

21.6 Where this agreement is terminated:

21.6.1 The contractor shall remove temporary structures,
construction equipment and surplus materials and goods
from the site within ten (10) working days, or such period
agreed by the principal agent
21.6.2 The latent defects liability period for the completed portion of
the works shall end on the date of termination [16.5]
21.6.3 The contractor may be entitled to damages
21.6.4 The guarantee for payment, where applicable [CD], shall
expire on payment of the final payment certificate
21.6.5 The guarantee for construction shall expire on the date of
termination
21.6.6 The guarantee for advance payment, where applicable
[CD], shall expire on repayment of amounts due to the
employer
21.7 Termination of the works shall not prejudice any rights the contractor
may have
21.8 The right to terminate may not be exercised where the contractor is in
material breach of this agreement
Termination by the employer
21.9 The employer may give notice of intention to terminate this agreement
where the contractor has failed to:
21.9.1 Provide and/or maintain a guarantee for construction [CD]
[9.1.1]
21.9.2 Proceed with the works [11.2.6]
21.9.3 Comply timeously with a contract instruction [14.0]
21.10 Where the employer contemplates terminating this agreement the
principal agent shall give notice to the contractor of a specified default
[21.9.1–3] to be remedied within ten (10) working days of the date of
Copyright © 2019. Juta & Company, Limited. All rights reserved.

receipt of such notice

21.11 Where a specified default has not been remedied within such period
[21.10] the employer may give notice to the contractor of termination of
this agreement forthwith
21.12 The employer may:
21.12.1 Employ others to safeguard the works, complete the
outstanding work and rectify defects in that portion of the
works executed by the contractor [10.2.2]

Page 356

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
21.12.2 Use materials and goods and temporary structures on the
site for which payment shall be included in the final account
21.12.3 Sell temporary structures or construction equipment
belonging to the contractor where the contractor fails to
remove such items on notice to do so, without being
responsible for any loss or damage
21.12.4 Recover damages from the contractor from the date of
termination including, but not limited to, additional costs
incurred in the completion of the works
21.12.5 Apply the penalty [18.2] up to the date of termination where
the initial or revised date for practical completion has
passed
21.13 The employer has the right of recovery against the contractor, where
applicable, [CD], from the:
21.13.1 Guarantee for construction until the final payment has
been made
or . . .
21.13.2 Payment reduction
or . . .
21.13.3 Guarantee for advance payment until the outstanding
balance has been repaid to the employer
21.14 The latent defects liability period for the completed portion of the works
shall end [16.6] five (5) years from the date of termination
21.15 Termination of the works shall not prejudice any rights the employer may
have
21.16 The right to terminate may not be exercised where the employer is in
material breach of this agreement
Termination due to impossibility of performance
21.17 Either party may terminate this agreement where the works is:
21.17.1 Stopped for forty-five calendar days due to circumstances
Copyright © 2019. Juta & Company, Limited. All rights reserved.

beyond the control of either party

21.17.2 Substantially damaged or destroyed
21.18 Where either party decides to terminate this agreement the party seeking
termination shall give notice to the other party
21.19 The contractor shall:
21.19.1 Cease work and ensure that the works is safe in terms of the
law

Page 357

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
21.19.2 Remain responsible for the works [11.2] until possession is
relinquished to the employer
21.20 Termination shall take effect from the date recorded by the principal
agent [21.19.2]
21.21 The securities, where applicable, shall expire and be returned to the
contractor or employer:
21.21.1 The guarantee for payment shall expire on payment of the
final payment certificate or on payment in full of the
guaranteed sum or on the security expiry date, whichever is
the earlier
21.21.2 The guarantee for construction shall expire on the date of
termination
21.21.3 The guarantee for advance payment shall expire on
repayment of amounts due to the employer
21.22 The principal agent, in consultation with the contractor where possible,
shall within twenty (20) working days of the date of termination compile
and issue to the parties a status report of the works including marked up
drawings and photographs recording completed and incomplete work on
the date of termination of the works
21.23 The principal agent shall continue to certify the value of the work
executed and materials and goods until the issue of the final payment
certificate [19.2; 19.8]
21.24 The principal agent shall commence and complete the final account
[20.0] within thirty (30) working days of the date of termination including
the cost of materials and goods and those ordered before termination
that the contractor is bound to accept and make payment for
21.25 This clause [21.0] shall, to the extent necessary to fulfil its purpose, exist
independently of this agreement

Commentary
21.0 Termination
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The MWA makes provision for the Agreement to be terminated by the employer or
suspended or terminated by the contractor where either party is in default of the
listed clauses. The contractor is, however, obligated to give the employer notice of
his intention to suspend the works prior to termination to allow the employer to
correct the default situation to avoid the contractor terminating the agreement.

Page 358

21.1 Suspension or termination by the contractor

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
The contractor may give notice of intention to suspend or terminate the agreement if
the employer has failed to timeously:
• provide and/or maintain guarantee for payment when required to do so [clause
21.1.1];
• give possession of the site to the contractor when required to do so [clause
21.1.2];
• make payment of an amount in a payment certificate [clause 21.1.3];
• appoint another principal agent and/or agents [clause 21.1.4];
• allow the principal agent and/or agents to exercise fair judgement [clause
21.1.5];
• effect insurances [clause 21.1.6],
or where the principal agent fails to issue a certificate for payment to the contractor
or has failed to timeously issue construction information to the contractor [clause
21.1.7]
Where the employer or principal agent is in default [clause 21.1.1 to 21.1.7] in any
of these respects, the contractor may give the employer five working days’ written
notice of the default and of his intention to suspend the works. Where a specified
default in terms of the notice has not been remedied, the contractor may suspend
execution of the works until such default has been remedied without prejudice to any
rights the contractor may have. Such suspension requires the principal agent to
revise the date for practical completion on resumption of the works [clause 21.3] with
an adjustment to the contract value [clause 17.2.8].
Where the employer is in default in any of the above respects and the contractor
decides to terminate the agreement [clause 21.4], the contractor shall give notice to
the employer and/or principal agent of a specified default to be remedied within five
working days of the date of receipt of such notice [clause 21.4].
Where such notice period has elapsed and the employer remains in default, the
contractor may, by written notice to the employer, terminate the agreement forthwith.
The contractor may not terminate the agreement if he himself is in breach of a
material term of the agreement [clause 21.8].
Copyright © 2019. Juta & Company, Limited. All rights reserved.

On termination by the contractor:

• The contractor shall remove temporary structures, construction equipment and
surplus materials and goods from the site within ten working days, or such
period agreed by the principal agent [clause 21.6.1].
• The latent defects liability period for the completed portion of the works shall
end on the date of termination [clauses 21.6.2 and 16.5].
• The contractor may be entitled to damages [clause 21.6.3].
• Termination of the works shall not prejudice any rights the contractor may
have [clause 21.7].

21.2 Termination by the employer – contractor’s default

A party may not terminate an agreement unless the other party has been guilty of a
serious breach. To remove any doubt about what constitutes a serious breach, the
MWA sets out the defaults of the contractor which would entitle the employer to give
notice of termination. These are:
• failure to provide and maintain a JBCC guarantee for construction (if that was
the form of security chosen by the contractor) within 15 working days of the
date of acceptance of his tender [clauses 21.9.1; 9.1.1];
• failure to commence with the works within 10 working days after receiving
possession of the site, and/or failing to proceed with due diligence, regularity,
expedition, skill and appropriate resources to bring the works to practical
completion and to final completion [clauses 11.2.6; 21.9.2];
• failure to timeously comply with a contract instruction or remedy a specified
default [clauses 14.3; 21.9.3].
If the contractor is in default in any of these respects and the employer wishes to
terminate, the principal agent shall give the contractor written notice of such default
and of the employer’s intention to terminate if the default is not remedied within 10
working days of receipt of such notice [clause 21.10]. If after 10 working days the
contractor is still in default, the employer, or the principal agent on his behalf, may by
written notice to the contractor terminate the agreement forthwith [clause 21.11]. The
employer may not terminate the agreement if he himself is in breach of a material
term of the agreement [clause 21.16]. [35]
On termination by the employer he may:
• employ others to safeguard the works, complete the outstanding work and
rectify defects in that portion of the works executed by the contractor [clause
21.12.1];
• use materials and goods and temporary structures on the site for which
payment shall be included in the final account [clause 21.12.2];
• sell temporary structures or construction equipment where the contractor fails
Copyright © 2019. Juta & Company, Limited. All rights reserved.

to remove such items on notice to do so, without being responsible for any
loss or damage [clause 21.12.3];
• recover damages from the contractor from the date of termination including,
but not limited to, additional costs incurred in the completion of the works
[clause 21.12.4];
• apply the penalty up to the date of termination where the initial or revised date
for practical completion has passed [clauses 21.12.5; 18.2];

Page 360

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
• exercise his right of recovery against the contractor from the guarantee for
construction or the retention fund [clause 21.13.1] or a payment reduction
[21.13.2] or guarantee for advance payment [clause 21.13.3].
The latent defects liability period for the completed portion of the works shall end five
years from the date of termination [clause 21.14]. This refers to a latent defect in the
contractor’s work only; he would not be responsible for a latent defect in the work of
a direct contractor who had completed the works. Termination of the works shall not
prejudice any rights the employer may have [clause 21.15].
21.3 Termination by either party
The MWA provides for termination by the employer due to the contractor’s default
[clauses 21.9 to 21.16] or termination by the contractor due to default by the
employer or the principal agent [clauses 21.1 to 21.7]. The agreement makes
provision for termination due to impossibility of performance [21.17] where the works
is stopped for forty-five calendar days due to circumstances beyond the control of
either party [clause 21.17.1] or where the works has been substantially damaged or
destroyed [clause 21.17.2]
The MWA stipulates the procedures to be followed where the agreement is
terminated by either party in that the contractor shall:
• Cease work and ensure that the works are safe in terms of the law [clause
21.19.1];
• Remain responsible for the works until possession is relinquished to the
employer [clause 21.19.2].
The security as chosen by the contractor [CD] shall expire and be returned to the
contractor or employer as the case may be [clause 21.21].
The principal agent is required to perform the tasks as described in clauses
21.22, 21.23 & 21.24 as follows:
• in consultation with the contractor where possible, compile and issue to the
parties a status report recording completed and incomplete work at the date of
termination – this [clause 21.22] is silent on the subject of defective work and
Copyright © 2019. Juta & Company, Limited. All rights reserved.

it is recommended that the status report records work and or materials found
to be defective when so inspected;
• continue certifying the value of the work executed and materials and goods
until the issue of the final payment certificate [clause 21.23];
• commence and complete the final account within thirty (30) working days of
the date of termination including the cost of materials and goods and those
ordered before termination that the contractor is bound to accept and make
payment for [clause 21.24].
It must be noted that clause 21.0 shall, to the extent necessary to fulfil its purpose,
exist independantly of this agreement [21.25].

Dispute resolution
Chapter 22
Dispute resolution
22.1 Should any disagreement arise between the employer (or the principal
agent or an agent) and the contractor out of or concerning this
agreement, its validity or termination, either party may give notice of
disagreement. The parties shall attempt to resolve the disagreement
between them and record such resolution in writing signed by them
22.2 Where the disagreement is not resolved within ten (10) working days of
receipt of the notice of disagreement, such disagreement shall be
deemed to be a dispute and may be referred to adjudication by either
party
22.3 The notice of adjudication shall clearly define the scope of the dispute and
the relief sought by adjudication
22.4 Failure to comply with the procedure described [22.5] shall cause the
dispute to be resolved by arbitration and not by adjudication
22.5 Where a dispute is referred to adjudication:
22.5.1 The adjudicator shall be nominated by the nominating body
[CD] and shall be deemed to have been appointed by the
parties
22.5.2 The applicable rules shall be stated [CD] or shall be by
agreement between the parties and the adjudicator failing
which the rules shall be determined by the adjudicator.
Neither party shall be entitled to legal representation, unless
otherwise agreed in writing by the parties
22.5.3 A determination given by the adjudicator shall be immediately
binding upon, and implemented by the parties not
withstanding that either party may give notice to refer the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

determination to arbitration
22.5.4 Where the adjudicator has not given a determination within
the time period allowed or an extended time period provided
in the applicable rules for adjudication either party may give
notice to the other party and to the adjudicator that if such
determination is not received within ten (10) working days of
receipt of this notice his appointment is thereupon
automatically terminated and such dispute shall be referred
to further adjudication or arbitration, at the option of the

Page 362

22.5.5 The adjudicator shall not be eligible for subsequent

appointment as the arbitrator
22.6 Where the dispute is referred to arbitration:
22.6.1 Arbitration shall not be construed as a review or appeal from
any such determination by the adjudicator and that any such
determination by the adjudicator shall remain in force and
continue to be implemented until overturned by an arbitration
award
22.6.2 The resolution of the dispute shall commence anew
22.6.3 The referring party in the adjudication shall be the claimant in
the arbitration
22.6.4 The arbitrator shall be nominated by the nominating body
[CD] and shall be deemed to have been appointed by the
parties
22.6.5 The applicable rules shall be stated [CD] or shall be by
agreement between the parties and the arbitrator, failing
which, shall be determined by the arbitrator
22.6.6 The arbitrator shall have the authority to finally determine the
dispute including the power to make, open up and revise any
certificate, opinion, decision, determination, requisition or
notice relating to the dispute as if no such certificate,
opinion, decision, determination, requisition or notice had
been issued or given
22.6.7 The arbitrator’s award shall be final and binding on the
parties
22.7 Where the body to nominate an adjudicator [CD] or an arbitrator [CD] is
not specified the referring party shall be entitled to stipulate the body that
is to nominate the adjudicator or the arbitrator binding on the other party
Copyright © 2019. Juta & Company, Limited. All rights reserved.

to accept such nomination

22.8 Notwithstanding the provisions relating to the resolution of a
disagreement, adjudication or arbitration [22.5, 22.6], the parties may, by
agreement and at any time, refer a dispute to mediation, in which event:
22.8.1 The provisions relating to adjudication and/or arbitration shall
be deemed to be suspended from the time of such
agreement until notice by either party that they be resumed
22.8.2 The appointment of a mediator, the procedure and the status
of the outcome shall be agreed between the parties

22.8.3 Regardless of the outcome of a mediation the parties shall

bear their own costs concerning the mediation and equally
share the costs of the mediator and related expenses
22.9 The parties shall continue to perform their obligations in terms of this
agreement, notwithstanding that a disagreement or dispute exists
between them
22.10 This clause [22.0] shall, to the extent necessary to fulfil its purpose, exist
independently of this agreement

Commentary
22.0 Dispute resolution
In the MWA Edition 5.2, adjudication or arbitration is now the chosen procedure for
the settlement of disputes. [36] These procedures may, however, be temporarily
suspended should the parties agree to mediation [clause 22.8].
The disputes that come within the scope of this clause are those between the
employer, or the principal agent or an agent acting on his behalf, and the contractor.
Any dispute between the employer and his principal agent would fall beyond the
scope of this clause and would fall to be dealt with in terms of their agreement.
The dispute must arise out of a disagreement between the employer (or the
principal agent or an agent) and the contractor which the parties are unable to
resolve themselves within 10 working days of receipt of a notice of disagreement
[clauses 22.1, 22.2].
Any such dispute shall be referred to adjudication [clause 22.2]. Where the
dispute is referred to adjudication, the adjudicator shall be nominated by the
nominating body stated in the CD and shall be deemed to have been appointed by
the parties. The adjudication shall be conducted in terms of the rules agreed by the
parties and the adjudicator, where possible it is recommended that the JBCC Rules
for Adjudication be used. A determination given by the adjudicator shall be
Copyright © 2019. Juta & Company, Limited. All rights reserved.

immediately binding upon, and implemented by the parties. Where the adjudicator
has given a determination, either party may give notice of dissatisfaction to the other
party and the adjudicator within ten working days of receipt of the determination
[clause 22.5.4].

Page 364

Where the dispute is referred to arbitration, the arbitrator shall be nominated by

the nominating body stated in the CD and shall be deemed to have been appointed
by the parties [clause 22.6.4]. Traditionally, the arbitrator was the person named in

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
the schedule but in recent times this practice has been discontinued in favour of an
arbitrator being nominated for his expertise in the matter under dispute. This would,
for example, favour an architect being appointed as the arbitrator in matters dealing
with quality issues; a quantity surveyor being appointed where the dispute concerns
the project’s finances or an engineer where structural matters are in dispute. If all
else fails, a party may apply to court for an arbitrator to be appointed in terms of s
12(2) of the Arbitration Act 42 of 1965.
The Summary Procedure Rules and more recently, the Restricted Representation
Rules are devised to facilitate the conduct of arbitrations that may arise from small
construction contracts such as the MWA. Under these rules the parties are not
permitted legal representation in hearings unless otherwise agreed, but may be
assisted in the preparation and presentation of their cases by suitable qualified and
experienced persons such as an architect, quantity surveyor or engineer.
In the proceedings the arbitrator is empowered to open and revise any document
relating to the dispute as if no such document had been issued or given [clause
22.6.6].
At the end of the proceedings the arbitrator will make his decision known in the
form of a written award which is final and binding; there is no appeal against an
award unless otherwise agreed beforehand. An award may be set aside by the court
on proof of gross misconduct on the part of the arbitrator. [37]
If a party does not comply with a directive contained in the award, the other party
may apply to court to have the award made an order of court, [38] and enforced as
such.
Arbitration under the Restricted Representation Rules is a comparatively quick
and inexpensive process. The arbitrator will usually award that the costs be paid by
the unsuccessful party.
The resolution of any dispute by arbitration shall not cause the progress of the
works to be suspended, and notwithstanding the existence of any dispute, each
party shall continue to perform his obligations [clause 22.9]. Thus a contractor shall
remove and replace work which the principal agent had condemned in a
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 365

contract instruction and ordered to be replaced, even though the contractor disputes
the principal agent’s condemnation of the work. The contractor’s claim in the ensuing
arbitration would then be the cost of demolishing and reconstructing work which he
held to have been of an acceptable quality.
The dispute resolution clause is severable from the rest of the agreement and
shall survive any cancellation of the agreement [clause 22.10]. Indeed, termination

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
will frequently give rise to disputes about the validity of the grounds for termination
and the damages that are claimed, which will need the arbitration provisions for
resolution.
The State is opposed to arbitration, [39] and retains the right to choose adjudication
or litigation instead.

Page 366

Agreement
This agreement, comprises the entire contract between the parties No
representations, terms, conditions or warranties not contained in this agreement
shall be binding on the parties. No agreement or addendum varying, adding to,
deleting or terminating this agreement including this clause shall be effective unless
reduced to writing and signed by the duly authorised representatives of the parties.
The contracting parties

The parties Employer Contractor

Business name

Business type

Business registration

Tax number (VAT/GST)

Contact person

Telephone

Mobile number

E-mail

Address: Building name

Address: Street

Address: Suburb

Address: City

Address: P O Box
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Address: Post Office

Address: Province

Address: Country

Project name

Project location

Currency

Accepted contract sum including tax

Accepted contract sum including tax in
words

Signed – who by signature hereto

Page 367

MVA Contract data

The Joint Building Contracts Committee® – NPC

Minor Works Agreement
Edition 5.2—May 2018

The definitions contained in the JBCC® Minor Works Agreement apply to this
document. A word or phrase in bold type in the text has the same meaning assigned
to it in the definitions of such agreement. Where a word or phrase is not in bold type
it has the meaning consistent with the context of its use
This contract data contains unique requirements applicable to the project and
variables referred to in the JBCC® Minor Works Agreement and the JBCC® General
Preliminaries. The information provided in this document by the principal agent is
complete and accurate at the time of calling for tenders. Where additional
information becomes available, all tenderers will be informed in writing. Reference to
®

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
clause numbers in the JBCC® Minor Works Agreement are shown in [square
brackets] in this contract data eg [3.2.1]. Spaces requiring information must be filled
in, or marked as ‘not applicable’, but not left blank
This contract data, when completed and submitted by the contractor, becomes
the form of tender. Where the contractor is appointed, the contract documents
comprise the signed JBCC® Minor Works Agreement, this completed contract data,
the priced document, drawings and other listed documents
Warning!
The JBCC® Minor Works Agreement Edition 5.2 has been coordinated with the
JBCC® General Preliminaries and the JBCC® certificate forms and support
documents. Forms from previous editions are not compatible with the JBCC® Minor
Works Agreement Edition 5.2

Page 368

JBCC® claims authorship of this work. All rights are reserved. No part of this
publication may be reproduced, stored in any retrieval system or transmitted in any
form or by any means, electronic, mechanical, photocopying, scanning, recording, or
otherwise, without the prior permission in writing of the JBCC®.
Unauthorised reproduction of the work is an infringement of the copyright. Judicial
proceedings can and will be instituted to obtain relief and recovery of damages

Page 369

A Project information

A 2.0 Site [1.1]

Erf/stand number

Township/Suburb

Site address

Local authority

A 3.0 Employer [1.1]

Name

Legal entity of above Contact person

Business registration number Telephone number

VAT/GST number Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

A 4.0 Principal agent [1.1]

Name
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

A 5.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

A 6.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

A 7.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Page 371

A 8.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

B Contract information

B 1.0 Definitions [1.1]

Bills of quantities:
System/Method of measurement

B 2.0 Law, regulations and notices [2.0]

Law applicable to the works, state country [2.1]

B 3.0 Offer and acceptance [3.0]

Currency applicable to this agreement [3.2]

B 4.0 Documents [4.0]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
The original signed agreement is to be held by the principal
agent [4.2], if not, indicate by whom

Number of copies of construction information issued to the
contractor at no cost [4.5]
Documents comprising the agreement Page numbers
The JBCC® Minor Works Agreement, Edition 5.2 – May 2018 1 to 19
The JBCC® Minor Works Agreement—Contract Data, Edition 5.2 1 to 11
– May 2018

Page 372

The JBCC® General Preliminaries for use with the JBCC® Minor 1 to 7
Works Agreement, Edition 5.2 – May 2018

‘‘

Contract drawings— Number Revision Date
description

B 5.0 Employer’s agents [5.0]

Authority is delegated to the following agents to issue contract instructions and perform duties for specific aspects of the
works [5.2]

Principal agent’s and agents’ interest or involvement in the works other than a professional interest [5.3]

B 6.0 Insurances [8.0]

Insurances by employer Amount including Deductible

tax amount including
tax

Contract works insurance:

New works [8.2.1]
(contract sum or amount)

or Works with alterations and additions [8.2.1] (reinstatement
value of existing structures with or including new works)

Direct contractors [13.0] where applicable, to be included in
the contract works insurance

Free issue [10.1.12] where applicable, to be included in the
contract works insurance

Escalation, professional fees and reinstatement costs if not
included above

Total of the above contract works insurance amount

Supplementary insurance [8.2.2]

Public liability insurance [8.2.3]

Removal of lateral support insurance [8.2.4]

Other insurances [8.2.5]

Yes/no? If yes,
description 1

Yes/no? If yes,
description 2

B 7.0 Obligations of the employer [10.1]

Existing premises will be in use and Yes/no?
occupied [10.1.3]
If yes, description

Restriction of working hours [10.1.3] Yes/no?
If yes, description

Natural features and known services to be Yes/no?
preserved by the contractor [10.1.4]
If yes, description

Restrictions to the site or areas that the Yes/no?
contractor may not occupy [10.1.5]
If yes, description

Supply of free issue [10.1.12] Yes/no?
If yes, description

B 8.0 Direct contractors [13.0]

Extent of work [10.1.11]

Extent of work [10.1.11]

Extent of work [10.1.11]

Extent of work [10.1.11]

Extent of work [10.1.11]

B 9.0 Possession of site [10.1.6], practical completion [15.0; 17.0]

and penalties [18.0]

Practical completion Intended date of Period for inspection Date for practical Penalty
for the works as a possession of the site by the principal completion [15.1.1] amount [18.1]
whole [10.1.6] agent [15.3]

Date working days Date Penalty per
calendar day

Criteria to achieve practical completion not covered in the definition of practical completion
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 375

B 10.0 Payment [19.0]

Date of month for issue of regular payment certificates
[19.2]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.

B 11.0 Dispute resolution [22.0]

Adjudication [22.5.1]
Name of nominating body

Applicable rules for adjudication
[22.5.2]

Arbitration [22.6.4]
Name of nominating body

Applicable rules for arbitration
[22.6.5]

B 12.0 JBCC® General Preliminaries—selections

Provisional bills of quantities [P2.2] Yes/no?

Availability of construction information [P2.3] Yes/no?

Previous work—dimensional accuracy—details [P3.1]

Previous work—defects—details [P3.2]

Inspection of adjoining properties—details [P3.3]

Handover of site in stages—specific requirements [P4.1]

Enclosure of the works—specific requirements [P4.2]

Geotechnical and other investigations—specific requirements
[P4.3]

Existing premises occupied—details [P4.5]

Services—known—specific requirements [P4.6]

Water [P8.1] By contractor Yes/no?

By employer Yes/no?

By employer – metered Yes/no?

Electricity [P8.2] By contractor Yes/no?

By employer Yes/no?

By employer – metered Yes/no?
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 376

Ablution and By contractor Yes/no?
welfare facilities
[P8.3]

By employer Yes/no?

Communication facilities—specific requirements [P8.4]

Protection of the works—specific requirements [P11.1]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
Protection/isolation of existing works specific requirements [P11.2]

Disturbance—specific requirements [P11.5]

Environmental disturbance—specific requirements [P11.6]

B 13.0 Changes made to JBCC® documentation

Reference may be made to other documents forming part of this agreement

Page 377

C Tender closing

Tender closing date Time

Tender submission address

Tender may be submitted by e- Yes/no? E-mail
mail

D Tenderer’s selections

D 1.0 Securities [9.0]

Guarantee for construction: Select Option A or B

Option A Guarantee for construction (variable) by contractor [9.1.1]

Option B Guarantee reduction [9.1.2]

Copyright © 2019. Juta & Company, Limited. All rights reserved.

Guarantee for payment by employer [9.2] Amount

Advance payment, subject to a guarantee for advance payment [9.4] Amount

D 2.0 Contractor’s annual holiday periods during the construction

period

Year 1 contractor’s annual holiday start date end date
period

Year 2 contractor’s annual holiday start date end date
period

D 3.0 Payment of preliminaries [19.0]

Select Option A or B Where the contractor does not select an option, Option A
shall apply
Where the total amount of preliminaries is not identified (in a lump sum contract)
it shall be taken as 7.5% (seven and a half per cent) of the contract sum, excluding
contingency sums, and any provision for contract price adjustment (cost fluctuation)

Page 378

Option A Assessed by the principal agent, an amount prorated to the value of the works executed in the same
ratio as the amount of the preliminaries to the contract sum which contract sum shall exclude the
amount of preliminaries.
Contingency sum(s) and any provision for contract price adjustment (cost fluctuations) shall be excluded
for the calculation of the aforesaid ratio
Option B An amount agreed by the principal agent and the contractor in terms of the bills of quantities or the
priced document to identify an initial establishment charge, a time based charge and a final
disestablishment charge.
Payment of the time based charge shall be adjusted from time to time as may be necessary to take into
account the progress of the works

D 4.0 Adjustment of preliminaries [20.6.3]

Select Option A or B Where the contractor does not select an option, Option A
shall apply
The amount of preliminaries shall be adjusted to take account of the effect of
changes in time and/or value on preliminaries. Such adjustment shall be based on
the particulars provided by the contractor for this purpose in terms of Options A or
B, shall preclude any further adjustment of the amount of preliminaries and shall
apply notwithstanding the actual employment of resources by the contractor in the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

execution of the works

For the adjustment of preliminaries both the contract sum and the contract
value shall exclude the amount of preliminaries, contingency sum(s) and any
provision for contract price adjustment (cost fluctuations)
Where the total amount of preliminaries is not identified (in a lump sum contract)
it shall be taken as 7.5% (seven and a half per cent) of the contract sum, excluding
contingency sums, and any provision for contract price adjustment (cost fluctuation)

Page 379

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
Option A The preliminaries shall be adjusted in accordance with an allocation of preliminaries amounts to be
provided by the contractor within fifteen (15) working days of the date of acceptance of the tender as
follows:
- An amount which shall not be varied;
- An amount varied in proportion to the contract value as compared to the contract sum;
- An amount varied in proportion to the number of calendar days extension to the date of practical
completion to which the contractor is entitled with an adjustment of the contract value as compared to the
number of calendar days in the initial construction period
Where the above mentioned information is not provided the following allocation of preliminaries amounts
shall apply:
- Ten per cent (10%) shall not be varied
- Fifteen per cent (15%) shall be varied in proportion to the contract value as compared to the contract
sum
- Seventy five per cent (75%) shall be varied in proportion to the number of calendar days extension to the
date of practical completion to which the contractor is entitled with an adjustment of the contract value as
compared to the number of calendar days in the initial construction period
Option B The preliminaries shall be adjusted in accordance with a detailed breakdown of preliminaries amounts
for the works to be provided by the contractor within fifteen (15) working days of possession of the site.
Such breakdown shall inter alia include administrative and supervisory staff charges and charges for the
use of construction equipment, all in terms of the programme
The adjustment of preliminaries shall be based on the number of calendar days extension to the date of
practical completion to which the contractor is entitled with an adjustment of the contract value as
compared to the number of calendar days in the initial construction period taking into account the
resources planned for the period of construction during which the delay occurred (not for the period added
to the initial or extended date for practical completion)
Where the contractor does not provide the detailed breakdown of preliminaries within the period stated,
Option A shall apply

Page 380

E Form of tender

E 1.0 Tenderer’s details

Name

Legal entity of above Contact person

Business registration number Telephone number

VAT/GST number Mobile number

Country E-mail
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Postal address

Postal code

Physical address

Postal code

E 2.0 Acceptance of tender conditions

By submission of this tender to the employer the tenderer offers and agrees to
execute and complete the works and to remedy any defects in conformity with the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
specification for the tender amount stated.
The tender shall remain in full legal force for forty-five (45) calendar days from
the closing date of the tender. The tenderer accepts liability for loss or damages that
may be suffered by the employer should the tender validity period not be honoured.
The lowest or any tender will not necessarily be accepted by the employer nor
will reasons be given for such a decision.

E 3.0 Tender amount compilation

Amount

Tenderer’s work excluding tax

Tax %

Total tender amount including tax

Total tender amount including tax, in words

Page 381

Signature Tenderer who by signature hereto warrants Place
authority

Name Capacity Date

Signature Witness Place

Name Date

E 4.0 Tender qualifications

[1] These were often for very simple inexpensive projects, such as a single-storied block of classrooms
costing about R1 million.
[2] Except in a State contract where the contractor is at risk for loss or damage to the works.
[3] See Section 3 at 9.1 below.
[4] Clause 4.3. It is submitted that this clause should be expanded to state that besides the priced document
not being used as a specification, it should also not be used for the ordering of materials.
[5] Such as the name and address of the employer, the names and addresses of the agents, requirements
with regard to insurance, dates for commencement and practical completion, the criteria to achieve practical
completion, penalties for late completion etc.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
[6] Such as his tender price, the type of security that he offers, contractor’s holiday periods, adjustment of
preliminaries and the tenderer’s details.
[7] The use of provisional bills of quantities would enable tenders to be invited before drawings are complete.
[8] Defined in clause 1.1.
[9] Clause 4.3 in JBCC MWA Edition 4.0.
[10] If there are bills of quantities, it would only be necessary to include the small scale (1:100) working
drawings and site plan; if there are no bills of quantities, all drawings, detail drawings and schedules should be
included.
[11] Act 95 of 1998, as amended.
[12] The principal agent is expected to exercise his independent judgment when he approves or disapproves
work, grants or refuses a revision of the date for practical completion, values variations and payment
certificates and certifies practical and final completion.
[13] A great deal can be read into the phrase ‘give the contractor interpretations and direction’ in clause
6.1.4. It is submitted that, especially where the contractor is an inexperienced emerging contractor, the
principal agent is expected to help him to develop his technical skills and organisational and managerial
abilities.
[14] The contract minutes go far beyond conventional site minutes: they are intended to be a comprehensive
record of progress generally, all instructions given and drawings issued, decisions made and actions taken, all
claims for extra time and extra payment and the decisions made with regard to such claims. The obligation on
the principal agent to prepare such minutes recognises the limited ability of the contractor to handle the paper
work associated with any building contract. At each site meeting the minutes of the previous site meeting and
of all the events since then should be confirmed.
[15] A principal agent considering appointment under a MWA would be well advised to ensure that his fee
allows for adequate compensation for such duties.
[16] JBCC has taken the view that most of the contractors for whom the MWA was intended would not be
able to meet the expense of making good substantial loss or damage to the works, nor would they be able to
protect themselves with insurance, and as a matter of policy decided that the risk would lie with the employer.
[17] The amount of insurance cover should be sufficient to replace the building if it was to be completely
destroyed, with additional allowance for cost escalation, the cost of removing the ruins and additional
professional fees. The deductible is the first portion of any claim which would be met by the employer – the
greater the deductible, the lower the premium.
[18] The contractor is in possession of the site and has the right to exclude unauthorised persons— with very
good reason!
[19] Further discussed in Section 1 at 1.1 above.
[20] It was introduced by JBCC in 1991, although similar forms of guarantee or suretyship had previously
been used in isolated instances by sophisticated contractors and employers.
[21] For a discussion on the concept of possession and the contractor’s lien see Section 1 chapters 6.2.1 to
6.2.3 above.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[22] It is strongly recommended that prior to the handing over of the site to the contractor, a land surveyor be
engaged to confirm the positions of boundary pegs or beacons and to point these out to the contractor at the
site hand-over and that the Certificate of Site Possession be signed by the parties as a record of the date on
which the contractor was given possession of the site and the boundary pegs and datum level were pointed
out to the contractor.
[23] Description of work to be undertaken by direct contractors is to be listed in the CD.
[24] For a detailed discussion see Section 2 at 19 and 21.
[25] If the employer has not been required to provide a payment guarantee, the contractor would be entitled
to exercise his lien and retain possession of the site until payment of any amount that was due to him had
been made.
[26] If the contractor fails to commence the work on the list for final completion within a reasonable time, the
principal agent would be entitled in terms of clause 14.3 to give the contractor five working days’ notice of his
default, and if the contractor had failed to commence the work within that time, the employer would be entitled

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
to engage others to undertake the work and recover from the contractor all expenses and losses thereby
incurred.
[27] All such adjustments are made nett, that is, exclusive of VAT, and VAT is deducted from the contract
sum. VAT is then added to the final contract value.
[28] The term ‘preliminaries’ refers to that portion of the contract price which relates to the cost to the
contractor of maintaining a presence on site and which is time-variable; hire-charges of plant and scaffolding,
salaries of site managers and insurance premiums are typical examples of such costs. The amount of such
costs may have been identified in the bills of quantities or priced document; if not, the respective clause of the
current edition of the JBCC General Preliminaries is to be applied.
[29] Employer’s allowances mean monetary allowances which the contractor is required to include in his
tender price for work which is anticipated will be required, but the exact nature of which is not known at the
time of tendering. It also includes allowances for unforeseen requirements.
[30] Ceramic floor and wall tiles are frequently the subject of prime cost items. The wastage when cutting,
fitting and fixing such tiles can be high, especially when the tiles are large and where the tiles are required to
be laid to patterns.
[31] Where it is found on opening up and testing work that the work is not in compliance with the agreement,
the cost of such opening up and testing would be to the contractor’s account.
[32] Such circumstance might not entitle the contractor to a revision of the date for practical completion if the
delay did not affect the progress of the works as a whole.
[33] This would be the preliminaries allowed in certain instances where the date for practical completion has
been revised.
[34] Most if not all of the work necessary to compile this final account will have been progressively done in
the preparation of the monthly statements in terms of clauses 20.1 and 20.6.
[35] A breach of a material term of the agreement would, among others, be one of the breaches that would
entitle the contractor to terminate in terms of clause 21.1. The most common of these breaches is failure to pay
an amount of an interim payment certificate.
[36] The JBCC MWA Edition 4.0 only provided for Arbitration as a means of resolving a contractual dispute
and stipulated that the Summary Procedure Rules for the Conduct of Arbitrations, published by the Association
of Arbitrators (Southern Africa) and current when the dispute is declared, shall apply.
[37] Section 33 of the Arbitration Act. Examples of such misconduct might be the acceptance of a bribe or
refusal to allow one of the parties to lead evidence. The courts will not set aside an award merely because they
may consider that the arbitrator has misconstrued the law.
[38] Section 31 of the Arbitration Act.
[39] Just as the state is not prepared to grant full authority to the principal agent to deal with payments and
similar issues, so it is not prepared to grant similar authority to an arbitrator, preferring to reserve such authority
to adjudication or to the courts.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 385

Nominated/Selected Subcontract Agreement (NSSA)

The Nominated/Selected Subcontract Agreement
This is the form of agreement to be entered into between the contractor and a
subcontractor who has been nominated or selected in terms of clause 14.0 or 15.0 of
the PBA as the case may be. [1] Whether the subcontractor is nominated or selected,
the form of agreement with the principal contractor remains the same. The difference
between these types of subcontractor appears from clauses 14.0 and 15.0 of the
PBA and is principally concerned with the placing of the risk of the subcontractor’s
malperformance.
The provisions of the NSSA are substantially the same as those in the PBA, with
the necessary changes made, and for ease of reference, corresponding clauses in
the two forms of agreement bear the same number; for example, the clause
concerning Works Risk is numbered 8.0 in both forms. [2] It sometimes happens that
a clause in one form has no counterpart in the other; for example, clause 18.0,
Interim Completion in the NSSA, has no counterpart in the PBA and in that
document is marked ‘No Clause’ in order to maintain consistent numbering.
The format of the NSSA is identical to that of the PBA; it starts with a set of
Copyright © 2019. Juta & Company, Limited. All rights reserved.

definitions and concludes with an Agreement, has its own CD and words that are
printed in bold typeface bear the meanings assigned to them by definition.

Page 386

Nominated/Selected subcontract Agreement

Edition 6.2 – May 2018

©Copyright reserved: JBCC® Edition 6.2—May 2018

This page does not form part of the JBCC® NSSA, Edition 6.2—May 2018

JBCC®
The Joint Building Contracts Committee® NPC (JBCC®) is representative of building
owners and developers, professional consultants and general and specialist
contractors who contribute their knowledge and experience to the compilation of the
JBCC® documents. The JBCC® documents portray the consensus view of the
constituent members and are published in the interests of standardisation and good
practice with an equitable distribution of contractual risk
For more information about the JBCC®, frequently asked questions, where
documents may be purchased as well as training courses visit www.jbcc.co.za. The
JBCC® does not sell directly to users but may be contacted at [email protected]
Nominated Selected Subcontract agreement structure
The JBCC® Nominated/Selected Subcontract Agreement (subcontract agreement)
replicates the JBCC® Principal Building Agreement with common clauses retaining
the same numbering. The agreement clauses follow the project execution sequence.
The documents set out clear, balanced and enforceable procedures, rights and
obligations which, when competently managed and administered, protect the
employer, contractor and subcontractors alike. The following additional documents
form part of the suite of subcontract agreements:
• The JBCC® Nominated/Selected Subcontract Agreement/Contract Data that
incorporates specific contractor and subcontractor requirements;
• The JBCC® General Preliminaries that generally covers all aspects of
Copyright © 2019. Juta & Company, Limited. All rights reserved.

preliminaries for most types of projects;

• A comprehensive set of certificate forms and support documents for use in the
administration of the agreement
Warning!
The JBCC® Principal Building Agreement Edition 6.2 has been coordinated with the
JBCC® Nominated/Selected Subcontract Agreement Edition 6.2, the JBCC® General
Preliminaries and the JBCC® certificate forms and support documents. Forms from
previous editions are not compatible with this JBCC® Nominated/Selected
Subcontract Agreement Edition 6.2

Persons entering into or preparing contracts using the JBCC® suite of contract
agreements and support documents are warned of the dangers inherent in modifying
any part of it
Experience has shown that changes drafted by others, including members of the
building professions, often have unintended results that may be prejudicial to either,
or both, parties
Disclaimer
While the JBCC® aims to ensure that its publications represent best practice, it does
not accept or assume any liability or responsibility for any events or consequences
which derive from the use of the JBCC® documents
Copyright reserved
The name ‘The Joint Building Contracts Committee® NPC’, the abbreviation JBCC®,
the electronic version e-JBCC® and the JBCC® logo are registered trademarks. The
JBCC® claims authorship of this work. All rights are reserved. No part of this
publication may be reproduced, stored in any retrieval system or transmitted in any
form or by any means, electronic, mechanical, photocopying, scanning, recording, or
otherwise, without the prior permission in writing of the JBCC®
Unauthorised reproduction of the work is an infringement of the copyright. Judicial
proceedings can and will be instituted to obtain relief and recovery of damages

Page 388

Actions by the parties/principal agent within a given time

Clause Time period Action Purpose

2.0 1 WD/7 CD parties or principal agent notices deemed to be received
6.4 5 WD contractor > principal agent non-performance of an agent i.t.o.
this agreement
Copyright © 2019. Juta & Company, Limited. All rights reserved.

6.5 5 WD employer appoint another agent/contractor

may object
7.2 to be agreed subcontractor submit design information, where
applicable
10.3 as soon as possible employer/contractor proof/renewal of insurance—other
party to accept
10.6 5 WD notice subcontractor failure to insure > suspension >
expense and loss
11.2.1 20 WD subcontractor provide a replacement security
11.5.1 15 WD contractor provide guarantee for payment
11.5.2 20WD contractor provide a replacement security

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
11.6 10 WD notice > contractor no security, subcontractor notice to
suspend works
11.8 10 WD parties return original/replacement security
forms
12.3.2 15 WD subcontractor submit subcontract priced document
12.3.6 15 WD subcontractor submit subcontract works
programme
12.4 10 WD contractor > subcontractor before construction equipment is to
be removed
14.4.2 15 WD contractor > subcontractor submit specified guarantee for
payment
14.4.5 date in agreement contractor > subcontractor payment
14.5 5 WD subcontractor > employer direct payment on default by
contractor
15.4.2 15 WD contractor > subcontractor submit specified guarantee for
payment
15.4.5 date in agreement contractor > subcontractor payment
15.5 5 WD subcontractor > employer direct payment on default by
contractor
17.3 5 WD subcontractor carry out a contractor’s instruction,
where practical
18.2.2 5 WD subcontractor > contractor subcontract works ready for interim
inspection
18.4 5 WD subcontractor > contractor no list for interim completion =
deemed . . .
21.3.1 10 WD subcontractor > contractor rectify items on extract from list for
completion
21.3.2 5 WD notice subcontractor > contractor subcontract works ready for final
inspection
21.5 5 WD notice subcontractor > contractor subcontract works ready for final
completion
21.6 10 WD contractor > subcontractor list for final completion/certificate of
final completion
21.7.3 5 WD contractor > subcontractor (updated) subcontract list for final
completion
21.9 5+5 WD notice principal agent > contractor list for final completion after
inspection
23.4.2* 15 WD notice subcontractor > contractor notice of a possible delay, no details
Copyright © 2019. Juta & Company, Limited. All rights reserved.

yet
23.5 20 WD subcontractor > contractor delay ceased, details of delay and
expenses
23.7 25 WD contractor > subcontractor assess claim = accept/reduce/reject
25.3 7 CD contractor > subcontractor issue subcontract payment advice
25.10 21 CD contractor > subcontractor make payment from date of payment
certificate
25.13 5 WD subcontractor > contractor no/partial payment > suspend /
demand from security, etc
25.14 30 CD contractor > subcontractor moratorium to pay subcontractor if
contractor not been paid

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
25.16 7 CD contractor > subcontractor final payment advice after certificate
of final completion
26.5* 15 WD notice subcontractor > contractor notice of possible expense and loss
26.6 20 WD subcontractor > contractor substantiated claim
26.7 20 WD principal agent > subcontractor assess claim—accept/reduce/reject
26.10 30 WD principal agent subcontractor issue subcontract final account
26.11 20 WD subcontractor > principal agent accept subcontract final account
26.12 10 WD notice subcontractor + principal agent object to subcontract final account or
deemed acceptance
26.13 7 CD contractor > subcontractor issue final subcontract payment
advice
27.2.9 5 WD contractor > subcontractor remedy default before claiming
expense and/or loss
28.1 5 WD notice subcontractor > contractor intention to suspend
29.2 5 WD contractor > subcontractor intention to terminate if defaults not
remedied
29.3 forthwith contractor > subcontractor default not remedied, termination
forthwith
29.15 10 WD subcontractor > contractor intention to terminate if defaults not
remedied
29.17 forthwith subcontractor > contractor default not remedied, termination
forthwith
29.21 10 WD either party intention to terminate > impossible to
complete
29.24.3 10 WD subcontractor remove subcontract construction
equipment

29.25.2 20 WD PA, contractor and/or subcontractor
prepare status report
29.25.4 30 WD principal agent + subcontractor complete and agree final account
30.2 10 WD either party disagreement not resolved > dispute
30.3 10 WD aggrieved party appointment of adjudicator
30.6.4 10 WD aggrieved party notice of dissatisfaction with
determination
30.6.5 15 WD parties adjudication failed—refer dispute to
arbitration
Abbreviations: WD = working days, CD = calendar days, *no notice, forfeit the opportunity to claim
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 389

Section Clause No Description

INTERPRETATION 1.0 Definitions and interpretation

2.0 Law, regulations and notices

3.0 Offer and acceptance

4.0 Cession and assignment

5.0 Subcontract Documents

INSURANCES AND SECURITIES 8.0 Subcontract works risk

9.0 Indemnities

10.0 Insurances

11.0 Securities

EXECUTION 12.0 Obligations of the parties

13.0 Setting out

14.0 Nominated subcontractors

15.0 Selected subcontractors

16.0 Cooperation with other contractors

17.0 Contractor’s instructions

COMPLETION 18.0 Interim completion

19.0 Practical completion

20.0 Completion in sections

21.0 Defects liability period and final completion

22.0 Latent defects liability period

23.0 Revision of date for interim completion

24.0 Damages for non performance

PAYMENT 25.0 Payment

26.0 Adjustment of N/S subcontract value & final account

27.0 Recovery of expense and/or loss

SUSPENSION AND TERMINATION 28.0 Suspension by the subcontractor

29.0 Termination

DISPUTE RESOLUTION 30.0 Dispute resolution

AGREEMENT JBCC® N/S Subcontract agreement

Page 390
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Interpretation
Chapter 1
Definitions and interpretation

1.1 Definitions
A word or phrase in bold type in this agreement shall have the meaning assigned to
it in these definitions. A word or phrase not in bold type shall be interpreted in the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
context of its usage
AGENT: An entity [CD] appointed by the employer to deal with specific aspects
of the works
BUDGETARY ALLOWANCE: An amount included in the subcontract sum for
work intended for execution by the subcontractor, the extent of which is identified
but not detailed
CALENDAR DAYS: Twenty four (24) hour days commencing at midnight (00:00)
which include Saturdays, Sundays, proclaimed public holidays and recorded
contractor’s annual holiday periods [CD]
CERTIFICATE of FINAL COMPLETION: A certificate issued by the principal
agent to the contractor with a copy to the employer stating the date on which final
completion of the works, or of a section thereof, was achieved
CERTIFICATE of INTERIM COMPLETION: A certificate issued by the contractor
to the subcontractor stating the date on which interim completion of the
subcontract works, or of a section thereof, was achieved
CERTIFICATE of PRACTICAL COMPLETION: A certificate issued by the
principal agent to the contractor with a copy to the employer stating the date on
which practical completion of the works, or of a section thereof, was achieved
COMPENSATORY INTEREST: Interest due to the subcontractor at the ruling
rate of interest on amounts certified after thirty-one (31) calendar days of the date
of practical completion, compounded monthly until the date of payment
CONSTRUCTION PERIOD: The period commencing on the intended date [PBA-
CD] of possession of the site by the contractor and ending on the date of practical
completion
[CD] The notation used where project specific information is recorded in the
subcontract contract data

Page 391
Copyright © 2019. Juta & Company, Limited. All rights reserved.

CONTRACT DRAWINGS: The drawings listed [PBA-CD]

CONTRACTOR: The party contracting with the subcontractor for the execution
of subcontract works
CONTRACTOR’S INSTRUCTION: A written instruction issued by or under the
authority of the contractor to the subcontractor which may include drawings,
photographs and other construction information
DAMAGES: Proven expense and/or loss incurred that may be recovered by the
contractor due to a breach of this subcontract agreement by the subcontractor
and vice versa

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
DEFAULT INTEREST: Interest at six (6) percentage points per annum above the
ruling rate of interest where payment has not been received within the stipulated
period, compounded monthly from the due date for payment until the date of
payment
DEFECT: Any aspect of materials and workmanship forming part of the
subcontract works that does not conform to this subcontract agreement and/or
subcontract construction information
DIRECT CONTRACTOR: An entity appointed under separate agreement by the
employer to do work on site prior to practical completion [CD]
EMPLOYER: The party contracting with the contractor
FINAL COMPLETION: The stage of completion as certified by the principal
agent where the works, or a section thereof, has been complete and is free of
defects
FINAL PAYMENT CERTIFICATE: The certificate issued by the principal agent
after the issue of the certificate of final completion and after the final account has
been agreed
FORCE MAJEURE: An exceptional event or circumstance that:
• could not have been reasonably foreseen
• is beyond the control of the parties, and
• could not reasonably have been avoided or overcome
Such an event may include but is not limited to:
• Acts of war (declared or not), invasion, and hostile acts of foreign enemies
• Insurrection, rebellion, revolution, military and/or usurped power and terrorism

Page 392

• Civil commotion, disorder, riots, strike, lockout by persons other than the
contractor’s employees or his subcontractors
• Sonic shock waves caused by aircraft or other aerial devices, and ionising or
radioactive contamination
Copyright © 2019. Juta & Company, Limited. All rights reserved.

• Explosive materials, except where attributable to the contractor’s use of such

technology
• Natural catastrophes including earthquakes, floods, hurricanes, or volcanic
activity
FREE ISSUE: Materials and goods provided at no cost to the contractor and/or
the subcontractor by the employer for inclusion in the subcontract works [CD]
GUARANTEE for ADVANCE PAYMENT: A security in terms of the JBCC®
Guarantee for Advance Payment form, obtained by the subcontractor from an
institution approved by the employer [CD]
®

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
GUARANTEE for CONSTRUCTION: A security in terms of the JBCC®
Guarantee for Construction form, obtained by the subcontractor from an institution
approved by the contractor [CD]
GUARANTEE for PAYMENT: A security in terms of the JBCC® Guarantee for
Payment form, obtained by the contractor from an institution approved by the
subcontractor [CD]
INTEREST: The bank rate applicable from time to time to registered banks
borrowing money from the Central or Reserve Bank of the country [CD]. The ruling
bank rate on the first calendar day of each month shall be used in calculating the
interest due for such month
INTERIM COMPLETION: The state of completion as certified by the contractor
where the subcontract works, or a section thereof, is substantially complete
JBCC®: The Joint Building Contracts Committee® NPC
LATENT DEFECT: a defect on inspection of the subcontract works by the
contractor, principal agent and/or agents would not reasonably have revealed
LAW: The law of the country [CD]
LIST for COMPLETION: A list that may include marked up drawings and
photographs issued by the principal agent, where practical completion has been
certified, listing defects and/or outstanding work to be completed
LIST for FINAL COMPLETION: A list for completion that may include marked
up drawings and photographs issued by the principal

Page 393

agent, after the inspection of the works for final completion, where final
completion has not been achieved, listing defects and/or outstanding work to be
completed to achieve final completion
LIST for INTERIM COMPLETION: A list that may include marked up drawings
and photographs issued by the contractor after the inspection of the subcontract
Copyright © 2019. Juta & Company, Limited. All rights reserved.

works for interim completion, where interim completion has not been achieved,
listing the defects and/or outstanding work to be completed to achieve interim
completion
LIST for PRACTICAL COMPLETION: A comprehensive and conclusive list that
may include marked up drawings and photographs issued by the principal agent
after the inspection of the works for practical completion, where practical
completion has not been achieved, listing the defects and/or outstanding work to
be completed to achieve practical completion
MATERIALS AND GOODS: Unfixed materials, goods and/or items fabricated for

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
inclusion in the subcontract works whether stored on or off the site or in transit
NOTICE: A written communication, excluding social media, issued by either
party, the principal agent and/or agents to the other party, the principal agent
and/or agents to, inter alia, record an event, request for outstanding subcontract
construction information and/or where suspension or resumption of the
subcontract works or termination of this subcontract agreement is contemplated
PARTY: The contractor or the subcontractor and ‘parties’ shall refer to both of
them
PAYMENT CERTIFICATE: A certificate issued at regular agreed intervals [PBA-
CD] by the principal agent to the contractor and to the employer certifying the
amount due and payable in terms of the JBCC® Payment Certificate format
[PBA-CD]: The notation used where project specific information is recorded in the
Principal Building Agreement contract data
PENALTY: The stipulated amount per calendar day [PBA-CD] payable by the
contractor to the employer where the date or the revised date for practical
completion, whichever is the later, has not been met
PRACTICAL COMPLETION: The stage of completion as certified by the
principal agent where the works or a section thereof has been completed and is
free of patent defects other than minor defects identified in the list for completion
and can be used for the intended purpose [CD]

Page 394

PRELIMINARIES: The JBCC® General Preliminaries and/or the items listed in

the preliminaries section of the subcontract priced document
PRIME COST AMOUNT: An amount included in the subcontract sum for the
delivered cost of materials and goods obtained from a supplier as instructed by the
principal agent
PRINCIPAL AGENT: The entity appointed by the employer with full authority and
Copyright © 2019. Juta & Company, Limited. All rights reserved.

obligation to act in terms of the JBCC® Principal Building Agreement in conjunction

with the subcontract agreement
PRINCIPAL BUILDING AGREEMENT: The JBCC® Principal Building Agreement
recording the contract between the employer and the contractor
PROGRAMME: A diagrammatic representation of the planned execution of units
of work or activities by the contractor and subcontractors indicating the dates for
commencement and completion prepared and maintained by the contractor
PROVISIONAL SUM: An amount included in the subcontract sum for the supply
and installation of work by a subcontractor or a supplier

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
SECTION: An identified portion of the works for which practical completion is
required by a date earlier than that required for the works as a whole [CD]
SECURITY: A monetary guarantee [CD] provided by the contractor to the
subcontractor, or vice versa, in terms of this subcontract agreement from which
either party may recover expense and loss in the event of default
SITE: The land or place where the works is to be executed [CD]
STATUS REPORT: A report compiled by the principal agent and/or agents
and/or the contractor and/or the subcontractor in the event of termination of the
principal building agreement or the subcontract agreement, or where the works
has been suspended due to a force majeure event, or in the event of termination of
the subcontract agreement by the contractor, to record the state of completion or
otherwise of the works or the subcontract works. Such status report may include
marked up drawings and photographs
SUBCONTRACTOR: A nominated or a selected subcontractor appointed in terms
of this subcontract agreement by the contractor in accordance with a contract
instruction for the supply and installation of work for which a provisional sum has
been included in the contract sum [PBA-CD]

Page 395

SUBCONTRACT AGREEMENT: The completed JBCC® Nominated/Selected

Subcontract Agreement and the completed JBCC® Nominated/Selected Subcontract
Agreement Contract Data, the specification, the subcontract drawings, the
subcontract priced documents and agreed special conditions between the
contractor and the subcontractor used in conjunction with the JBCC® Principal
Building Agreement
SUBCONTRACT BILLS OF QUANTITIES: The document drawn up in
accordance with the measuring system [CD]
SUBCONTRACT CONSTRUCTION EQUIPMENT: Equipment and/or plant
provided by or belonging to the subcontractor and used during the subcontract
Copyright © 2019. Juta & Company, Limited. All rights reserved.

construction period
SUBCONTRACT CONSTRUCTION INFORMATION: All information issued by
the principal agent and or agents including this subcontract agreement,
specifications, drawings, schedules, notices and contractor’s instructions
required for the execution of the subcontract works
SUBCONTRACT CONSTRUCTION PERIOD: The period commencing on the
intended date [CD] of access to the site and ending on the date of interim
completion
SUBCONTRACT CONTRACT DATA: The document listing the subcontract

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
project specific information
SUBCONTRACT DRAWINGS: The drawings listed [CD]
SUBCONTRACT FINAL ACCOUNT: The document prepared by the principal
agent that reflects the final subcontract value of the subcontract works at final
completion or termination
SUBCONTRACT PAYMENT ADVICE: A document issued at regular intervals
[CD] by the contractor stating the amount due and payable by the contractor to the
subcontractor or vice versa using the JBCC® Subcontract Payment Advice format
SUBCONTRACT PAYMENT NOTIFICATION: A document issued with each
payment certificate by the principal agent stating the amount due and payable by
the contractor to the subcontractor or vice versa using the JBCC® Subcontract
Payment Notification format
SUBCONTRACT PRICED DOCUMENT: The document incorporating quantities
and/or rates used in the compilation of the subcontract sum such as subcontract
bills of quantities, preliminaries and schedules of rates
SUBCONTRACT PROGRAMME: A diagrammatic representation of the planned
execution of units of work or activities indicating the dates

Page 396

for commencement and completion prepared and maintained by the subcontractor

in conformity with the contractor’s programme
SUBCONTRACT RECOVERY STATEMENT: The statement prepared and issued
in conjunction with each payment advice by the contractor in terms of the JBCC®
Subcontract Recovery Statement format
SUBCONTRACT SUM: The accepted tender amount, inclusive of tax [CD], not
subject to adjustment
SUBCONTRACT VALUE: A monetary value initially equal to the subcontract
sum subject to adjustment in terms of this subcontract agreement
Copyright © 2019. Juta & Company, Limited. All rights reserved.

SUBCONTRACT WORKS: The extent of work to be executed by the

subcontractor described in the subcontract agreement and contractor’s
instructions, which includes free issue and materials and goods. Work or
installations to be executed by direct contractors and others responsible to the
employer are excluded [CD]
SUSPENSION: The temporary cessation of the subcontract works by the
contractor or the subcontractor
TAX: Value-added tax, general sales tax, or similar consumption tax applicable by
law

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
WORKING DAYS: Calendar days which exclude Saturdays, Sundays,
proclaimed public holidays and recorded contractor’s annual holiday periods [CD]
WORKS: The extent of work to be executed in terms of the JBCC® Principal
Building Agreement by the contractor described in the construction information
and contract instructions, which includes free issue and materials and goods.
Work or installations to be executed by direct contractors and others responsible to
the employer are excluded [PBA-CD]

Commentary
1.1 Definitions
The NSSA closely follows the PBA in format, text and clause numbering wherever
possible, with changes made to the clauses of specific relevance to nominated or
selected subcontractors. As in the PBA, a number of new definitions have been
introduced while some of the existing definitions have either been reworded or
omitted altogether.

Page 397

Definitions in the PBA omitted from the NSSA include agreement, bills of
quantities, construction period, contract documents, contract sum, contract value,
final account, guarantee for advance payment, guarantee for construction, guarantee
for payment, priced document and recovery statement.
Definitions pertinent to the NSSA are grouped together as far as possible for ease
of reference and include certificate of interim completion, contractor’s instruction, list
for interim completion, JBCC subcontract agreement, subcontract bills of quantities,
subcontract construction information, subcontract construction period, subcontract
data, subcontract drawings, subcontract final account, subcontract payment advice,
subcontract payment notification, subcontract priced document, subcontract
programme, subcontract recovery statement, subcontract sum, subcontract value
and subcontract works.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The definition for Practical Completion has been revised as discussed under
Section 5.

1.2 Interpretation
1.2.1 In this document, unless inconsistent with the context, the words ‘accept,
allow, appoint, approve, authorise, certify, decide, demand, designate,
grant, inform, instruct, issue, list, notice, notify, object, record, reduce,
refuse, request and state’ and their derivatives require such acts to be in
writing
1.2.2 The masculine gender includes the feminine and neuter genders and vice

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
versa, the singular includes the plural and vice versa, and a person
includes juristic or artificial persons
1.2.3 The headings of clauses are for information only and shall not be used in
interpretation
1.2.4 Reference to a clause number written as [54.3.2] means that specific
clause; clause [54.3.2–4] means sub-clauses 2 to 4 inclusively; or clause
[54.3.2 & 4] means sub-clauses 2 and 4 only
1.2.5 The word “deemed” shall be conclusive that something is fact, regardless
of the objective truth

Page 398

Commentary
1.2 Interpretation
Clause 1.2.1 describes the acts that are to be in writing and it is extremely important
that the parties, the principal agent and/or agents, where required to do so, execute
the actions listed in this clause in writing as a written record of such action will avoid
the possibility of a dispute arising at some later stage of the contract and because it
is a contractual requirement.

Page 399

Chapter 2
Law, regulations and notices
2.1 The subcontractor shall comply with the law [CD], obtain permits,
licenses and approvals required and pay related charges for the execution
of the subcontract works [17.1.4]. The employer shall comply with the
law [CD], obtain permits, planning, building or similar permissions and pay
charges for the subcontract works other than those which are the
responsibility of the subcontractor [26.4.1]
2.2 All communication or notices between the parties shall be in the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

language of this subcontract agreement and in a format that can be

read, copied and recorded
2.3 Legal processes arising out of or concerning this subcontract agreement
may validly be delivered to and served on the parties at the physical
address of the parties recorded in this subcontract agreement. Either
party may, at any time, by notice to the other, change his physical
address provided it is in the same country as the original address
2.4 Notices given in terms of this subcontract agreement shall be deemed
to have been received where:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
2.4.1 Delivered by hand – on the day of delivery
2.4.2 Sent by electronic mail, excluding social media – within one
(1) working day
2.4.3 Sent by registered post – within seven (7) calendar days
after posting

Commentary
2.0 The obligation to comply with statutory requirements
Clauses 2.1 to 2.4.3 above set out the conditions pertaining to the law, regulations
and the issuing of notices which are applicable to the NSSA and to which the
subcontractor shall comply. Clauses 2.4.1 to 2.4.3 establish the method of issuing
notices in terms of this agreement either by hand delivery, electronic mail or
registered post. The provision for notices to be delivered by electronic mail was
given legal certainty by the promulgation of the Electronic Communications and
Transactions Act 25 of 2002. Delivery by social media is excluded.

Page 400

Chapter 3
Offer and acceptance
3.1 The objective of this subcontract agreement is the execution of and
payment for the subcontract works for which there has been an offer by
the subcontractor and an acceptance by the contractor
3.2 The currency applicable to this subcontract agreement is as recorded
[CD]
3.3 This subcontract agreement shall come into force on the date of
acceptance by the subcontractor and continue to be of force and effect
until the end of the latent defects liability period [22.0] notwithstanding
termination [29.0] or the certification of final completion [21.0] and final
payment [25.0]
3.4 Should any provision of this subcontract agreement be unenforceable
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the parties shall act in good faith to agree alternative provisions in terms
of this subcontract agreement
3.5 Failure or omission by a party to enforce any provision of this
subcontract agreement shall not constitute a waiver of such provision or
affect such party’s rights to require the performance of such provision in
the future

Commentary
3.0 Offer and acceptance

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
Tender documents for nominated subcontracts are prepared by the principal agent
and/or agents who thereafter invites and receives tenders, [3] recommends the
acceptance of one to the employer, and on receipt of the employer’s approval,
instructs the contractor to enter into a nominated subcontract with the successful
tenderer [14.1.4]. [4] If the contractor has a reasonable objection to the subcontractor
[clause 14.2.1], [5] or the subcontractor refuses to enter into a subcontract in

Page 401

terms of the JBCC NSSA [clause 14.2.2], [6] or is unable to provide security [clause
11.0] of the Agreement [clause 14.2.2], [7] the process must be repeated to secure a
new nominated subcontractor.
Where a tender is for a selected subcontractor, the tender documents are
prepared in like manner except that such preparation is to be done in consultation
with the contractor [clause 15.1.1] and that tenders are to be called for from a list of
tenderers agreed between the principal agent and the contractor [clause 15.1.2].
The legal principles involved when the principal agent invites and accepts tenders
for nominated or selected subcontracts, and brings such subcontracts into existence,
do not conform to the conventional contractual model, and call for some explanation.
The employer wants to invite tenders from subcontractors, and yet does not want the
agreement that results from the accepted offer to be a contract between himself and
the subcontractor, but instead a subcontract between the contractor and the
subcontractor, in which the subcontractor is under contractual obligations to the
contractor and there is no privity of contract between the employer and the
subcontractor. It is submitted that the principal agent, when he calls for tenders, does
not do so as the agent of the contractor – by no stretch of the imagination can he be
said to be the agent of the contractor – but as the agent of the employer, and that
such tenders are offers by the subcontractor to the employer to enter into a
subcontract, on agreed terms, with the contractor. On notification by the principal
agent that he has been nominated and that the contractor has been instructed to
accept his tender, the subcontractor comes under a contractual obligation to enter
Copyright © 2019. Juta & Company, Limited. All rights reserved.

into a subcontract with the contractor. Unless he has good reason to refuse to do so,
the contractor is under an obligation to the employer to accept the tender, thus
bringing about the desired subcontract.
The implication of this proposition is that, if the subcontractor should amend or
withdraw his tender before it has been accepted by the contractor, thus aborting the
subcontract, the risk of financial loss in nominating or choosing a new subcontractor
lies with the employer, who has the right to claim damages from the defaulting
subcontractor. The right to such damages arises from the subcontractor’s breach of
his undertaking to the employer to enter into a subcontract with the

contractor on the agreed terms. The amount of such damages might be the
additional cost of accepting a higher tender, possibly additional professional fees,
and the financial loss that the resulting delay might cause.
The contractor would be entitled to refuse to enter into a subcontract with a
subcontractor who has been nominated or selected by the principal agent where:
• The subcontractor refuses to enter into a subcontract in terms of the JBCC
NSSA and other tender requirements [clause 14.2.2]. [8]
• The subcontractor is unable to produce security in terms of JBCC NSSA
[clauses 14.2.3; 15.2.2].
• The contractor makes reasonable objection to appointing such subcontractor
[clauses 14.2; 15.2.3].
What would constitute ‘reasonable objection’ is uncertain and would depend on
circumstances. A suspicion that the subcontractor’s resources are too limited for him
to complete the required scope of work within the time available would, it is
submitted, be grounds for reasonable objection.

Page 403

Chapter 4
Cession and assignment
4.1 Neither party shall cede rights or assign rights and obligations under this
subcontract agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld
4.2 The contractor shall not consent to a nominated subcontractor ceding
rights or assigning rights and obligations under this subcontract
agreement without obtaining the prior written consent of the principal
agent
4.3 Notwithstanding the above where a party cedes any right to any monies
due or to become due under this subcontract agreement as security in
Copyright © 2019. Juta & Company, Limited. All rights reserved.

favour of a financial institution, consent shall not be required provided

notice of such cession is timeously given to the other party

Commentary
4.0 Cession and assignment
Should either party wish to assign or cede rights or obligations under the NSSA,
written consent is required from the other party [clause 4.1] and such consent may
not be unreasonably withheld. For further commentary on this clause, see Section 2
chapter 4.0.

Chapter 5
Subcontract Documents
5.1 Documents referred to in this subcontract agreement shall mean the
current edition thereof with all amendments thereto as at the date of
submission of the subcontractor’s tender
5.2 The parties shall sign the original subcontract agreement and shall each
be issued with a copy thereof by the contractor. The original signed
subcontract agreement shall be held by the contractor [CD]
5.3 The contractor shall not add to, vary or alter any terms of the
appointment, and/or the subcontract agreement without the written
consent of the principal agent, which consent shall not be unreasonably
withheld
5.4 Persons authorised to act on behalf of the parties and/or agents
appointed by the employer shall be identified in the subcontract
construction information. Such authorised person may be changed by
notice to the other party
5.5 The subcontract priced document shall not be used as a specification of
materials and goods or methods
5.6 The content of this subcontract agreement shall not be published or
disclosed or used for any purpose other than that specified in this
subcontract agreement by one party without the prior written consent of
the other party
5.7 The principal agent and/or agents shall timeously provide the number of
copies [CD] of drawings, un-priced bills of quantities and other
subcontract construction information at no cost to the subcontractor

Commentary
5.0 N/S subcontract documents
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The NSSA contract documents comprise the NSSA, N/S subcontract priced
document, N/S subcontract drawings, specification and other documents identified in
the NSSA CD.
The original NSSA documents shall be signed by the contractor and the
nominated or selected subcontractor, who shall each be issued with a copy by the
contractor and the original shall be held by the contractor [clause 5.2]. It has been
reported by the JBCC that they only sell about a quarter of the number of NSSA
documents when compared with the number of PBA documents sold. In reality, as
there are usually a number of nominated or selected subcontractors appointed on
any

specific project, the number of NSSA agreements sold should outweigh the number
of PBAs sold, which indicates that the principal building contractors are not using the
JBCC NSSA documents when contracting with these subcontractors. It is assumed
that the principal contractors are contracting with N/S subcontractors by means of
letters of appointment rather than by using the NSSA, which practice may prejudice
the subcontractor in the event of a dispute.

Page 406

Chapter 6
Employer’s agents
6.1 The employer warrants that the principal agent has full authority and
obligation to act on behalf of and bind the employer in terms of the
principal building agreement. The principal agent has no authority to
amend this subcontract agreement
6.2 The employer may appoint agents to deal with specific aspects of the
works in terms of this subcontract agreement [CD]. The principal agent
shall give notice to the contractor where such authority is delegated to
agents to issue contract instructions and perform duties for specific
aspects of the works. An agent appointed in terms of this clause shall not
be entitled to sub-delegate his authority without the prior written consent of
the employer and notice to the contractor
6.3 The principal agent and/or agents shall declare any interest or
involvement in the works other than a professional interest, where
applicable [CD]
6.4 Where the principal agent fails to act in terms of the principal building
agreement and/or an agent fails to act in terms of delegated authority, the
contractor shall give notice to the principal agent with a copy to the
employer, to rectify such default within five (5) working days. Where
such default has not been rectified, the contractor may give notice to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

suspend the works [28.0]

6.5 Where the principal agent and/or an agent fails to act or is unable to or
ceases to be the principal agent or an agent in terms of the principal
building agreement, the employer shall appoint another principal agent
and/or an agent within ten (10) working days of the date of such notice
from the contractor. The employer shall not appoint a principal agent
and/or an agent against whom the contractor makes reasonable
objection within five (5) working days of receipt of notice of intention to
make such an appointment

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
6.6 The employer shall not interfere with or prevent the principal agent
and/or agents from exercising fair and reasonable judgement when
performing their obligations in terms of the principal building agreement

Page 407

Commentary
6.0 Employer’s agents
There is no provision for the appointment of the employer’s agents in the NSSA,
however, the employer and his appointed agents are bound by the terms of clauses
6.1 to 6.6 of the NSSA, which mirrors clauses 6.1 to 6.6 in the PBA. The functions of
the principal agent are, to a large extent, reduced when administering the
subcontractor’s contracts as the contractor is required to perform a greater role in
administering the subcontract works.

Page 408

Chapter 7
Design responsibility
7.1 Unless otherwise stated [CD], the subcontractor shall not be responsible
for the design of the subcontract works other than the subcontractor’s
temporary works. The subcontractor shall not be responsible for the
coordination of design elements
7.2 Where the subcontractor is appointed to design, supply and to install an
element [CD]:
7.2.1 The subcontractor shall submit such design documentation
to suit dates in the programme to the contractor for review
by the principal agent or relevant agent for conformity with
this subcontract agreement
7.2.2 The principal agent and/or agents shall be responsible for
acceptance and coordination of design documentation
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[23.2.8]
7.2.3 The subcontractor indemnifies the contractor for
consequences of such design and shall cede such indemnity,
warranties, and other rights to the employer [9.1; 12.3.20 &
21]
7.2.4 The subcontractor shall provide proof of professional
indemnity insurance where required [CD] [10.1.5]

Commentary

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
7.0 Design of the subcontract works
Frequently the scope of the subcontract works will include the design of the works by
the subcontractor in accordance with design parameters laid down by the principal
agent or agents in the subcontract tender documents. The contractor is indemnified
by the subcontractor for consequences of such design and cedes to the employer
his right to take action against the subcontractor for loss or damages arising out of
defective design [clause 7.2.3]. In the case of design carried out by a selected
subcontractor, the contractor bears the responsibility of any delays to practical
completion that may be caused by tardy production by the subcontractor of the
necessary subcontract design documentation. [9]

Page 409

Insurances and securities

Chapter 8
Subcontract works risk
8.1 The subcontractor shall take full responsibility for the subcontract
works for the duration of the subcontract construction period. On the
date of issue of the certificate of interim completion or deemed
achievement of interim completion of the subcontract works as a
whole, or a section thereof, the responsibility for the subcontract works
shall pass to the contractor
8.2 The subcontractor shall make good physical loss and repair damage to
the subcontract works caused by or arising from:
8.2.1 Any cause arising before the date of practical completion
[19.0]
8.2.2 Any act or omission of the subcontractor in the course of
any work carried out in pursuance of the subcontractor’s
obligations after the date of practical completion
8.3 The liability of the subcontractor in respect of any loss or damage shall
Copyright © 2019. Juta & Company, Limited. All rights reserved.

include, but not be limited to:

8.3.1 Physical loss and repairing damage to the subcontract
works including clearing away and removing all debris, and
any other costs to reinstate the subcontract works
8.3.2 The new replacement value of free issue [12.1.10]
8.3.3 The cost of additional professional services
8.4 Notwithstanding subclause 8.3, the limit of the subcontractor’s liability
shall not exceed the amount of the contract works insurance [10.1.1] [CD]
8.5 The subcontractor shall not be liable for the cost of making good physical

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
loss and repairing damage to the subcontract works caused by or arising
from:
8.5.1 The use or occupation of any part of the subcontract works
by the employer, the employer’s employees and/or agents
and those for whose actions they are responsible
8.5.2 An act or omission of the employer, the employer’s
employees and/or agents and those for whose actions they
are responsible
8.5.3 An act or omission by a direct contractor

Page 410

8.5.4 The use or occupation of any part of the works

8.5.5 The design of the subcontract works for which the
subcontractor is not responsible [7.2]
8.5.6 A defect in free issue or materials and goods specified by
trade name where the subcontractor has no right of
substitution. The subcontractor hereby cedes any right of
action to the employer that may exist against the supplier
and/or manufacturer of such free issue, and/or materials
and goods
8.5.7 Force majeure
8.6 Where the subcontractor is not liable for the cost of making good
physical loss or repairing damage [8.5] such making good and/or expense
and/or loss shall be measured and valued and included in the
subcontract value by the principal agent [17.1.10]
8.7 The subcontractor shall immediately give notice to the contractor with a
copy to the principal agent on becoming aware of physical loss or
damage to the subcontract works

Commentary
Copyright © 2019. Juta & Company, Limited. All rights reserved.

8.0 Subcontract works risk

The nominated or selected subcontractor shall take full responsibility for the
subcontract works for the duration of the subcontract construction period and is
under obligation to make good at their own cost any physical loss or damage that
may occur to the subcontract works during the subcontract construction period
[clause 8.1].
On the date of issue of the certificate of interim completion or deemed
achievement of interim completion for a section or the subcontract works as a whole,
responsibility for the subcontract works shall pass to the contractor. Between the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
certified date of interim completion and the date of practical completion the
subcontractor remains liable to make good any physical loss or damage that may
befall the subcontract works [clause 8.2.1]. After the certified date of practical
completion the subcontractor shall make good physical loss and repair damage to
the subcontract works that arises from any act or omission of the subcontractor in
the course of any work carried out in pursuance of the subcontractor’s obligations
[clause 8.2.2]. Clause 8.3 sets out the liability of the subcontractor in respect of any
loss or damage. Clauses 8.5.1 to 8.5.7 list the items for which the subcontractor
shall

Page 411

not be liable for the cost of making good physical loss and repairing damage to the
subcontract works – these causes are mainly related to acts and omissions of the
employer, employer’s agents and occupation of any part of the subcontract works.

Page 412

Chapter 9
Indemnities
9.1 The subcontractor indemnifies and holds harmless the contractor, the
contractor’s subcontractors, the contractor’s employees, the
employer, the employer’s employees and/or agents for all claims or
proceedings for damages, expenses and or loss, including legal fees and
expenses in respect of or arising from:
9.1.1 Death or bodily injury or illness of any person or physical loss
or damage to any property other than the subcontract
works arising out of or due to the execution of the
subcontract works or presence on and / or occupation of
the site by the subcontractor. Should such an event occur,
the subcontractor shall forthwith give notice to the
contractor with a copy to the principal agent
Copyright © 2019. Juta & Company, Limited. All rights reserved.

9.1.2 Non-compliance by the subcontractor with the law,

regulation, or bylaw of any local or other authority and the
failure by the subcontractor to obtain any permit, license or
approval that the subcontractor is required to obtain in
terms of this subcontract agreement [2.1]
9.1.3 Physical loss or damage caused by the subcontractor to
construction equipment or other property belonging to the
contractor and/or the contractor’s subcontractors, but
excluding direct contractors’ equipment or property
9.2 The contractor and the employer indemnify and hold the subcontractor

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
harmless from all claims or proceedings for damages, expense and/or
loss, including legal fees and expenses in respect of or arising from:
9.2.1 An act or omission of the contractor and/or the contractor’s
employees and the employer and/or the employer’s
employees and/or agents and those for whose actions they
are responsible
9.2.2 An act or omission of a direct contractor [PBA-16.0]
9.2.3 Design of the subcontract works [7.1] where the
subcontractor is not responsible for such design
9.2.4 The use or occupation of any part of the works by the
employer, tenants, direct contractors or others authorised
by the employer

Page 413

9.2.5 Proceeding with the subcontract works on instruction from

contractor and/or the employer without the employer
obtaining the required permission under the law in terms of
this subcontract agreement [2.1]
9.2.6 Interference with any servitude or other right not recorded in
subcontract construction information issued to the
subcontractor that is the unavoidable result of the execution
of the subcontract works including the removal of or
weakening of or interference with the support of land and
property adjacent to or within the site unless resulting from
any negligent act or omission by the subcontractor or his
subcontractors. Should such an event occur, the
subcontractor shall forthwith give notice to the contractor
with a copy to the principal agent
9.2.7 Physical loss or damage to an existing structure and the
contents thereof where this subcontract agreement is for
alterations or additions to an existing structure [CD]. Should
Copyright © 2019. Juta & Company, Limited. All rights reserved.

such an event occur, the subcontractor shall forthwith give

notice to the contractor with a copy to the principal agent
9.2.8 A defect in free issue [CD]
9.2.9 Physical loss or damage to the works where a certificate of
practical completion has been issued [19.0] or practical
completion has been deemed to have been achieved

Commentary
9.0 Indemnities

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:01:38.
harmless from all claims or proceedings for damages, expense and/or
loss, including legal fees and expenses in respect of or arising from:
9.2.1 An act or omission of the contractor and/or the contractor’s
employees and the employer and/or the employer’s
employees and/or agents and those for whose actions they
are responsible
9.2.2 An act or omission of a direct contractor [PBA-16.0]
9.2.3 Design of the subcontract works [7.1] where the
subcontractor is not responsible for such design
9.2.4 The use or occupation of any part of the works by the
employer, tenants, direct contractors or others authorised
by the employer

Page 413

9.2.5 Proceeding with the subcontract works on instruction from

such an event occur, the subcontractor shall forthwith give

Commentary
9.0 Indemnities

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
Clause 9.1 stipulates that the subcontractor indemnifies the contractor, the
contractor’s subcontractors, the contractor’s employees, the employer, the
employer’s employees and/or agents for all claims or proceedings for damages,
expenses and/or loss (including legal fees and expenses) in respect of or arising
from the events listed in 9.1.1, 9.1.2 and 9.1.3, whereas in clause 9.2 the contractor
and the employer indemnifies and holds the subcontractor harmless from all claims
or proceedings for damages, loss or expenses (including legal fees and expenses) in
respect of the items listed [clauses 9.2.1 to 9.2.9].
It is important to note that the employer and the contractor indemnifies and holds
the subcontractor harmless from all claims arising out of physical loss or damage to
an existing structure and the contents thereof where the NSSA is for alterations or
additions of an existing structure [clause 9.2.7]. Should such an event occur, the
subcontractor shall forthwith give notice to the contractor with a copy to the

Page 414

principal agent. It is essential, therefore, that in the case of alterations and/or

additions to existing structures both the structure and the contents need to be
adequately insured by the time possession of the site is given to the contractor and
subcontractor.

Page 415

Chapter 10
Insurances
10.1 The employer and/or the contractor [PBA-CD] shall effect the respective
insurances [CD] and keep in force in their joint names from the date of
possession of the site until the issue of the certificate of practical
completion with an extension to cover the contractor’s obligations after
the date of practical completion [8.2.2]:
10.1.1 Contract works insurance [CD] for the works that shall make
Copyright © 2019. Juta & Company, Limited. All rights reserved.

provision for direct contractors [CD], free issue [CD],

materials and goods, professional fees, temporary works,
clearing away and removing of all debris and any other costs
to reinstate the works and where required, damage to
employer owned surrounding property [CD] where not
covered under the removal of lateral support insurance
10.1.2 Supplementary insurance [CD] for the works against loss or
damage caused by civil commotion, riot, strike, labour
disturbance and lockout to the extent not insured under the
contract works insurance

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
10.1.3 Public liability insurance [CD] providing indemnity in respect
of accidental death of or injury to any person and accidental
loss of or physical damage to tangible property, to remain in
force until the date of final completion
10.1.4 Removal of lateral support insurance [CD] where the
employer considers that the execution of the works could
cause the removal of or weakening of or interference with the
support of land or property adjacent to or within the site (also
including employer owned surrounding property) and the
consequences thereof. The employer shall appoint an agent
to design and monitor appropriate support structures for use
in excavations and/or in existing property that form part of the
works and/or the site
10.1.5 Other insurances [CD]
10.2 Where practical completion in sections is required [20.0], where the
works is for alterations and additions, the employer shall effect and keep
in force contract works insurance [10.1.1], supplementary insurance
[10.1.2], public liability insurance [10.1.3] and where

Page 416

applicable, removal of lateral support insurance [10.1.4] and other

insurances [10.1.5] in the joint names of the employer and the
contractor until the date of final completion
10.3 The employer or the contractor, shall provide proof of the insurances
effected [10.1.1–5; 10.2] to the other party before the commencement of
the construction period and, where required, provide proof of extension
or renewal of such insurances before their expiry. Upon request the party
responsible for effecting insurances shall provide the other party with the
entire policy wording of such insurances
10.4 The subcontractor shall be responsible for the deductible amounts [CD]
where an action or inaction by the subcontractor is the cause of a claim
Copyright © 2019. Juta & Company, Limited. All rights reserved.

10.5 The employer may, at his expense, require the cover of the contract
works insurance [10.1.1] to be increased. The party responsible for
effecting insurances shall provide written proof of such adjustment
10.6 Where the employer or the contractor fail to effect the required
insurances the subcontractor may give five (5) working days’ notice to
the contractor to comply failing which the subcontractor may suspend
the subcontract works [28.1.4]
10.7 Where this subcontract agreement is terminated [29.0] and the
contractor and/or the subcontractor is not required to make good the
physical loss or repair damage to the works, the right to the proceeds of

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
an insurance claim shall vest solely in the employer. The party
responsible for the insurances shall give notice to the insurer to clarify the
status of the insurance cover and/or further insurance obligations
applicable to the works, public liability insurance, supplementary
insurance and removal of lateral support insurance
10.8 Any amounts not recovered from insurers shall be borne by the employer
or contractor in accordance with their respective obligations under this
agreement
10.9 The employer or the contractor shall keep insurers informed of any
relevant changes in respect of this subcontract agreement
10.10 The employer or the contractor shall at their discretion effect insurances
for aspects not insured such as construction equipment and work by
direct contractors after practical completion

Page 417

Commentary
10.0 Insurances
The insurance clauses in the PBA are covered in the commentary in section 2
chapter 10 and include insurances for the contract works, public liability,
supplementary insurance and the removal of lateral support, and will not be repeated
here save for the requirement for public liability insurance to specifically cover the
indemnities as required [clause 9].
10.1 Indemnity insurance
Public liability insurance, to cover the risks [clause 9.0], is required to be taken out
either by the employer or the contractor, as designated in the CD, [10] for the amount
and deductible as stated in the CD [clause 10.1.3]. Each subcontractor is similarly
required to take out public liability insurance for the amount and deductible [clause
10.0] of the subcontract CD. As an accident arising out of even a very small contract
can cause serious personal injury or loss of an entire existing structure, including the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contents thereof, leading to a claim possibly in excess of millions of rands, the cover
should be substantial. These insurances are to be kept in force until the contractor’s
responsibility has ended [clause 10.1] on the date of practical completion.
Furthermore, the contractor and subcontractors are required to take out insurance
in terms of the Compensation for Occupational Injuries and Diseases (COID) Act of
1993 Compensation for Occupational Injuries and Diseases Act 1993 Compensation
for Occupational Injuries and Diseases Act 1993 as amended to indemnify
themselves in respect of claims made by employees who sustain injuries or disease
as a result of their employment on the works.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
The subcontractor is required to effect and maintain professional indemnity
insurance and provide proof of such insurance when appointed to design, supply
and instal the subcontract works [7.2.4; 10.1.5].

Page 418

Chapter 11
Securities
11.1 The subcontractor shall provide to the contractor a guarantee for
construction within fifteen (15) working days of acceptance of the
subcontractor’s tender and choose:
11.1.1 A guarantee for construction—(variable) initially equal to
ten per cent (10%) of the subcontract sum and keep such
security valid and enforceable until the final payment
advice has been issued to the subcontractor’s [25.15]
or . . .
11.1.2 A guarantee for construction—(fixed) equal to five per cent
(5%) of the subcontract sum and a payment reduction of
five per cent (5%) of the value of each subcontract payment
advice up to a maximum of five per cent (5%) of the
subcontract sum [25.3.3; 25.12]. The subcontractor shall
keep such security valid and enforceable until the only or
last certificate of practical completion has been issued
11.2 The subcontractor shall:
11.2.1 Maintain and/or replace a guarantee for construction—
(variable or fixed) [11.1.1–2] at least twenty (20) working
days before such security is due to expire
11.2.2 Provide a guarantee for advance payment where an
advance payment is required. The subcontractor shall keep
such security valid and enforceable until the advance
payment is repaid [11.3]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

11.3 The amount of the guarantee for advance payment shall be reduced by
the amount repaid by the subcontractor as certified by the principal
agent in the subcontract payment notification format. If the advance
payment is not repaid by the date a certificate of practical completion is
issued or deemed achievement of practical completion or by the date of
termination by the employer due to contractor default [PBA 29.9.3], the
entire outstanding amount shall immediately become due and payable
11.4 Where the subcontractor fails to provide the specified guarantee for
construction the contractor may:
11.4.1 Give access to the subcontract works to the subcontractor

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
and withhold an amount in payment advices until the total
amount withheld is equal to ten per cent (10%) of the
subcontract sum. The

Page 419

amount withheld shall be reduced at practical completion

[19.0] to two and one half per cent (2.5%) of the subcontract
sum and to zero per cent (0%) in the final payment advice
[25.9]
or
11.4.2 Terminate this subcontract agreement [29.1.1; 29.2]
11.5 The contractor shall:
11.5.1 Provide to the subcontractor a guarantee for payment
equal to ten per cent (10%) of the subcontract sum where
required in the accepted tender [CD] within fifteen (15)
working days of acceptance of the subcontractor’s tender
11.5.2 Keep such guarantee for payment valid and enforceable in
terms of the security form and/or provide a replacement
guarantee for payment at least twenty (20) working days
before such security is due to expire
11.6 Where the contractor fails to provide a guarantee for payment [CD], or
such security has expired, the subcontractor may, after giving ten (10)
working days’ notice, where such default has not been remedied,
forthwith suspend the subcontract works until such security has been
provided [28.1.1] or by further notice terminate this subcontract
agreement [29.14.2; 29.15]
11.7 Where the subcontract value exceeds the subcontract sum by more
than ten per cent (10%) the applicable security shall be adjusted at the
employer’s expense. The party responsible for adjusting the security
value shall provide written proof of such adjustment
Copyright © 2019. Juta & Company, Limited. All rights reserved.

11.8 The original or the replacement security form(s) shall be returned to the
other party within ten (10) working days after the expiry date
11.9 Where a party makes an unjustified call on a security, the amount paid
and default interest shall be paid to the other party [27.1.2; 27.1.5]

Commentary
11.0 Securities
The subcontractor’s first contractual obligation is to furnish a subcontract guarantee
for construction [clause 11.0] of the NSSA and he must do so within 15 working days

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
of the written acceptance of his tender by the contractor, failing which the contractor
may give access to the subcontract works to the subcontractor and withhold an
amount in payment advices until the total amount withheld is equal to 10% of the
contract sum [11.4.1] or his subcontract would be liable to

Page 420

termination [clause 11.4.2]. Where tenders had been invited on the basis of bills of
quantities, the subcontractor must submit his priced bill of quantities to the contractor
within the time limit specified in the CD to the NSSA. Where bills of quantities have
not been used he must submit his priced document within the same time period
[clause 12.3.2].
An astute subcontractor will state on his tender form that he will require the
contractor to provide a guarantee for payment. If he should do so, the contractor
would be obliged to provide a guarantee on a JBCC Guarantee for Payment form
within 15 working days of acceptance of his tender; failure to do so would entitle the
subcontractor to give notice to the contractor of his intention to suspend the contract
works [clauses 11.5.1; 28.1.1].
The NSSA contains almost identical provisions requiring the subcontractor to
furnish the contractor with security either in the form of a variable guarantee for
construction or a fixed guarantee for construction, the choice resting with the
subcontractor. Where either form of guarantee for construction is to be provided, the
JBCC N/SS Guarantee for Construction form is to be used.
An anomalous situation could arise. The contractor could have chosen a fixed
guarantee for construction while a subcontractor could have chosen a variable
guarantee for construction. The contractor would be paid, in terms of interim
payment certificates, 95% of the value of work, materials and goods (including the
subcontract work, materials and goods), whereas the subcontractor would be
entitled to receive from the contractor the full value of work, materials and goods. For
the duration of the construction period, the contractor would therefore have to make
up the difference.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

If a nominated or selected subcontractor requires an advance payment for goods

or materials that he may purchase for the works which will not be stored on site, he
must stipulate accordingly in his tender, stating the amount required. It is submitted
that the Guarantee for Advance Payment provided by the subcontractor should be in
favour of the employer.

Page 421

Execution

12.0 Obligations of the parties

12.1 The employer shall in terms of the JBCC® Principal Building Agreement:
12.1.1 Provide a guarantee for payment to the contractor where
applicable
12.1.2 Record specific requirements where the existing premises
will be in use and occupied during the execution of the
works, including restriction of working hours
12.1.3 Record and describe relevant natural features and known
services where the contractor shall be responsible for their
preservation
12.1.4 Define any restrictions to the site or areas that the
contractor may not occupy
12.1.5 Give possession of the site to the contractor on the agreed
date
12.1.6 Effect and keep in force insurances in the joint names of the
parties where the employer is responsible for providing
insurances
12.1.7 Make payments by the due date
12.1.8 Make advance payments, where required [CD]
12.1.9 Permit reasonable access to the works by the contractor
and/or subcontractors, subsequent to practical completion
to fulfil outstanding obligations
12.1.10 Supply free issue to suit the programme
12.1.11 Define the extent of work to be carried out by a direct
contractor
12.1.12 Ensure that the principal agent and/or agents provide
adequate construction information timeously to the
contractor
12.1.13 At the employer’s discretion make direct payment where the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contractor has failed to honour a subcontract payment

advice after notice of default by a subcontractor to the
principal agent, the employer and the contractor

Page 422

12.2 The contractor shall:

12.2.1 Appoint the subcontractor in terms of the subcontract
agreement on receipt of a contract instruction to do so
from the principal agent

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
12.2.2 Provide a guarantee for payment to the subcontractor
[11.5], where applicable
12.2.3 Define any restrictions to the site or areas that the
subcontractor may not occupy [CD]
12.2.4 List statutory and other notices the subcontractor must
submit and/or comply with before access to the site can be
given
12.2.5 Give access to the subcontract works on the agreed date
[CD]
12.2.6 Effect and keep in force insurances in terms of the JBCC®
Principal Building Agreement where the contractor is
responsible for providing insurance [10.0] [PBA-CD]
12.2.7 Issue to the subcontractor a subcontract recovery
statement and a subcontract payment advice using
information issued by the principal agent following every
interim payment certificate and the final payment
certificate
12.2.8 Make payment by the due date [25.10] [CD]
12.2.9 Make advance payments, where specified [CD]
12.2.10 Designate an area for the subcontractor to establish
temporary site facilities
12.2.11 Allow the use of personnel welfare facilities, where provided
12.2.12 Provide water, lighting and single phase electric power to a
position within 50m of the place where the subcontract
works is to be carried out, other than fuel or power for
commissioning of any installation
12.2.13 Permit the subcontractor to use erected scaffolding, hoisting
facilities, etc provided by the contractor, in common with
others having the like right while it remains erected on the
site
12.2.14 Arrange with the employer to permit the subcontractor
Copyright © 2019. Juta & Company, Limited. All rights reserved.

reasonable access to the subcontract works, or a section

thereof, subsequent to practical completion to fulfil
outstanding obligations

Page 423

12.2.15 Hold regular meetings with the subcontractor to monitor

progress of the works, and to deal with technical and
coordination matters. The contractor shall record and
promptly distribute the minutes of such meetings
12.2.16 Facilitate the timeous acceptance by the principal agent

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
and/or agents of a design proposal and/or a method
statement where a subcontractor is appointed for the
design, supply and installation of an element [7.2]
12.2.17 Issue a certificate of interim completion where the
subcontract works has reached the specified standard of
completion, on application by the subcontractor [18.0]
12.2.18 Regularly update the programme to illustrate progress of the
subcontract works, and revise the programme where the
principal agent has revised the date for practical
completion
12.2.19 Inform the subcontractor of progress and/or the result
where a revision of the date of practical completion or an
adjustment of the contract value has been applied for in
terms of the principal building agreement
12.2.20 Issue contractor’s instructions to the subcontractor [17.0]
12.2.21 Appoint another subcontractor on instruction from the
principal agent where the nominated subcontractor fails to
execute the subcontract works in accordance with the
subcontract agreement and/or the programme, and
recover expense and/or loss so incurred [14.7; 27.2.6]
12.2.22 Appoint another subcontractor where the selected
subcontractor fails to execute the subcontract works in
accordance with this subcontract agreement and/or the
programme
12.3 The subcontractor shall:
12.3.1 Have inspected the site and any existing structures and be
thoroughly acquainted with the conditions under which the
subcontract works is to be executed including means of
access and any matters which may influence the execution
and/or the pricing of the subcontract works
12.3.2 Within fifteen (15) working days of acceptance of the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

subcontractor’s tender submit to the contractor, who in

turn shall submit to the principal agent, the subcontract
priced document with items priced to include all costs,
overheads and profit, extended and cast. Where

Page 424

the subcontract priced document contains errors or

discrepancies and/or prices considered by the principal
agent to be imbalanced or unreasonable, the principal
agent and the subcontractor shall adjust such items without

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
any change to the subcontract contract sum
12.3.3 Provide a guarantee for construction [11.1; 11.2.1]
12.3.4 Provide a guarantee for advance payment in favour of the
employer [11.2.2], where applicable [CD]
12.3.5 Be entitled to request proof of insurances [10.0]
12.3.6 Prepare and submit to the contractor within fifteen (15)
working days of receipt of subcontract construction
information a subcontract programme in sufficient detail to
enable the contractor to monitor the progress of the
subcontract works
12.3.7 On being given access to the subcontract works area,
commence the subcontract works and proceed with due
diligence, regularity, expedition, skill and appropriate
resources to bring the subcontract works to interim,
practical and final completion
12.3.8 Provide everything necessary for the proper execution of the
subcontract works in compliance with this subcontract
agreement
12.3.9 Coordinate the subcontract programme with the
contractor’s programme
12.3.10 Regularly update the subcontract programme to illustrate
progress of the subcontract works and revise the
subcontract programme where the principal agent has
revised the date for practical completion
12.3.11 Regularly submit to the contractor a progress report and a
schedule of outstanding subcontract construction
information to avoid delays to the subcontract works
12.3.12 Cooperate with the contractor in the preparation of the
subcontractor’s claim for payment and cash flow
projections
12.3.13 Designate a competent person to continuously administer
Copyright © 2019. Juta & Company, Limited. All rights reserved.

and control the subcontract works and to receive and

implement contractor’s instructions on behalf of the
subcontractor
12.3.14 Maintain daily records of categories of persons and
construction equipment employed on the subcontract
works and regularly provide copies to the contractor

Page 425

12.3.15 Keep on site a copy of all subcontract construction

information required for execution of the subcontract

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
works to which the contractor, principal agent and/or
agents shall have reasonable access
12.3.16 Allow the contractor, employer, principal agent and/or
agents reasonable access to the subcontract works,
workshops and other places where work is being prepared,
executed and/or stored
12.3.17 Give notice forthwith to the contractor, the principal agent
and/or the employer where items of free issue have been
received damaged prior to storage or where, on unpacking,
are found not to be in good order before installing such items
12.3.18 Where not provided by the contractor [CD], provide,
maintain and remove on interim completion temporary
structures, subcontract construction equipment and notice
boards
12.3.19 On achievement of interim completion hand over to the
contractor all information for the preparation of ‘as built’
documentation and applicable statutory and/or regulatory
approval certificates as well as all operating and instruction
manuals and the like
12.3.20 Cede to the employer on the date of issue of the certificate
of final completion any guarantees, product warranties or
indemnities pertaining to the subcontract works. This
cession shall not prejudice any other rights that the employer
may have
12.3.21 Regularly clear away all rubbish and materials and goods
surplus to the subcontract works
12.3.22 Where applicable, submit subcontract design information
[7.2] [CD] in terms of the programme to the contractor for
submission to the principal agent and/or agents for
approval
12.3.23 Provide consumables for commissioning
Copyright © 2019. Juta & Company, Limited. All rights reserved.

12.3.24 Be subject to reasonable control by the contractor [2.1]

12.4 The contractor shall give notice to the subcontractor ten (10) working
days before temporary structures and other construction equipment is
due to be removed defining the cost to the subcontractor for each
additional calendar day that such equipment remains on site
12.5 The contractor, agents and the subcontractor(s) shall hold regular
meetings to monitor progress of the subcontract works and to deal with
technical and coordination matters. The contractor shall record and
timeously distribute the minutes of such meetings

Commentary
12.0 Obligations of the parties
The contractor is to provide and maintain a n/s subcontract guarantee for payment to
the subcontractor equal to ten per cent (10%) of the subcontract sum where required
in the accepted tender [CD] within 15 working days of acceptance of the
subcontractor’s tender [clause 11.5] where applicable, or where the subcontractor
makes such a demand [clause 25.14].
Where the contractor has breached his obligation to pay the subcontractor an
amount which has been included by the principal agent either in an interim payment
certificate or a final payment certificate and such certificate has been paid by the
employer, the subcontractor may give five working days’ notice to the contractor to
comply, failing which the subcontractor may suspend the n/s subcontract works
[clauses 25.13.1; 28.1.1], exercise the lien where this has not been waived or call up
the n/s subcontract guarantee for the full balance of the n/s subcontract sum not yet
paid.
Where the subcontractor has stipulated in his tender that he will require advance
payment, he shall provide the employer with a n/s subcontract Guarantee for
Advance Payment in accordance with the JBCC n/s subcontract Guarantee for
Advance Payment form [clause 12.3.4].
The subcontractor is required to observe all the terms of the PBA to the extent
that they may be applicable to the subcontract works and indemnifies the contractor
against breach, non-observance or non-performance of any of the provisions of the
principal agreement by the subcontractor, his agents or his employees, with the
proviso that nothing in the subcontract agreement shall create privity of contract
between the employer and a subcontractor appointed by the contractor [clause
14.8]. [11]
The subcontractor shall prepare and submit a n/s subcontract program to the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contractor within 15 working days of receipt of n/s subcontract information in

sufficient detail to enable the contractor to monitor the progress of the n/s
subcontract works. The subcontractor is further required to update the n/s
subcontract program where the date for

Page 427

practical completion has been revised by the principal agent [clauses 12.3.6;
12.3.10].
The contractor is required to program the subcontract works as part of his own
[12]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
program for the contract works as a whole, [12] and the subcontractor is required to
commence work on being given access to the n/s subcontract works area and to
proceed with due diligence, regularity, expedition, skill and appropriate resources to
bring the n/s subcontract works to interim, practical and final completion [clause
12.3.7]. [13]
The contractor is required to give the subcontractor access to the n/s subcontract
works on the agreed date [clause 12.2.5], [14] including space for him to erect such
temporary offices and storage sheds as he may require [clause 12.2.10], and the
use of toilet facilities [clause 12.2.11]. He is also required to provide him, at no cost,
with lighting, water and single phase electric power to a point not more than 50
metres of the place where the subcontract work is to be carried out other than fuel or
power for commissioning of any installation [clause 12.2.12]. [15] The subcontractor is
entitled, at no charge by the contractor, to reasonable access to scaffolding that the
contractor may have erected on the site for his own purpose [clause 12.2.13], [16] for
as long as it remains erected on site [clause 12.2.13]. It is submitted that the
contractor is only entitled to charge a subcontractor for the use of scaffolding [17] if it
is needed by the subcontractor for an extended period due to his own default.

Page 428

Chapter 13

13.0 Setting out

13.1 The contractor and/or an agent with delegated authority shall:
13.1.1 Point out boundary pegs or beacons identifying the
subcontract works and the datum level
13.1.2 Define the setting out points and levels required for the
execution of the subcontract works
13.2 The subcontractor shall:
13.2.1 Be responsible for accurate setting out of the subcontract
works within the works, notwithstanding checking by others
Copyright © 2019. Juta & Company, Limited. All rights reserved.

13.2.2 Be responsible for the preservation and the reinstatement of

boundary pegs, beacons and other survey information used
to set out the subcontract works and, where disturbed or
destroyed, replace such items at his expense
13.2.3 Not be responsible for incorrect setting out if incorrect
information was issued to the subcontractor. In such event
the subcontractor may be entitled to a revision of the date
for interim completion and/or an adjustment of the
subcontract value [26.0]
13.2.4 Immediately suspend affected work to an appropriate extent

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
where encroachments of adjoining structures occur and
where undocumented services, natural features, articles of
value or relics are uncovered on site, and forthwith give
notice to the contractor with a copy to the principal agent,
who shall issue a contractor’s instruction on how to proceed
with the subcontract works. Any relics or other articles of
value found on the site shall remain the property of the
employer

Commentary
13.0 Setting out
13.1 Contractor’s obligations
The contractor is responsible for pointing out boundary pegs, beacons and datum
level and for defining the setting out points and levels to the subcontractor for the
execution of the subcontract works [clauses 13.1.1; 13.1.2]. These clauses are
specifically pertinent in the case of a subcontractor being appointed to carry out
external work such as bulk excavations, piling, boundary fencing and construction of
retaining walls. Where the subcontractor is to execute other installations within

Page 429

the structure of the building, it is submitted that the contractor has a duty to point out
to the subcontractor the specific areas where such installations are to be installed.
13.2 Subcontractor’s obligations
The subcontractor is responsible for the accurate setting out of the subcontract
works within the works [clause 13.2.1]. The subcontractor relies heavily on the
setting out information provided to him by the principal agent and/or agents, which
information is to be issued by the contractor on instruction from the principal agent
and carries no responsibility for incorrect setting out if he was issued with incorrect
Copyright © 2019. Juta & Company, Limited. All rights reserved.

information [clause 13.2.3]. If the subcontractor was issued with late or incorrect
information, he may be entitled to a revision of the date for interim completion and/or
an adjustment of the subcontract value [clause 23.2.5] of the NSSA.

Page 430

Chapter 14
Nominated subcontractors
14.1 The principal agent and/or agents shall:
14.1.1 Prepare tender documents in conformity with this

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
subcontract agreement for work intended to be executed by
a nominated subcontractor
14.1.2 Call for tenders
14.1.3 Scrutinise the received tenders for compliance with the
tender documents, in consultation with the contractor, where
appointed
14.1.4 Nominate a subcontractor and instruct the contractor [PBA
17.1.14] to appoint such subcontractor as a nominated
subcontractor in terms of this subcontract agreement and
other tender requirements
14.1.5 Inform the contractor where an advance payment is to be
made to the subcontractor for an amount included in the
accepted tender and that a guarantee for advance payment
shall be provided by the subcontractor for the amount
stated [CD]
14.2 The contractor may refuse to appoint such subcontractor:
14.2.1 Against whom the contractor makes a reasonable objection
14.2.2 Who refuses or fails to enter into a subcontract agreement
and/or to comply with other tender requirements
14.2.3 Who has failed to provide a required security
14.3 Where such subcontractor is not appointed by the contractor for the
reasons stated [14.2], or where the appointment of a subcontractor has
been terminated, another subcontractor shall be nominated and
appointed in accordance with a contract instruction issued by the
principal agent
14.4 Where the subcontractor has complied with the tender requirements the
contractor shall:
14.4.1 Appoint the subcontractor as a nominated subcontractor in
accordance with a contract instruction issued by the
principal agent [PBA 17.1.14] and forward a copy of the
signed subcontract agreement to the principal agent
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 431

14.4.2 Provide a guarantee for payment in the amount stated

within fifteen (15) working days [11.5.1] of such appointment
where required in the subcontract agreement [CD]
14.4.3 Forward the subcontractor’s regular payment claims to the
principal agent and/or agents for inclusion in the
contractor’s payment claim
14.4.4 Issue to each subcontractor (with a copy to the principal
agent) a subcontract payment advice and a subcontract

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
recovery statement to reconcile the amount due for
payment with the amount stated in the subcontract
payment notification issued by the principal agent
14.4.5 Pay the subcontractor the amount certified by the date
stated [25.10]
14.5 Where the contractor fails to provide proof of payment to the
subcontractor within five (5) working days of a notice by the principal
agent, the employer may instruct the principal agent to certify direct
payment to the subcontractor and recover such amount from the
contractor [PBA 27.2.7]
14.6 Where a nominated subcontractor has been declared insolvent or where,
after notification by the contractor, the principal agent agrees that a
nominated subcontractor is in default of a material term of this
subcontract agreement, the principal agent shall instruct the
contractor to give notice to the subcontractor to rectify such default.
The principal agent shall instruct the contractor to terminate this
subcontract agreement should such default continue for five (5) working
days after such notice [PBA 17.1.15]
14.7 Where a subcontract agreement with a nominated subcontractor is
terminated:
14.7.1 Due to default or insolvency of the subcontractor [23.2.10],
or the default of the employer, the principal agent and/or
agents [23.2.11] any variation in the cost of completing such
subcontract works shall be for the account of the employer
14.7.2 Due to default or insolvency of the contractor any variation
in the cost of completing the subcontract works shall be for
the account of the contractor. The employer may recover
expense and/or loss [27.2.8]
14.7.3 The principal agent shall instruct the contractor to appoint
another nominated subcontractor [14.1.4] to complete the
n/s subcontract works
Copyright © 2019. Juta & Company, Limited. All rights reserved.

14.8 There shall be no privity of contract between the employer and a

subcontractor appointed by the contractor

Page 432

Commentary
14.0 Nominated subcontractors
The commentary below mirrors the commentary in section 2 chapter 14 and is
repeated here for ease of reference.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
14.1 Advantages and disadvantages of nominated subcontracts
There could be a variety of reasons why an employer, or his principal agent, might
wish to nominate a subcontractor to perform certain work, instead of leaving the
work to be measured and included in the bills of quantities for the principal contract,
which would allow the contractor to engage a subcontractor of his own choice to
perform the work:
• They may require work of a particularly high standard – paneling and joinery in
a board-room, for example – and would be prepared to pay an enhanced price
for the work to be done by a particularly skilled subcontractor of their choice,
instead of leaving it to the general contractor to subcontract to whoever quotes
him the lowest price.
• The work may be of such a specialised nature, such as an air-conditioning or
lift installation, involving an element of design by the subcontractor, that it
cannot be measured and billed in the normal manner, and must be the subject
of different and separate tendering techniques or even of negotiation.
• Some of the requirements of the employer may not be available at the time of
tendering, and perforce a monetary allowance must be allowed for them that
would enable tenders to be invited from subcontractors to perform the work
when eventually the requirements are known and the tender documents can
be prepared. For example, the required type and layout of partitioning in an
office building might not be known until leases have been arranged, which
might not be until late in the construction period.
• There may be urgency in completing sufficient tender documentation for
tenders to be called for the principal contract. In order to save time, monetary
allowances could be allowed for work that would occur in the later stages of
the contract and which in any event would normally be carried out by
subcontractors, enabling the preparation of tender documentation for such
work to be deferred to a later date. In provisional bills of quantities, a high
proportion of work is generally made the subject of nominated or selected
subcontracts.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 433

Nominated subcontracts may account for the major part of the contract sum of a
large project, in which the number of subcontractors could amount to 50 or more.
Contractors, who depend on the cooperation of their subcontractors for the
timeous and profitable completion of their contracts, are understandably reluctant to
enter into nominated subcontracts with unknown and untried subcontractors unless
there are contractual provisions to protect them. Most building agreements contain
provisions that absolve the contractor from liability for delays caused by the default
of a nominated subcontractor, [18] and for the additional costs that are incurred when
[19]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
a defaulting or insolvent nominated subcontractor has to be replaced. [19]
These provisions have, over the years, been highly unpopular with employers, [20]
who lack the contractual nexus with nominated subcontractors that would enable
them to sue them for damages and who are therefore left without remedy. This has,
in recent years, led to the introduction of the selected subcontractor in an attempt to
overcome the prejudice.
The selected subcontractor is, to all intents and purposes, the same as a
nominated subcontractor save that the contractor, not the employer, accepts the
consequences of delays caused by the default of a selected subcontractor [21] and for
the additional costs that are incurred when a defaulting or insolvent selected
subcontractor has to be replaced. [22]
The contractor clearly is at a greater risk in employing selected subcontractors
than he is in employing nominated subcontractors, and in order to limit that risk he is
entitled to participate in the process of inviting tenders for selected subcontracts [23]
and in selecting the successful subcontractor. [24] Whether this eliminates the
additional risk is uncertain; if it remains it is likely that an astute contractor, when
preparing his tender, will price for it. In practice, selected subcontracts

Page 434

have largely replaced nominated subcontracts, but the benefits that the employer
enjoys quite possibly come at a price. [25]
14.2 Entering into a nominated subcontract
A nominated subcontractor is a subcontractor who performs specific work for which a
monetary allowance, termed a provisional sum, [26] has been included in the contract
sum, or who performs additional work in terms of a contract instruction, [27] and this
subcontract shall be in terms of the JBCC Nominated/Selected Subcontract
Agreement (NSSA). [28]
Tender documents are prepared by the principal agent who thereafter invites and
receives tenders, [29] recommends the acceptance of one to the employer, and on
Copyright © 2019. Juta & Company, Limited. All rights reserved.

receipt of the employer’s approval instructs the contractor to enter into a nominated
subcontract with the successful tenderer [clause 14.1.4]. [30] If the contractor has a
reasonable objection to the subcontractor [clause 14.2.1], [31] or the subcontractor
refuses to enter into a subcontract in terms of the NSSA [clause 14.2.2], [32] or is

Page 435

unable to provide security [clause 14.2.3], the process must be repeated to secure a
new subcontractor.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
The legal principles involved when the principal agent invites and accepts tenders
for nominated or selected subcontracts, and brings such subcontracts into existence,
do not conform to the conventional contractual model, and call for some explanation.
The employer wants to invite tenders from subcontractors, and yet does not want the
agreement that results from the accepted offer to be a contract between himself and
the subcontractor, but instead a subcontract between the contractor and the
subcontractor, in which the subcontractor is under contractual obligations to the
contractor and there is no privity of contract between the employer and the
subcontractor. It is submitted that the principal agent, when he calls for tenders, does
not do so as the agent of the contractor – by no stretch of the imagination can he be
said to be the agent of the contractor – but as the agent of the employer, and that
such tenders are offers by the subcontractor to the employer to enter into a
subcontract, on agreed terms, with the contractor. On notification by the principal
agent that he has been nominated and that the contractor has been instructed to
accept his tender, the subcontractor comes under a contractual obligation to enter
into a subcontract with the contractor. Unless he has good reason to refuse to do so,
the contractor is under an obligation to the employer to accept the tender, thus
bringing about the desired subcontract.
The implication of this proposition is that, if the subcontractor should amend or
withdraw his tender before it has been accepted by the contractor, thus aborting the
subcontract, the risk of financial loss in nominating or choosing a new subcontractor
lies with the employer, who has the right to claim damages from the defaulting
subcontractor. The right to such damages arises from the subcontractor’s breach of
his undertaking to the employer to enter into a subcontract with the contractor on the
agreed terms. The amount of such damages might be the additional cost of
accepting a higher tender, possibly additional professional fees, and the financial
loss that the resulting delay might cause.
The contractor would be entitled to refuse to enter into a subcontract with a
subcontractor who has been nominated by the principal agent where:
• The subcontractor refuses to enter into a subcontract in terms of the NSSA
and other tender requirements [clause 14.2.2].
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 436

• The subcontractor is unable to produce security in terms of NSSA [clause

14.2.3].
• The contractor makes reasonable objection to appointing such subcontractor
[clause 14.2.1]. What would constitute ‘reasonable objection’ is uncertain and
would depend on circumstances. A suspicion that the subcontractor’s
resources are too limited for him to complete the required scope of work within
the time available would, it is submitted, be grounds for reasonable objection.

Chapter 15
Selected subcontractors
15.1 The principal agent and/or agents shall:
15.1.1 Prepare tender documents in conformity with this
subcontract agreement for work intended to be executed by
a selected subcontractor. Such preparation shall be carried
out in consultation with and to the reasonable approval of the
contractor
15.1.2 Call for tenders from a list of tenderers agreed between the
contractor and the principal agent
15.1.3 Scrutinise the received offers for compliance with the tender
documents in consultation with the contractor
15.1.4 In consultation with the contractor, choose the compliant
tenderer to be appointed as a selected subcontractor in
terms of this subcontract agreement
15.1.5 Inform the contractor where an advance payment is to be
made to the subcontractor for an amount included in the
accepted tender and that a guarantee for advance payment
shall be provided by the subcontractor for the amount
stated [CD]
15.2 The contractor may refuse to appoint such subcontractor:
15.2.1 Who refuses to enter into a subcontract agreement and/or
to comply with other tender requirements
15.2.2 Who has failed to provide a required security
15.2.3 Against whom the contractor makes a reasonable objection
where circumstances have changed
15.3 Where such subcontractor is not appointed by the contractor for the
reasons stated [15.2], or where the appointment of a subcontractor has
been terminated, another subcontractor shall be chosen in consultation
Copyright © 2019. Juta & Company, Limited. All rights reserved.

with the contractor and be appointed in accordance with a contract

instruction issued by the principal agent
15.4 Where the subcontractor has complied with the tender requirements, in
accordance with a contract instruction issued by the principal agent
[PBA 17.1.14] the contractor shall:
15.4.1 Appoint the subcontractor as a selected subcontractor and
forward a copy of the signed subcontract agreement to the
principal agent

Page 438

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
15.4.2 Provide a guarantee for payment in the amount stated
within fifteen (15) working days [11.5.1] of such appointment
where required in the subcontract agreement [CD]
15.4.3 Forward the subcontractor’s regular payment claims to the
principal agent for inclusion in the contractor’s payment
claim
15.4.4 Issue to each subcontractor, with a copy to the principal
agent, a subcontract payment advice and a subcontract
recovery statement to reconcile the amount due for
payment with the amount stated in the subcontract
payment notification issued by the principal agent
15.4.5 Pay the subcontractor the amount certified by the date
stated [25.10]
15.5 Where the contractor fails to provide proof of payment to a
subcontractor within five (5) working days of a notice by the principal
agent, the employer may instruct the principal agent to certify direct
payment to the subcontractor and recover such amount from the
contractor [PBA 25.2.7]
15.6 Where the selected subcontractor is in default of a material term of this
subcontract agreement the decision of whether or not to terminate this
subcontract agreement is that of the contractor
15.7 Where a subcontract agreement with a selected subcontractor is
terminated:
15.7.1 Due to default of the employer, the principal agent and/or
agents, any variation in the cost of completing such
subcontract works shall be for the account of the employer
[25.3.7]
15.7.2 Other than due to default by the employer, the principal
agent and/or agents, any variation in the cost of carrying out
and completing the subcontract works shall be for the
account of the contractor [25.3.7]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

15.7.3 The principal agent shall instruct the contractor to appoint

another selected subcontractor [15.1.4] to complete the
subcontract works
15.8 There shall be no privity of contract between the employer and a
subcontractor appointed by the contractor

Commentary
15.0 Selected subcontractors
15.1 Entering into a selected subcontract

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
A selected subcontractor is a subcontractor who performs specific work for which a
monetary allowance, termed a budgetary allowance,

Page 439

has been included in the contract sum, or who performs additional work in terms of a
contract instruction, [33] and this subcontract is required to be in terms of the JBCC
NSSA.
Tender documents are required to be prepared by the principal agent in
consultation with and to the reasonable approval of the contractor, and tenders are
to be invited by the principal agent from a list of subcontractors that he has agreed
with the contractor [clauses 15.1.1; 15.1.2]. [34]
The principal agent, having consulted the contractor, instructs the contractor to
enter into a selected subcontract with the chosen tenderer in terms of the NSSA and
any relevant tender conditions. Thereupon, within fifteen working days, the
contractor shall establish that the tenderer can meet any relevant contractual
requirements including the provision of security [clause 15.2.2]. If he cannot, or if the
contractor can advance acceptable reasons [clause 15.2.3] [35] why he should not
enter into a subcontract with the chosen tenderer, the process must be repeated to
choose another tenderer for appointment [clause 15.3].

Page 440

Chapter 16
Cooperation with other contractors
16.1 The subcontractor shall cooperate with other contractors engaged on the
works and with direct contractors. The subcontractor shall permit work
to be executed and installed in the subcontract works by others
16.2 Where other contractors cause the subcontractor expense and/or loss for
which no provision was required to be made in the subcontract sum,
such expense and/or loss may be claimed as an adjustment to the n/s
Copyright © 2019. Juta & Company, Limited. All rights reserved.

subcontract value [26.5]

Commentary
16.0 Cooperation with other contractors
Clause 16 in the NSSA [cooperation with other contractors] differs from clause 16 in
the PBA [direct contractors] in that in the former agreement the subcontractor is
required to cooperate with other contractors and direct contractors engaged on the
works, whereas in the latter document, it is the contractor, who, on instruction by the
principal agent, is to permit a direct contractor to execute and/or install work as part

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
of the works. The common-law position is that the contractor, who has undertaken to
erect and complete the building, and who is given possession of the site to do so, is
in complete control of the site and may exclude anyone from it, even the rightful
owner of the site. As indicated [clause 12.3.16], this right is limited by the
provision [36] in the PBA that requires him to give access to the employer and his
agents. But, without further contractual provision, the employer would not be entitled
to engage other workmen to carry out any work on the site while the contractor
remained in possession of it.
Under the Agreement and Schedule of Conditions of Building Contract, [37] the
employer was given the very limited right to engage artists, craftsmen and similar
workmen to carry out work on site which was not part of the building contract while
the contractor was still in possession of the site. The intention was to permit artistic
work embellishing the building to be performed by independent artists who, for
various reasons, it was not practical for the contractor to employ as nominated
subcontractors.

Page 441

In the first edition of the JBCC Principal Agreement the scope of this provision
was enlarged to include manufacturing and processing installations. However, it did
not address the growing problem of ‘tenant installations’ in commercial buildings, [38]
which the employer and his tenants wished to have carried out as soon as the works
were sufficiently far advanced to permit this, so that the installations were complete,
or very nearly so, when the building itself reached practical completion.
This requirement is catered for by clause 16.0 of the PBA, in terms of which the
contractor is required, if so instructed [39] by the principal agent, to permit such work
to be executed by workmen engaged by the employer, provided that the type and
extent of such work has been described in the contract data. [40] The contractor is
required to make reasonable provision for such work in his program [PBA clause
16.1.2]. Any delay to practical completion of the works that might be caused by such
workmen would entitle the contractor to a revision of the date for practical completion
Copyright © 2019. Juta & Company, Limited. All rights reserved.

and financial compensation in terms of clause 23.2.9. Such workmen are subject to
the reasonable control of the contractor [PBA clause 17.1.16]. The contractor is not
responsible for the performance by such workmen of their work, nor for any risks
associated therewith. [41]

Page 442

Chapter 17
Contractor’s instructions
17.1 The contractor may issue contractor’s instructions to the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
subcontractor regarding:
17.1.1 Rectification of discrepancies, errors in description or quantity
or omission of items in the subcontract agreement other
than in the JBCC® Nominated/Selected Subcontract
Agreement
17.1.2 Alteration to design, standards or quantity of the subcontract
works provided that such contractor’s instructions shall
not substantially change the extent of the subcontract
works
17.1.3 The site [13.0]
17.1.4 Compliance with the law, regulations and bylaws [2.1]
17.1.5 Provision and testing of samples of materials and goods,
and/or of finishes and assemblies of elements of the
subcontract works
17.1.6 Opening up of work for inspection, removal or re-execution
[23.2.4; 26.4.2]
17.1.7 Removal or re-execution of work
17.1.8 Removal or substitution of any materials and goods
17.1.9 Protection of the subcontract works
17.1.10 Making good physical loss and repairing damage to the
subcontract works [23.2.2]
17.1.11 Rectification of defects [21.2]
17.1.12 A list for interim completion specifying outstanding or
defective work to be rectified to achieve interim completion,
and extracts from the list for practical completion, the list
for completion and the list for final completion specifying
outstanding or defective work to be rectified to achieve final
completion
17.1.13 Expenditure of budgetary allowances, prime cost amounts
and provisional sums
17.1.14 Suspension of the subcontract works where the works is
Copyright © 2019. Juta & Company, Limited. All rights reserved.

suspended
17.1.15 No clause (PBA = termination of the subcontract
agreement)
17.1.16 Work by direct contractors [PBA 16.0]

Page 443

17.1.17 Access by others or previous contractors and

subcontractors to remedy defective work
17.1.18 Removal from the site of any person employed on the
subcontract works

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
17.1.19 No clause (PBA = removal from the site of any person not
engaged on or connected with the contract works)
17.1.20 On suspension or termination, protection of the
subcontract works, removal of subcontract construction
equipment and materials and goods [29.0]
17.2 The subcontractor shall comply with and duly execute all contractor’s
instructions
17.3 Should the subcontractor fail to proceed with a contractor’s instruction
with due diligence, the contractor may give notice to the subcontractor
to proceed within five (5) working days of receipt of such notice. Where
the subcontractor remains in default, the contractor may engage others
to carry out such contractor’s instruction and may recover expense
and/or loss incurred [27.2.3]
17.4 The subcontractor shall not be obliged to carry out a contractor’s
instruction for additional work issued after the certified or deemed date of
practical completion
17.5 Oral instructions shall be of no force or effect

Commentary
17.0 Contractor’s instructions
In the NSSA provision is made for the contractor to issue contractor’s instructions
[clause 17.1] which are effectively the same as those which the principal agent may
issue to the contractor in the PBA. This arrangement is logical; if the principal agent
wishes to issue an instruction that will require compliance by a subcontractor, he
should issue the instruction to the contractor, who will then repeat it as a contractor’s
instruction to the subcontractor. For the principal agent to give an instruction directly
to a subcontractor, bypassing the contractor, would undermine the contractor’s
authority on site and his ability to control and monitor the works. This provision
applies equally to an agent who has been authorised by the principal agent to issue
contract instructions to the contractor. Clause 17.1 lists the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 444

20 circumstances which govern the subject matter of the instruction which the
contractor may issue, the only clauses not applicable are 17.1.15 which is the PBA
provision for termination of a nominated subcontract agreement.

Page 445

Completion

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
Chapter 18
Interim completion
18.1 The contractor, in consultation with the principal agent and/or applicable
agent, shall:
18.1.1 Inspect the subcontract works at appropriate intervals to
give the subcontractor interpretations and direction on the
standard of work and the state of completion of the
subcontract works required of the subcontractor to
achieve interim completion [CD]
18.1.2 Issue a contractor’s instruction [17.1] consequent on such
inspection, where necessary
18.2 The subcontractor shall:
18.2.1 Inspect the subcontract works in advance of the anticipated
date for interim completion to confirm that the standard of
work required and state of completion of the subcontract
works for interim completion [CD] has been achieved
18.2.2 Give at least five (5) working days’ notice to the contractor
of the anticipated date for the inspection for interim
completion of the subcontract works to meet the
anticipated date for interim completion
18.3 The contractor shall inspect the subcontract works, or a section
thereof, within the period stated [CD] and forthwith issue to the
subcontractor:
18.3.1 A list for interim completion [17.1.12] to the subcontractor
where the subcontract works has not reached interim
completion specifying defects to be rectified and work to be
completed to achieve interim completion
or . . .
18.3.2 A certificate of interim completion to the subcontractor
with a copy to the principal agent and/or agents stating the
date on which interim completion of the subcontract
Copyright © 2019. Juta & Company, Limited. All rights reserved.

works, or of a section thereof, was achieved

Page 446

18.4 Should the contractor not issue a list for interim completion or the
updated list within five (5) working days after the inspection period, or the
certificate of interim completion [18.3.1–2] the subcontractor shall
forthwith give notice to the contractor and the principal agent and/or
agent. Should the contractor not issue such list within a further five (5)
working days of receipt of such notice, interim completion shall be

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
deemed to have been achieved on the initial/revised date of such notice
and the contractor shall issue the certificate of interim completion
forthwith
18.5 On achievement of interim completion the subcontractor shall hand
over to the contractor all operating and instruction manuals, product
guarantees and information for the preparation of ‘as built’ documentation
by the principal agent and/or an agent and applicable
statutory/regulatory approval certificates
18.6 Where the subcontract works or a portion thereof includes mechanical
and/or electrical systems that are put to use for the convenience of the
contractor with the permission of the subcontractor, the guarantee
period for such systems shall commence on the date of practical
completion [19.0]

Commentary
18.0 Interim completion
For the purposes of practical completion and final completion, all work in terms of
subcontract agreements forms part of the works and is treated as such by clauses
19.0 and 21.0 of the PBA. These clauses are replicated in the NSSA to the extent
that they bear directly on the rights and obligations of the subcontractor, with minor
modifications. Where in terms of the PBA the contractor is furnished by the principal
agent with a list for practical completion or a list for final completion, the contractor is
required to furnish the subcontractor with an extract of such list specifying the items
to be attended to by the subcontractor [clauses 19.1.2; 21.7.2].
The intended date for practical completion of the subcontract works is the
intended date for practical completion of the works in terms of the principal building
agreement. However, in some instances the subcontract works will be required to be
sufficiently complete at an

Page 447
Copyright © 2019. Juta & Company, Limited. All rights reserved.

earlier date to enable the contractor to proceed with other works which depend on
the completion of such subcontractor’s works. [42]
Hence the concept of interim completion, which is defined as the state of
completion where the n/s subcontract works, or a section thereof, is substantially
complete as certified by the contractor. [43] It corresponds in all respects with the
concept of practical completion save that it is certified by the contractor, not the
principal agent, which is the determinant. The procedure, in which it is determined
whether the subcontract works have achieved interim completion and a certificate of
interim completion is issued, is mutatis mutandis the same as set out in clause 19.0

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
in respect of practical completion.
Differences sometimes occur in respect of the defects liability period. While
clause 21.1 of the NSSA specifies a defects liability period of 90 calendar days from
the day following the date of practical completion, as does clause 21.1 in the PBA, it
often happens that, particularly in respect of subcontracts for mechanical services
installations, the subcontractor is required to guarantee or provide a warranty or
indemnity for a longer period, often a year. In order to avoid postponing the date of
final completion of the principal contract to accommodate this requirement, the
defects liability period of the principal contract is not affected, but on the date of the
certificate of final completion, the contractor’s rights in terms of such guarantee,
warranty or indemnity are ceded to the employer [clause 21.11].
A circumstance may occur where a subcontractor, carrying out an installation
which entails a first fix installation of equipment that is required to be built into walls,
ducts or similar spaces at a relatively early stage in the construction of a building but
where the second fix items may only be installed at a much later stage in the
construction period, requires the first fix installation to be tested and certified for
interim completion and payment accordingly. In such circumstances the principal
agent and agents, when preparing the tender documents for such installation, would
be advised to include such description in the contract data issued with the NSSA
tender documents. The JBCC may wish to consider this aspect and possibly make
provision for an intermediate stage of interim completion for such subcontract work.

Page 448

Chapter 19
Practical completion
19.1 The principal agent shall:
19.1.1 Give direction to the contractor on the standard of work and
the state of completion of the works required of the
subcontractor to achieve practical completion
19.1.2 Give notice to the contractor, who shall advise the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

subcontractor where practical completion has not been

achieved and issue an extract from the list for practical
completion applicable to the subcontract works, specifying
defective work and work requiring to be completed by the
subcontractor
19.1.3 Give notice to the contractor who shall give notice to the
subcontractor where the certificate of practical
completion has been issued and issue the list for
completion applicable to the subcontract works specifying
defective work and work required to be attended to by the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
subcontractor
19.2 The subcontractor shall timeously complete items on the list for
practical completion and give notice to the contractor to inspect the
subcontract works until the certificate of practical completion is
issued
19.3 On practical completion of the works or a section thereof where the
principal agent instructs that installation work is to be executed by others,
the employer and/or contractor shall allow access for such installations

Commentary
19.0 Practical completion
The duty of the contractor in relation to the nominated or selected subcontractor is
similar to that of the principal agent to the contractor who is to ensure that the
contractor complies with his contractual obligations. The principal agent is required
to give direction to the contractor on the standard of work and state of completion of
the works of the subcontractor to achieve practical completion. The principal agent is
required to notify the contractor [clause 19.1.2], who shall give notice to the
subcontractor where practical completion has not been achieved and issue an
extract from the list for practical completion specifying defective work and work
required to be completed.

Page 449

Where the certificate of practical completion has been issued, the principal agent
is to notify the contractor thereof and the contractor has a duty to advise the
subcontractor that the certificate has been issued and to issue the list for final
completion applicable to the subcontract work specifying defective work and work
required to be completed by the subcontractor. The subcontractor is to timeously
complete the items on the list for practical completion and notify the contractor to
inspect such work until the certificate for practical completion is issued.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 450

Chapter 20
Completion in sections
20.1 Where completion of sections is required [CD] the terms and conditions
applicable to the subcontract works as a whole shall apply to each
section
20.2 The contractor shall for each section:
20.2.1 Issue a certificate of interim completion [18.3.2]
20.2.2 Inform the subcontractor of the date when practical

Commentary
20.0 Sectional completion
The provisions for sectional completion are discussed in greater detail in Section 2
chapter 20 and apply mutatis mutandis where sectional completion is required.

Page 451

Chapter 21
Defects liability period and final completion
21.1 The defects liability period for the works shall commence on the calendar
day following the date of practical completion and end at midnight
(00:00) ninety (90) calendar days from the date of practical completion
or when work on the list for final completion has been satisfactorily
completed [21.5], whichever is the later
21.2 Where defects become apparent during the defects liability period the
principal agent may instruct the contractor [PBA 17.1.11] and/or the
subcontractor [17.1.11] to progressively attend to such items, whilst at all
times minimising inconvenience to the occupants
21.3 The subcontractor shall:
21.3.1 Inspect and forthwith rectify items on the list for completion
applicable to the subcontract works no later than (10)
working days before the expiry of the defects liability period
21.3.2 Give notice to the contractor and/or agent to inspect the
subcontract works within five (5) working days of receipt of
such notice
21.4 Where applicable items on the list for completion have not been
attended to the contractor shall give notice to the subcontractor of such
Copyright © 2019. Juta & Company, Limited. All rights reserved.

outstanding items. The process [21.3] shall be repeated until all items on
the extract from the list for completion have been attended to
21.5 The subcontractor shall give notice to the contractor when the
outstanding items on the list for completion have been attended to. The
contractor and/or the principal agent and/or the agent shall inspect the
subcontract works within five (5) working days of receipt of such notice
21.6 On the expiry of the ninety (90) calendar days defects liability period
[21.1] or on notice from the subcontractor that applicable items on the
list for completion have been attended to, whichever is the later, the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
contractor shall inspect the subcontract works and within ten (10)
working days either:
21.6.1 Issue the updated list for final completion applicable to the
subcontract works
or . . .
21.6.2 Inform the subcontractor when the certificate of final
completion applicable to the subcontract has been issued

Page 452

21.7 Where the contractor issues the list for final completion applicable to
the subcontract works:
27.7.1 The subcontractor shall forthwith complete all outstanding
work and rectify all the defects
21.7.2 The subcontractor shall give notice to the contractor when
all outstanding work has been completed and all the defects
have been rectified
21.7.3 The contractor shall, within five (5) working days of receipt
of the subcontractor’s notice(s) [21.7.2] give notice to the
subcontractor either that the items on the list for final
completion have been completed, or issue an updated list
for final completion of the items not completed and of any
further defects that have become evident since the last
inspection
21.8 Where the contractor gives notice to the subcontractor of items on the
list for final completion or an updated list for final completion that are
required to be completed by the subcontractor, the subcontractor shall
promptly attend to and complete such items and give notice to the
contractor when all such items have been completed. The process shall
be repeated until the certificate of final completion is issued. The
contractor shall give notice to the subcontractor when the certificate of
Copyright © 2019. Juta & Company, Limited. All rights reserved.

final completion is issued

21.9 Where the principal agent has not issued the list for final completion or
the updated list within five (5) working days after the inspection period
[21.4], the contractor shall forthwith give notice to the employer and the
principal agent. Should the principal agent not issue such list within a
further five (5) working days of receipt of such notice, final completion
shall be deemed to have been achieved on expiry of such notice period
and the principal agent shall forthwith issue the certificate of final
completion
21.10 Where a subcontractor’s defects liability period extends beyond the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
contractor’s defects liability period:
21.10.1 The contractor’s obligations and liability concerning
subcontractor’s defects shall end on the date of issue of
the certificate of final completion
21.10.2 The remaining portion of the subcontractor’s defects liability
period shall be ceded to the employer on the date of issue of
the certificate of final completion

Page 453

21.11 Where the contractor, a subcontractor or a supplier is required to give a

guarantee, warranty or indemnity, other than a security to the contractor,
the rights and obligations under such guarantee, warranty or indemnity
shall be ceded to the employer on the date of issue of the certificate of
final completion. This cession shall not prejudice any other rights the
employer may have
21.12 A certificate of final completion shall be conclusive as to the sufficiency
of the works and that the subcontractor’s obligations [12.3.7] have been
fulfilled other than for latent defects

Commentary
21.0 Defects liability period and final completion
The defects liability period for the works commences on the calendar day after the
date of practical completion and ends at midnight 90 calendar days from the date of
practical completion or when work on the list for final completion has been
satisfactorily completed, whichever is the later. This clause 21.1 is identical to the
same clause in the PBA. The provisions in the NSSA regarding the defects liability
period reflect the provisions in the PBA save for the requirement that the role of the
principal agent in relation to the contractor is now carried out by the contractor in
relation to the subcontractor. For further commentary on this item see Section 2
chapter 21.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 454

Chapter 22
Latent defects liability period
22.1 The latent defects liability period for the subcontract works shall
commence at the start of the construction period and end five (5) years
from the certified date of final completion
22.2 The subcontractor shall make good all latent defects that appear up to
the date of expiry of the latent defects liability period [3.3]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
22.3 Where termination of this subcontract agreement occurs before the date
of final completion, the latent defects liability period shall end:
22.3.1 Five (5) years from the date of termination [29.10] for the
completed portion of the subcontract works only
or . . .
22.3.2 On the date of termination where execution of the
subcontract works has become impossible due to
circumstances beyond the control of either party [29.20], or
due to default by the contractor or the employer or
principal agent and/or agents [29.17.3; 29.23]

Commentary
22.0 Latent defects liability period
Clause 22.1 in both the PBA and the NSSA state that the latent defects liability
period for the works commences at the start of the construction period and ends five
years from the certified date of final completion. The subcontractor is required
[clause 22.2] to make good all latent defects that appear up to the date of expiry of
the latent defects liability period. The latent defects liability period may expire at an
earlier date in the event of termination of the subcontract works before the date of
final completion, in which case the latent defects liability period ends either five years
from the date of termination for the completed portion of the subcontract works only
[clause 22.3.1], or on the date of termination where execution of the subcontract
works has become impossible due to circumstances beyond the control of either
party [clause 22.3.2] or in respect of the subcontract works being terminated by the
subcontractor due to default by the contractor or the employer or the principal agent
[clause 29.17.3; 29.23].

Page 455

Chapter 23
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Revision of date for interim completion

23.1 The subcontractor is entitled to a revision of the date for interim
completion by the contractor without an adjustment of the subcontract
value for a delay to interim completion caused by one or more of the
following events:
23.1.1 Adverse weather conditions
23.1.2 Inability to obtain materials and goods where the
subcontractor has taken reasonable steps to avoid or
reduce such a delay
23.1.3 Making good physical loss and repairing damage to the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
subcontract works [8.2] where such risk is beyond the
reasonable control of the parties
23.1.4 Late supply of a prime cost amount item where the
subcontractor has taken reasonable steps to avoid or
reduce such delay
23.1.5 Exercise of statutory power by a body of state or public or
local authority that directly affects the execution of the works
23.1.6 Force majeure
23.2 The subcontractor is entitled to a revision of the date for interim
completion by the contractor with an adjustment of the subcontract
value [26.7] by the principal agent for a delay to interim completion
caused by one or more of the following events:
23.2.1 Delayed access to the subcontract works [12.2.5; 12.3.7]
23.2.2 Making good physical loss and repairing damage to the
subcontract works [8.5] where the subcontractor is not at
risk
23.2.3 Contractor’s instructions [17.1–2] not occasioned by the
subcontractor’s default
23.2.4 Opening up and testing of work and materials and goods
where such work is in accordance with this subcontract
agreement [17.1.6]
23.2.5 Late or incorrect issue of subcontract construction
information
23.2.6 Late supply of free issue, materials and goods for which
the employer is responsible [12.1.10]
23.2.7 No clause (PBA = late appointment of a subcontractor)

Page 456

23.2.8 Late acceptance by the principal agent and/or agents of a

design undertaken by a subcontractor where the
subcontractor’s obligations have been met [7.2]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

23.2.9 An act or omission by a nominated subcontractor [14.0] or a

direct contractor [16.0]
23.2.10 No clause (PBA = insolvency of a nominated subcontractor)
23.2.11 Suspension or termination of this subcontract agreement
by the subcontractor due to default by the contractor, the
employer or the principal agent and/or agents [14.7.2]
23.2.12 Execution of additional work for which the quantity in the
subcontract bills of quantities is not sufficiently accurate
23.2.13 Suspension of the subcontract works [28.0]
23.2.14 Payment default by the contractor [25.10]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
23.3 Further circumstances for which the subcontractor may be entitled to a
revision of the date for interim completion by the contractor are delays
to interim completion due to any other cause beyond the
subcontractor’s reasonable control that could not have reasonably been
anticipated and provided for. The principal agent shall adjust the
subcontract value where such delay is due to the contractor, or the
employer or the principal agent and/or agents
23.4 Should a listed circumstance occur [23.1–3] which could cause a delay to
the date for interim completion, the subcontractor shall:
23.4.1 Take reasonable steps to avoid or reduce such delay
23.4.2 Within fifteen (15) working days of becoming aware, or
ought reasonably to have become aware of such delay
including delays due to the employer’s action or inaction,
give notice to the contractor of the intention to submit a
claim for a revision to the date of interim completion, failing
which the subcontractor shall forfeit such claim
23.4.3 Failure by the subcontractor to give notice [23.4.2] shall not
prejudice his entitlement to a revision of the date for interim
completion if the delay occurred before the subcontractor
commenced work on the site or if the contractor is granted a
revision of the date for practical completion in terms of the
principal building agreement for the particular
circumstances causing the delay

Page 457

23.5 The subcontractor shall submit a claim for the revision of the date of
interim completion to the contractor within twenty (20) working days,
or such extended period the contractor may allow, from when the
subcontractor is able to quantify the delay in terms of the subcontract
programme
23.6 Where the subcontractor submits a claim for a revision of the date for
Copyright © 2019. Juta & Company, Limited. All rights reserved.

interim completion the claim shall in respect of each circumstance

separately state:
23.6.1 The relevant clause [23.1–3] on which the subcontractor
relies
23.6.2 The cause and effect of the delay on the current date for
interim completion, where appropriate, illustrated by a
change to the critical path on the current subcontract
programme
23.6.3 The extension period claimed in working days, and the
calculation thereof

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
23.7 The contractor shall, within twenty-five (25) working days of receipt of
the claim, grant in full, reduce or refuse the working days claimed, and:
23.7.1 Determine the revised date for interim completion as a
result of the working days granted
23.7.2 Identify each event and the reference clause for each
revision granted or amended
23.7.3 Give reasons where such claim is refused or reduced
23.8 Where the contractor fails to act within the period [23.7] such claim shall
be deemed to be refused. The subcontractor may give notice of a
disagreement [30.1] where the contractor refuses a claim, alternatively
reduces a claim, or fails to act

Commentary
23.0 Revision of the date for interim completion
Clauses 23.1, 23.2 and 23.3 in the NSSA are basically a replica of the same clauses
in the PBA dealing with practical completion and deal with the circumstances where
the subcontractor is entitled to a revision of the date for interim completion by the
contractor without an adjustment of the subcontract value [clause 23.1]; the
circumstances where the subcontractor is entitled to a revision of the date for interim
completion by the contractor with an adjustment of the subcontract value [clause
23.2] and further circumstances for which the subcontractor may be entitled to a
revision of the date for interim

Page 458

completion by the contractor due to any other cause beyond the subcontractor’s
reasonable control that could not have reasonably been anticipated and provided for
[clause 23.3]. The procedures to be followed by the subcontractor, contractor and
principal agent are prescribed [clauses 23.4 to 23.8]. The subcontractor’s
responsibility to submit notification to the contractor and a claim for the revision of
the date for interim completion is subject to the time barring as is the case of the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contractor in the PBA.

Page 459

Chapter 24
Damages for non-performance
24.1 The subcontractor shall be liable to the contractor for damages from the
later of the initial or revised date(s) for interim and/or practical
completion of a section or the subcontract works as a whole [CD] up to
and including the earlier of:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
24.1.1 The actual or deemed date of practical completion of the
works [23.7.1] or a section thereof
24.1.2 The date of termination [29.0]
24.2 Where the contractor elects to recover such damages, on notice thereof
to the subcontractor, the contractor shall include such amounts in
subsequent subcontract recovery statements [12.2.7] and subcontract
payment advices [27.1.6] from the date on which the contractor’s
entitlement to damages commences
24.3 Where the subcontractor is prevented from fulfilling obligations due to
default of the contractor, other subcontractors or a direct contractor,
the subcontractor shall be entitled to damages

Commentary
24.0 Damages for non-performance
The NSSA makes no provision for the subcontractor to pay penalties to the
contractor for non-completion and, accordingly, the contractor is entitled to his
common-law remedy of damages for breach of contract. Clause 24.0 of the NSSA
confirms, but does not vary, the common law in this regard.
This clause stipulates that the subcontractor shall be liable to the contractor for
damages if he fails to achieve interim completion of the subcontract works on the
date for interim completion according to the program, [44] or fails to complete the
relevant work on the list for interim completion on the dates agreed between the
contractor and the subcontractor [clause 24.1].

Page 460

Such damages must be the actual losses suffered by the contractor [45] and may
not be too remote. [46] They will probably comprise any penalties payable by the
contractor to the employer and additional management overheads incurred by the
contractor as a direct consequence of the subcontractor’s non-completion. The onus
is on the contractor to prove his damages. [47]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

There could also be circumstances that would entitle the subcontractor to claim
damages from the contractor. If he is prevented from fulfilling his contractual
obligations due to default by the contractor, other subcontractors or a direct
contractor, other than delay caused by any of them for which he is entitled to an
extension of time [clause 23.3], he is entitled to damages by the contractor.

Page 461

Payment

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
Chapter 25
Payment
25.1 The contractor shall apply for payment certificates, which shall include
work and materials included in the subcontract. The subcontractor shall
cooperate with the contractor in the preparation of payment claim
valuations by providing all required documents and quantified amounts
25.2 The principal agent shall regularly by the due date [PBA–CD] issue
payment certificates to the contractor with a copy to the employer until
and including the issue of the final payment certificate. A payment
certificate may be for a nil or negative amount. The principal agent shall
concurrently with each payment certificate issue a schedule to the
contractor indicating amounts due to each subcontractor and a
subcontract payment notification to each subcontractor to separately
include:
25.2.1 A fair estimate of the value of the subcontract works
executed
25.2.2 A fair estimate of the value of materials and goods
25.3 The contractor shall within seven (7) calendar days of the date of issue
of the payment certificate issue to the subcontractor a subcontract
payment advice to separately include:
25.3.1 The amount included in an interim payment certificate for
the subcontract works executed
25.3.2 The amount included in an interim payment certificate for
materials and goods [25.4; 25.5]
25.3.3 Security adjustment [11.1.2; 11.4.1]
25.3.4 Cost fluctuations, if applicable [CD]
25.3.5 The gross amount certified
25.3.6 The amount previously certified
25.3.7 Amounts due to either party in the subcontract recovery
statement [27.1]
25.3.8 Tax
Copyright © 2019. Juta & Company, Limited. All rights reserved.

25.3.9 Interest amounts included in the subcontract recovery

statement
25.3.10 Other non-taxable amounts

Page 462

25.3.11 The net amount certified due to the subcontractor or the

contractor
25.4 The value of materials and goods [25.3.2] (excluding materials and
goods off site or in transit) shall be included in the amount certified only

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
where:
25.4.1 Not prematurely delivered or offered for delivery in terms of
the programme
25.4.2 Stored and suitably protected against loss and damage
25.4.3 Covered by insurances [10.1.5], where applicable
25.5 The value of materials and goods [25.3.2] stored off site and/or in transit
shall be included in the amount certified only where covered by a
guarantee for advance payment or such other security acceptable to
the employer [CD]
25.6 Materials and goods when certified [25.4] and paid for shall become the
property of the employer and shall not be removed without the written
authority of the principal agent
25.7 The contractor shall concurrently with each subcontract payment
advice issue to the subcontractor:
25.7.1 A subcontract recovery statement identifying possible
differences between the subcontract payment notification
and the subcontract payment advice
25.7.2 The determination of default interest
25.7.3 The determination of compensatory interest
25.8 An interim subcontract payment advice shall not be evidence that the
subcontract works and materials and goods are in terms of the
subcontract agreement
25.9 The contractor shall certify one hundred per cent (100%) of the amount of
the subcontract final account including adjustments [26.0; 27.0] in the
final subcontract payment advice
25.10 The contractor shall pay the subcontractor the amount certified in an
issued subcontract payment advice within twenty-one (21) calendar
days of the date for issue of the payment certificate [CD] including
default interest

Page 463
Copyright © 2019. Juta & Company, Limited. All rights reserved.

25.11 The subcontractor shall pay the contractor the amount certified in an
issued subcontract payment advice within twenty-one (21) calendar
days of the date of issue of the subcontract payment advice [CD]
including default interest
25.12 Where a guarantee for construction (fixed) and payment reduction
[11.1.2] has been chosen the value of the subcontract works [26.0] and
materials and goods [25.3.2] that exceeds the subcontract sum and
any contract price adjustments [CD] shall be certified in full. The value
certified that does not exceed the subcontract sum shall be subject to the
following percentage adjustments:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
25.12.1 Ninety-five per cent (95%) of such value in an interim
subcontract payment advice issued up to the date of
practical completion
25.12.2 Ninety-seven and one half per cent (97.5%) of such value in
interim subcontract payment advices issued up to but
excluding the final payment advice
25.12.3 One hundred per cent (100%) of such value in the final
subcontract payment advice [25.15]
25.13 Where the contractor has made a partial or no payment of the amount
due on an issued subcontract payment advice, the subcontractor may
give five (5) working days’ notice to comply, failing which the
subcontractor may:
25.13.1 Suspend the subcontract works [28.1.3]
25.13.2 Exercise the lien, or any right of retention of the site, where
this has not been waived
25.13.3 Call up the guarantee for payment [11.5]
25.14 Where the employer has not paid the contractor in terms of an issued
payment certificate to enable the contractor to meet his obligations the
contractor, on presentation of an affidavit to the subcontractor, may
defer payment for not more than thirty (30) calendar days to resolve such
non- or part payment
25.15 Where the subcontractor disputes the correctness of the subcontract
final account, within the period allowed [26.12], the principal agent shall
issue interim payment certificates to the contractor with a subcontract
payment notification to the subcontractor by the due date [CD] for the
undisputed amount(s)

Page 464

25.16 The contractor shall issue the final subcontract payment advice to the
subcontractor within seven (7) calendar days of the date of acceptance
of the subcontract final account by the subcontractor [26.11] but not
Copyright © 2019. Juta & Company, Limited. All rights reserved.

before the date of issue of the certificate of final completion, other than
on termination [29.0]
25.17 For the purposes of provisional sentence in relation to subcontract
payment advice only, the parties consent to the jurisdiction of any court
of law of the country [CD]

Commentary
25.0 Payment

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
By the contractor to the subcontractor
Within seven calendar days of the issue of a payment certificate, the contractor is
required to issue to each subcontractor a subcontract payment advice [clause 25.3]
to separately include amounts due to each subcontractor detailing the amounts due
to each subcontract for work executed [clause 25.3.1], a fair estimate of materials
and goods [clause 25.3.2], security adjustment [clause 25.3.3] cost fluctuations if
applicable [clause 25.3.4], the gross amount certified [clause 25.3.5], the amount
previously certified [clause 23.3.6], amounts due to either party in the subcontract
recovery statement [clauses 25.3.7 and 27.1], tax [clause 25.3.8], interest amounts
included in the recovery statement [clause 25.3.9], other non-taxable amounts
[clause 25.3.10] and the net amount certified due to the subcontractor or the
contractor [clause 25.3.11]. The value of materials and goods shall be included in the
certified amount only where not prematurely delivered or offered for delivery in terms
of the programme, stored and suitably protected against loss and damage, and
covered by insurance [clauses 25.4, 25.4.1, 25.4.3]. The contractor is required to
pay the subcontractor [clause 25.10] [48] the amount certified in an issued subcontract
payment advice within 21 calendar days of the date of issue of the payment
certificate including default interest [clause 25.10], [49] provided that the subcontractor
has furnished the contractor with a VAT invoice. [50]

Page 465

The contractor is required to provide proof to the principal agent within seven
calendar days of a request to do so that payment has been made to the subcontrator
[PBA clause 25.13]. [51] Where the contractor has made a partial or no payment of
the amount due on an issued subcontract payment advice, the subcontractor may
give the contractor five working days to comply, failing which the subcontractor may,
like the contractor, suspend the subcontract works in order to enforce payment
[clause 25.13.1]. If the amount stated in the payment advice remains unpaid at the
latest date for payment, the subcontractor may give the contractor five working days
of his intention to suspend the subcontract works [clause 25.13.1], exercise the lien
Copyright © 2019. Juta & Company, Limited. All rights reserved.

where this has not been waived [clause 25.13.2] or call up the subcontract
guarantee for payment [clause 25.13.3]. [52] If the contractor continues to default for a
further five days, the subcontractor may give notice to the contractor of his intention
to suspend subcontract works [clause 28.1.3 and 28.2]. Suspension and termination
of the subcontract works is dealt with in greater detail in chapter 29.2 below.
If the contractor has, on the request of the subcontractor, provided a guarantee
for payment [clause 11.5.1], [53] the subcontractor may recover the amount due by
giving the contractor five working days’ notice to comply, failing which the
subcontractor may call up the subcontract guarantee for payment [clauses 25.13 and
25.13.3].

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
The remedy most favoured by subcontractors is to seek a certificate from the
principal agent entitling them to direct payment by the employer. Clauses 14.5 and
15.5 of the PBA provide that the contractor shall, within five working days of
receiving a contract instruction to do so, furnish proof that he has paid a nominated
or selected subcontractor the amount due in terms of an interim payment certificate.
Failure to provide such proof would permit the employer to instruct the principal
agent to issue to a subcontractor a certificate entitling him to direct payment by the
employer of the amount

Page 466

concerned. [54] The employer would then be able to recover this amount from the
contractor through the recovery statement [PBA clauses 14.5, 15.5 and 27.2]. [55]
By the subcontractor to the contractor
Where the subcontract payment advice shows an amount due by the subcontractor
to the contractor, [56] such amount shall be paid by the subcontractor within 21
calendar days of the date of issue of such payment advice including default interest
[clause 25.11]. The contractor would have to provide the subcontractor with a VAT
invoice. There is no specific provision in the NSSA entitling the contractor whereby
the contractor may recover this amount from the subcontractor if he fails to pay. It is
submitted, however, that the contractor retains his common-law right to deduct any
amount owing by the subcontractor to him from any amount which he may in the
future be required to pay the subcontractor.

Page 467

Chapter 26
Adjustment of the subcontract value and final account
26.1 The principal agent shall determine the value of adjustments to the
subcontract value in cooperation with the subcontractor and the
contractor in the preparation of the subcontract final account. Where
Copyright © 2019. Juta & Company, Limited. All rights reserved.

such adjustments require measurement on site, the subcontractor shall

have the right to be present
26.2 Adjustments to the subcontract value resulting from a contractor’s
instruction [17.1] shall be determined as follows:
26.2.1 Work of a similar character executed under similar conditions
shall be priced at the rates in the subcontract priced
document
26.2.2 Work not of a similar character shall be priced at rates based
on those in the subcontract priced document and adjusted
to suit the changed circumstances

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
26.2.3 If the above methods do not apply, work shall be priced at
rates based on the necessary labour, construction
equipment and/or material and goods for executing the
work plus an allowance of ten per cent (10%) mark-up
26.2.4 Work omitted shall be valued at the rates in the subcontract
priced document, but where the omission of such work
alters the circumstances in which the remaining work is
carried out, the value of the remaining work shall be
determined by the above methods
26.3 Where work is identified as provisional in the subcontract priced
document the principal agent shall omit such value from the
subcontract sum and add the value of work as executed to the
subcontract value
26.4 Where the subcontractor has made payment for items not included in the
subcontract priced document, in accordance with a contractor’s
instruction, the actual amounts paid plus a ten per cent (10%) mark-up
shall be added to the subcontract value limited to:
26.4.1 Charges by authorities [2.1]
26.4.2 The cost of opening up and testing [17.1.6], where the work
is according to this subcontract agreement
26.4.3 The cost of insurance [10.0], where applicable [CD]

Page 468

26.5 The subcontractor shall give notice to the contractor within fifteen (15)
working days of becoming aware or ought reasonably to have become
aware of expense and/or loss for which provision was not required in the
subcontract sum failing which such claim shall be forfeited. The
contractor shall forthwith submit such claim to the principal agent
26.6 Following notice [26.5] the subcontractor shall submit a detailed and
substantiated claim for the adjustment of the subcontract value to the
contractor to submit to the principal agent within twenty (20) working
Copyright © 2019. Juta & Company, Limited. All rights reserved.

days or such period as the principal agent may allow

26.7 The principal agent shall make a fair assessment of the claim and adjust
the subcontract value within twenty (20) working days of receipt of such
details
26.8 Where the principal agent fails to act within such period [26.7] the claim
shall be deemed to be refused. The subcontractor may give notice of a
disagreement [30.1] where no assessment is received
26.9 The principal agent shall:
26.9.1 Omit prime cost amounts and budgetary allowances
[17.1.13] from the subcontract sum and determine the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
actual value of such work to be added to the subcontract
value
26.9.2 No clause (PBA = Omit provisional sums . . .)
26.9.3 No clause (PBA = Prorate allowances for profit and
attendance . . .)
26.9.4 Adjust the preliminaries amounts in accordance with the
method selected [CD]
26.9.5 Adjust the subcontract value to include contract price
adjustments (cost fluctuations), if applicable [CD]
26.9.6 Rectify discrepancies, errors in description or quantity, or
omission of items in the subcontract agreement other than
in this JBCC® Nominated/Selected Subcontract Agreement
[17.1.1]
26.10 The principal agent shall prepare and issue the subcontract final
account to the subcontractor within thirty (30) working days of the date
of practical completion
26.11 The subcontractor shall accept the subcontract final account within
twenty (20) working days of receipt thereof or give notice of non-
acceptance with reasons failing which the subcontract final account
shall be deemed to be accepted

Page 469

26.12 Should the reasons for non-acceptance of the subcontract final account
[26.11] not be resolved within ten (10) working days, of the notice of non-
acceptance, or within such extended period as the principal agent may
allow on request from the subcontractor, the subcontractor may give
notice of a disagreement
26.13 The contractor shall issue the final subcontract payment advice to the
subcontractor within seven (7) calendar days of issue of the final
payment certificate
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Commentary
26.0 Adjustment of the subcontract value and final account
26.1 Adjustment of the subcontract amount
The subcontract value is required to be adjusted [clause 26.0] by the principal agent
[clause 26.9] in exactly the same way as in the PBA. The only point of difference is
that, whereas the contractor has 40 working days in which to submit his claim after
having given 20 working days’ notice to the principal agent of a circumstance in
terms of clause 26.6 that has caused him expense or loss, the subcontractor has 20

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
working days in which to submit his claim after having given 15 working days’ notice
to the contractor of such circumstance. Failure by the subcontractor to meet these
time constraints will result in the claim being forfeited [clause 26.5; 26.6].
26.2 N/S subcontract final account
Within 30 working days of practical completion, the principal agent is required to
prepare and issue the subcontract final account to the subcontractor [clause 26.10].
The subcontractor has 20 working days after receipt of the subcontract final account
to either accept this final account or to object to it with substantiated reasons, failing
which this final account shall be issued [clause 26.11]. Where the subcontractor
gives notice to the principal agent objecting to the correctness of the subcontract
final account, such objection is to be resolved within ten working days or such
extended period as the principal agent may allow on request from the subcontractor.
The subcontractor may give notice of disagreement [clause 30.1] where no
determination is received or where he disagrees with the determination given [clause
26.12]. The contractor is required to issue the final subcontract payment advice to
the subcontractor within seven calendar days of issue of the final payment certificate
[clause 26.13].

Page 470

The entitlement of a nominated or selected subcontractor to payment of an

amount included in a final payment certificate is exactly the same as it is in respect
of an interim payment certificate as are the remedies available to him, save that the
right to suspend work or to terminate the subcontract at this stage would be
pointless.

Page 471

Chapter 27
Recovery of expense and/or loss
27.1 The contractor shall issue a subcontract recovery statement with each
Copyright © 2019. Juta & Company, Limited. All rights reserved.

subcontract payment advice to the subcontractor with explanatory

documentation to support the calculation of amounts due to:
The contractor resulting from:
27.1.1 Damages [24.3]
27.1.2 Default interest [25.7.2]
27.1.3 Expense and/or loss [27.2]
The subcontractor resulting from:
27.1.4 Default interest [25.7.2]
27.1.5 Compensatory interest [25.7.3]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
27.1.6 Damages [24.2]
27.1.7 Expense or loss caused by a direct contractor [PBA 16.1.3]
27.1.8 Advance payments [11.3; 2.1.8]
27.1.9 Termination of the subcontract agreement due to default of
the employer, the principal agent and/or agents [14.7.2;
15.7.2]
27.1.10 A contractor’s instruction not consequent on a contract
instruction
27.1.11 Adjustment of the subcontractor’s preliminaries due to
default by the contractor
27.2 The contractor may recover expense and/or loss incurred or to be
incurred resulting from:
27.2.1 Paying charges [2.1]
27.2.2 Effecting insurance due to the subcontractor’s default [10.1]
27.2.3 Work executed by others due to the subcontractor’s default
[17.3]
27.2.4 Recoupment of advance payments [11.3]
27.2.5 The subcontractor not paying the amount due to the
contractor [25.3.7]
27.2.6 Termination of a nominated subcontract agreement [14.7.2]
27.2.7 No clause (PBA = amounts paid directly to subcontractors)
27.2.8 No clause (PBA = termination of other subcontract
agreements)

Page 472

27.2.9 Default by the subcontractor where not less than five (5)
working days’ notice detailing such default has been given
before the issue of the next subcontract recovery
statement to allow the subcontractor the opportunity to
remedy such default
27.2.10 Additional cost of scaffolding/hoisting equipment due to
Copyright © 2019. Juta & Company, Limited. All rights reserved.

default by the subcontractor

27.3 Where an amount is due to either party and has not been paid, the other
party may recover the amount from any of the following:
27.3.1 Subsequent subcontract payment advices [25.0]
27.3.2 A demand in terms of the security [11.0]
27.3.3 The defaulting party as a debt
27.4 Where either party has been liquidated, or this subcontract agreement
terminated, the other party may exercise rights in terms of the security
[11.0]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
Commentary
27.0 Recovery of expense or loss
In terms of the NSSA [clause 27.1], the contractor has an obligation to issue a
recovery statement with each subcontract payment advice with explanatory
documentation to support the amounts due to the contractor and/or the
subcontractor. In the case of the contractor the recovery items are for damages
[clause 24.2], default interest [clause 25.7.2] and expense and/or loss [clause 27.2]
which is substantially the same as the recovery statement in terms of the PBA.
In the case of recovery by the subcontractor, the amounts due are compensatory
interest [25.7.3], default interest [clause 25.7.2], damages [clause 24.2], advance
payments [clause 11.3], a contractor’s instruction not consequent on a contract
instruction [clause 27.1.10], expense or loss caused by a direct contractor [PBA
16.1.3], termination of the subcontract agreement due to default of the employer, the
principal agent and/or agents [14.7.2; 15.7.2]
The procedure to be followed [clause 27.3] where an amount due to either party
has not been paid and provides that the other party may recover the amount due
from a subsequent subcontract payment advice [clause 27.3.1]; a demand in terms
of the security [clause 11.0 and 27.3.2] and from the defaulting party as a debt
[clause 27.3.3]. Where either party has been liquidated or the subcontract
agreement has been terminated, the other party may exercise rights in terms of the
security as provided in terms of clause 11.0 [clause 27.4].

Page 473

Suspension and termination

Chapter 28
Suspension by the subcontractor
28.1 The subcontractor may give five (5) working days notice to the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contractor of the intention to suspend the subcontract works where the

contractor, employer or principal agent has failed to:
28.1.1 Provide and/or maintain subcontract guarantee for
payment, where required [11.5–6]
28.1.2 Issue a payment certificate, subcontract payment
notification or a subcontract payment advice by the due
date [CD] [25.2–3]
28.1.3 Make payment in full of an amount certified in an interim
payment certificate, or in a subcontract payment advice
by the due date [25.10]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
28.1.4 Effect insurances [10.1.1–6; 10.2, 10.3 or 10.1.6], where
applicable [CD]
28.1.5 Appoint another principal agent and/or another agent where
applicable [6.5] or where an agent has failed to act in terms
of delegated authority [6.4]
28.2 Where the contractor and/or the employer has not remedied a default in
terms of a notice [28.1] the subcontractor may suspend execution of the
subcontract works until such default has been remedied without
prejudice to any rights the subcontractor may have
28.3 Where the contractor suspends the works, the subcontractor shall
suspend the subcontract works forthwith in terms of a contractor’s
instruction
28.4 Where the subcontract works has been suspended [17.1.4] the
contractor shall revise the date for interim completion [23.2.13] on
resumption of the subcontract works with an adjustment to the
subcontract value [26.7]

Commentary
29 Suspension and termination
For ease of reference commentary on suspension has been combined with the
commentary on termination in chapter 29.2 below.

Page 474

Chapter 29
Termination
Termination by the contractor
29.1 The contractor may give notice of intention to terminate this subcontract
agreement where the subcontractor has failed to:
29.1.1 Provide and maintain a guarantee for construction [CD]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

29.1.2 Proceed with the subcontract works [12.3.7]

29.1.3 Comply timeously with a contractor’s instruction [17.2]
29.2 Where the contractor contemplates terminating this subcontract
agreement the contractor shall give notice to the subcontractor of a
specified default [29.1.1–3] to be remedied within five (5) working days of
the date of receipt of such notice
29.3 Where the subcontractor remains in default [29.2] the contractor:
29.3.1 Shall, on receipt of a contract instruction, terminate the
appointment of a nominated subcontractor
29.3.2 May terminate the appointment of a selected subcontractor

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
29.4 The contractor may employ others to safeguard the subcontract works,
complete the outstanding work and rectify defects in that portion of the
subcontract works executed by the subcontractor [17.3; 27.2.3]. The
subcontractor shall be liable to the contractor for such costs which shall
be included in the subcontract final account [26.10]
29.5 The contractor may use materials and goods and temporary structures
on the site for which payment shall be included in the subcontract final
account
29.6 Should the subcontractor default on removing temporary structures or
subcontract construction equipment from the site, the contractor,
without being responsible for any loss or damage, may have such items
belonging to the subcontractor removed and/or sold. Resulting costs
and/or income shall be included in the subcontract final account
29.7 The contractor, on notice to the subcontractor, may recover expense
and/or loss caused by the default of the subcontractor from the date of
termination including, but not limited to, additional costs incurred in the
completion of the remaining work [25.3.7, 27.1.3]

Page 475

29.8 The contractor shall be entitled to recover damages [24.1.2] resulting

from the termination of this subcontract agreement
29.9 The contractor has the right of recovery against the subcontractor,
where applicable [CD], from:
The guarantee for construction (variable) – until the final payment has
been made; or
The guarantee for construction (fixed) – until the date of practical
completion; or
The payment reduction until the final payment is made; or
The guarantee for advance payment – until the outstanding balance has
been repaid to the employer;
Copyright © 2019. Juta & Company, Limited. All rights reserved.

29.10 The latent defects liability period for the completed portion of the
subcontract works, shall end [22.3.1] five (5) years from the date of
termination
29.11 Where the principal building agreement is terminated, the contractor
shall forthwith give notice of termination of the subcontract agreement to
each subcontractor. The subcontractor shall follow the termination
procedures [29.24] and:
29.11.1 The subcontractor may be entitled to damages
29.11.2 The latent defects liability period for the completed portion of

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
the subcontract works, shall end [22.3.2]
29.11.3 The security [CD] shall expire and the original security form
shall be returned to the subcontractor within ten (10)
working days of receipt of the final payment
29.12 Termination of the subcontract agreement shall not prejudice any rights
the contractor may have
29.13 The right to terminate may not be exercised where the contractor is in
material breach of this subcontract agreement
Termination by the subcontractor
29.14 The subcontractor may give notice of intention to terminate this
subcontract agreement where:
29.14.1 The contractor has failed to provide and/or maintain a
guarantee for payment, where applicable [11.1]
29.14.2 The contractor has failed to give access to the subcontract
works portion of the site to the subcontractor [12.2.5]

Page 476

29.14.3 The employer has failed to allow the principal agent and/or
agents to exercise fair and reasonable judgement as
contemplated in this subcontract agreement [6.6]
29.14.4 The contractor has failed to effect insurances, where
applicable [10.1] [CD]
29.14.5 The contractor has failed to pay the amount certified by the
due date [25.10] [CD]
29.14.6 The contractor has failed to issue a subcontract payment
advice [25.3] and/or subcontract recovery statement
[25.7.1] to the subcontractor by the due date [CD]
29.14.7 The employer has failed to appoint another principal agent
and/or agents where applicable [6.5]
29.15 Where the subcontractor contemplates terminating this subcontract
Copyright © 2019. Juta & Company, Limited. All rights reserved.

agreement, the subcontractor shall give notice to the contractor, with a

copy to the principal agent, of a specified default [29.14.1–8] to be
remedied within ten (10) working days of the date of receipt of such
notice
29.16 Where a specified default has not been remedied within such period
[29.15] the subcontractor may forthwith give notice to the contractor,
with a copy to the principal agent, of the termination of this subcontract
agreement
29.17 Where this subcontract agreement is terminated by the subcontractor:
29.17.1 No clause (PBA contractor to notify subcontractor where PBA

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
is terminated by the employer)
29.17.2 The subcontractor shall on receipt of a contractor’s
instruction remove temporary structures, subcontract
construction equipment and surplus materials and goods
from the site within ten (10) working days, or such period
agreed by the contractor
29.17.3 The latent defects liability period for the completed portion of
the subcontract works, shall end on the date of termination
[22.3]
29.17.4 The subcontractor may be entitled to recover damages
[27.1.6]
29.17.5 The guarantee for construction [11.1; 11.2.1], shall expire
on the date of termination
29.17.6 The guarantee for advance payment [11.2.2; 11.3], where
applicable [CD], shall expire on repayment of amounts due to
the employer

Page 477

29.17.7 The guarantee for payment [11.5–6], where applicable [CD],

shall expire on payment of the final payment certificate or
on payment in full of the guaranteed sum, or on the security
expiry date, whichever is the earlier
29.18 Termination of the subcontract works shall not prejudice any rights the
subcontractor may have
29.19 The right to terminate may not be exercised where the subcontractor is in
material breach of this subcontract agreement
Termination by either party
29.20 Either party may terminate this subcontract agreement where:
29.20.1 The subcontract works is for alterations and/or additions to
(an) existing building(s), or a new building, which has been
Copyright © 2019. Juta & Company, Limited. All rights reserved.

substantially destroyed regardless of the cause other than by

the party seeking termination
29.20.2 Progress on the subcontract works has ceased for a
continuous period of ninety (90) calendar days, or an
intermittent period totalling one hundred and twenty (120)
calendar days as a result of a force majeure event or the
exercise of statutory power by a body of state or public or
local authority that directly affects the execution of the
subcontract works
29.21 The party contemplating termination of this subcontract agreement shall

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
give ten (10) working days notice to the other party. Where this
subcontract agreement is terminated by either party:
29.21.1 No clause (PBA contractor to give notice of termination to
each subcontractor)
29.21.2 No clause (PBA = party responsible for insurance to inform
the insurer of date of termination)
29.21.3 The guarantee for payment [11.5–6], where applicable [CD],
shall expire on payment of the final payment advice or on
payment in full of the guaranteed sum or on the security
expiry date, whichever is the earlier
29.21.4 The guarantee for construction [11.1; 11.2.1] shall expire
on the date of termination
29.21.5 The guarantee for advance payment [11.2.2; 11.3], where
applicable [CD], shall expire on repayment of amounts due to
the employer

Page 478

29.22 Neither party shall be liable to the other party for expense and/or loss
resulting from the termination
29.23 The latent defects liability period for the completed portion of the
subcontract works shall end [22.3.2]
Termination procedure by the contractor, the subcontractor, or by the parties
29.24 On termination of this subcontract agreement the subcontractor shall:
29.24.1 Cease work and ensure that the subcontract works is safe
in terms of the law
29.24.2 Remain responsible for the subcontract works [8.1] until
access to that portion of the site is relinquished to the
contractor and/or the employer
29.24.3 On receipt of a contractor’s instruction remove temporary
structures, subcontract construction equipment and
Copyright © 2019. Juta & Company, Limited. All rights reserved.

surplus materials and goods from the site within ten (10)
working days, or such period agreed by the contractor
29.25 On termination of this subcontract agreement the principal agent shall:
29.25.1 Prepare and hand over to the employer all compliance
certificates, as built drawings and product warranties in
conjunction with agents, the contractor and
subcontractors
29.25.2 In consultation with the subcontractor and/or agents, where
possible, compile and issue to the parties a status report
recording completed and incomplete work on the date of

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
termination of the subcontract works within twenty (20)
working days of such date
29.25.3 Continue to certify the value of the work executed and
materials and goods for payment by the contractor, or the
subcontractor, until the issue of the final payment advice
[25.15]
29.25.4 Prepare and issue the subcontract final account [26.10]
within thirty (30) working days of the date of termination
including the cost of materials and goods and those ordered
before termination that the subcontractor is bound to accept
and make payment for
29.26 Termination shall take effect after completion of the procedure [29.24]

Page 479

29.27 The employer shall arrange appropriate insurances to suit the stage of
completion of the works
29.28 This clause shall, to the extent necessary to fulfil its purpose, exist
independently of this subcontract agreement [3.3]

Commentary
29.0 Termination of the agreement
The termination clauses in the NSSA follow the equivalent clauses in the PBA but
deal with termination by the contractor where the subcontractor is in default;
termination by the subcontractor where the contractor is in default; and termination
by either party. The clauses set out the conditions under which termination may be
implemented in each instance followed by the termination procedures. A party may
not terminate an agreement unless the other party has been guilty of a material
breach.
29.1 Termination by the contractor on the default of a subcontractor
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The defaults of a subcontractor that would entitle the contractor to terminate the
subcontract are, mutatis mutandis, those of a contractor which would entitle the
employer to terminate the principal agreement, namely: [57]
• failure by the subcontractor to submit and maintain a Guarantee for
Construction to the contractor, within 15 working days of acceptance of the
subcontractor’s tender [29.1.1];
• failure to proceed with the subcontract works on being given access to the
applicable portion of the site [29.1.2];
• failure to comply timeously with a contractor’s instruction [29.1.3].
If the contractor considers that the subcontractor is in default in one or other of these

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
respects and he intends to terminate the subcontract, he may give the subcontractor
notice of the specified default, and if the default persists for five working days after
receipt by the subcontractor of the notice, he may, by a further notice, terminate the
subcontract

Page 480

[29.2]. He may not, however, terminate the subcontract if he is himself in breach of a

material term of the subcontract [29.13]. [58]
Selected subcontractor
The contractor may terminate a selected subcontract without reference to the
principal agent [29.3.2], but in the case of a nominated subcontract, the contractor
may serve the notice of intention to terminate, and subsequently the notice of
termination, only on the instructions of the principal agent [29.3.1].
The consequences of the termination of the subcontract by the contractor are
substantially the same as the consequences of the termination of the principal
agreement by the employer. [59] The subcontractor’s obligation to proceed with the
subcontract works ceases, and he must ensure that the subcontract works is safe in
terms of the law [29.24.1].
The contractor may use materials and goods and temporary structures on the site
for which payment shall be included in the subcontract final account [29.5]. Should
the subcontractor default in removing temporary structures or construction
equipment from the site, the contractor, without being responsible for any loss or
damage, may have such items removed and/or sold. Resulting costs and/or income
shall be included in the subcontract final account [29.6].
The contractor (in consultation with the principal agent and/or agent, where
applicable) shall, within 20 working days of the date of termination, compile and
issue to the parties a status report of the subcontract works including marked up
drawings and photographs recording completed and incomplete work on the date of
termination of the subcontract works [29.25.2]. The contractor, in consultation with
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the principal agent and/or agent, where applicable, shall compile and issue the
subcontract final account within 30 working days of the date of termination including
the cost of materials and goods and those ordered before termination that the
subcontractor is bound to accept and make payment for [29.25.4].
The contractor may consult with the principal agent and/or agent where applicable
in preparing this final account [29.25.4]. In the case of termination of a selected
subcontract, the contractor shall appoint another selected subcontractor to complete
the subcontract works in

Page 481

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
consultation with the principal agent and/or agents [15.1.4; 15.7.3]. [60] Other than
due to default by the employer or agents, any variation in the cost of carrying out and
completing the subcontract works shall be for the account of the contractor [15.7.2].
Nominated subcontractor
In the case of termination of a nominated subcontract, the principal agent and/or
agents in consultation with the contractor shall appoint another nominated
subcontractor to complete the subcontract works. Where the nominated
subcontractor’s contract is terminated due to default or insolvency of the
subcontractor, or default of the employer and/or agents, the subcontract value shall
be adjusted to include the cost of completing such subcontract works [14.7.1]. [61]
The delay that would inevitably be caused to practical completion by the
termination of a subcontract and the appointment of a new subcontractor would
entitle the contractor to an extension of time with additional preliminaries if it was a
nominated subcontract, [62] but not if it was a selected subcontract.
The contractor would be entitled to recover from the subcontractor such damages
as would flow from the termination. [63] Moreover, if the termination caused a delay to
practical completion of the works, the subcontractor would be liable to the contractor
for such damages as he suffered [clause 27.2.5; 27.2.6; 27.2.9; 27.2.10].
The contractor shall continue to certify the value of work executed and materials
and goods for payment by the contractor, or the subcontractor,

Page 482

as the case may be, until the issue of the final payment advice [29.25.3]. In the
payment advice issued after the issue of the final payment certificate, the contractor
would adjust the amount of damages against any amount included in the final
payment certificate for the subcontractor.
The subcontractor’s liability for latent defects in the completed portion of the
subcontract works shall end five years from the date of termination [29.10].
Copyright © 2019. Juta & Company, Limited. All rights reserved.

29.2 Suspension and termination by a subcontractor on the default of the

contractor or employer
The defaults of the employer or the principal agent, for whom the employer is
responsible, which would entitle the subcontractor to suspend work or terminate the
subcontract agreement are:
• the employer fails to provide and/or maintain the NSSA guarantee for payment
[28.1.1].
• the employer fails to issue a payment certificate, subcontract notification or a
subcontract payment advice by the due date [28.1.2].

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
• the employer fails to appoint another principal agent or other agent where
applicable [6.5; 28.1.5].
• the employer fails to make payment in full of an amount certified in a payment
certificate, subcontract notification or a subcontract payment advice by the
due date [28.1.3].
• the employer fails to effect insurances where applicable [28.1.4].
In the first instance the subcontractor may suspend work, and if he intends to do so,
he shall give five working days’ notice to the contractor and the principal agent of the
default and of his intention to suspend work. Where the contractor and/or the
employer has not remedied the defect in terms of a notice [28.2], the subcontractor
may suspend execution of the subcontract works until such default has been
remedied without prejudice to any rights the subcontractor may have. Where the
subcontract works has been suspended, the contractor shall revise the date for
interim completion on the resumption of the subcontract works with an adjustment of
the subcontract value [28.4].
On instruction received from the contractor where the contractor has suspended
the works, the subcontractor shall forthwith suspend the subcontract work [28.3].
The defaults of the contractor which would entitle the subcontractor to terminate
the subcontract agreement are listed [29.14.1 to 29.14.7].

Page 483

Where the subcontractor contemplates terminating the subcontract agreement for

any of the defaults listed [29.14], he shall give notice to the contractor (copied to the
principal agent) of a specified default to be remedied within ten working days of the
date of such notice [29.15].
If the default is not remedied within ten working days after the contractor has
received the notice of termination from the subcontractor, the subcontractor may give
further notice to the contractor, with a copy to the principal agent, of his intended
termination of the subcontract agreement forthwith [29.16]. The subcontractor may
not, of course, terminate the subcontract agreement if he himself is in material
Copyright © 2019. Juta & Company, Limited. All rights reserved.

breach of the subcontract [29.19].

On termination of the subcontract agreement, the subcontractor’s obligation to
execute the subcontract works ceases and work shall stop. The latent defects
liability period for the completed portion of the subcontract works shall end [22.1;
29.17.3]. The subcontractor, on leaving the site, shall remove his temporary
buildings, construction equipment and, on notice, surplus materials and goods from
the site within ten working days, or such period as agreed by the contractor
[29.17.2].
On termination, the contractor, in consultation with the principal agent and/or

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
agent, where applicable, shall, within 20 working days of the date of termination,
compile a report on the status of the portion of the subcontract works completed by
the subcontractor and issue copies to the parties [29.25.2]. The contractor, in
consultation with the principal agent and/or agent, where applicable, shall compile
and issue the subcontract final account within 30 working days of the date of
termination [29.25.4]. The value of the subcontract final account shall include the
value of all materials and goods including those ordered but not yet delivered and for
which the subcontractor is obliged to accept delivery and pay for [29.25.4]. The
contractor shall continue to certify the value of work executed and materials and
goods for payment by the contractor, or the subcontractor, as the case may be, until
the issue of the final payment advice [29.25.3].
The subcontractor may be entitled to damages that he has suffered as a
consequence of the termination [29.17.4], and this amount should be included by the
contractor in the recovery statement [27.1.6] and included in the payment advice
[25.3.7] prepared and issued by the contractor. It is unlikely, however, that
contractors will readily act in this manner against their own interests, and the
subcontractor may

Page 484

have to sue for damages or, if the claim for damages is disputed, submit the claim to
the dispute resolution procedures [30.0].
The subcontractor’s liability for latent defects for the completed portion of the
subcontract works shall end on the date of termination [29.17.3].
29.3 Termination by either party
Contracts must be observed, and neither party may turn his back on a contract and
walk away from it – such action would be regarded as repudiation. The parties may,
of course, terminate the contract by mutual agreement. But there are circumstances
where neither party is at fault but where it may be desirable for a party to bring the
contract to an end, and JBCC Agreements make provision for three such
Copyright © 2019. Juta & Company, Limited. All rights reserved.

circumstances.
The first is where performance by one of the parties becomes impossible. The law
does not require a person to perform the impossible, and if performance under an
agreement has become impossible, the obligation to perform ceases, failure to
perform ceases to be a default, and no damages would be awarded for such
failure. [64] The impossibility of performance need not be permanent, and temporary
impossibility would suffice if the period of impossibility was substantial. The
impossibility must not be due to the fault of either party, and if a party was in default
when supervening circumstances made performance impossible, that party would
not be absolved from its duty to perform. [65]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
To regulate the uncertainties inherent in this doctrine, the JBCC Agreements
provide that the agreement may be terminated where progress has ceased due to
circumstances beyond the control of either party. Where progress has ceased for a
continuous period of 90 calendar days or for intermittent periods totalling 120
calendar days for whatever reason, either party may terminate the subcontract
agreement by giving ten working days’ notice of its intention to do so to the other
party without prejudice to any other rights that it may have [clauses 29.20.2;
29.21]. [66]
The second circumstance is where there has been substantial damage to a major
portion of works, a calamity which could have profound

Page 485

implications for either party, but especially the employer, who might find that,
although the insurers may meet the cost of restoring the damaged portions of the
building, the resulting delay in achieving completion with no financial compensation
might turn a venture that was initially likely to be financially profitable into one that
becomes a financial disaster.
Thus, the JBCC Agreements provide that if a substantial part of the completed
portion of the works has been destroyed, or if the existing building, which is being
added to or altered, has been substantially destroyed, the employer, to whom the
completion of the project may now have become unattractive and probably unviable,
may abandon the project [PBA 29.20.1]. It does not matter how the damage has
been caused and neither party shall be liable to the other party for expense and/or
loss resulting from the termination [29.22].
In any of these circumstances of termination, termination does not necessarily
take immediate effect. The principal agent may issue a contract instruction for
protective measures to be taken by the contractor before work may cease, and in
such case, termination would only take effect once the contractor had completed
these measures [PBA 29.24; 29.26]. [67]
On termination, or on completion of the protective measures, the contractor would
Copyright © 2019. Juta & Company, Limited. All rights reserved.

no longer be obliged to execute the works and work ceases. The contractor shall
remain responsible for the works until possession is relinquished to the employer
[29.24.2]. The contractor in consultation with the principal agent and/or agent must,
within 20 working days of the date of termination, compile and issue to the parties a
status report of the subcontract works including marked up drawings and
photographs recording completed and incomplete work on the date of termination of
the subcontract works [29.25.2].
Thereafter the contractor in consultation with the principal agent and/or agent,
shall commence and complete the subcontract final account within 30 working days

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
of the date of termination [29.25.4]. This shall include the value of materials and
goods intended for incorporation in the works, including those ordered by the
subcontractor and of which he is bound to accept delivery and make payment for. At
the same time the principal agent shall continue to issue to the

Page 486

contractor interim payment certificates for such amounts as he may find due to the
contractor [29.25.3], and on completion of the final account he shall issue the final
payment certificate .
Where the subcontract agreement has been terminated before the date of final
completion, the latent defects liability period shall end either where execution of the
subcontract works has become impossible due to circumstances beyond the control
of either party [29.20.2] or five years after the date of termination [22.3.1]. The
subcontractor is required to make good all latent defects that appear up to the date
of expiry of the latent defects period [22.2].
Neither party would have any claim against the other for expense and/or loss
resulting from such termination [29.22].

Page 487

Dispute resolution
Chapter 30
Dispute resolution
Settlement by the parties
30.1 Should any disagreement arise between the employer (or the principal
agent or an agent) and the contractor (or the contractor and the
subcontractor) arising out of or concerning the action or inaction of the
employer (or the principal agent or an agent) or the contractor, or any
Copyright © 2019. Juta & Company, Limited. All rights reserved.

other matter concerning this subcontract agreement (including the

validity thereof), either party may give notice of disagreement to the
other. The parties shall attempt to resolve such disagreement between
them and record in writing such resolution signed by them
30.2 Where the disagreement is not resolved within ten (10) working days of
receipt of the notice of disagreement, the disagreement shall be deemed
to be a dispute
30.3 The dispute shall be referred to adjudication within ten (10) working days
of the expiry of the period [30.2] by means of a notice of adjudication by
the party (the referring party) which gave the notice of disagreement

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
30.4 The notice of adjudication shall clearly define the scope of the dispute and
the relief sought by adjudication
30.5 Failure to comply with the procedure described [30.3–4] shall cause the
dispute to be resolved by arbitration and not by adjudication
Adjudication
30.6 Where a dispute is referred to adjudication:
30.6.1 The adjudicator shall be nominated by the nominating body
[CD] and shall be deemed to have been appointed by the
parties
30.6.2 The applicable rules shall be stated [CD] or shall be by
agreement between the parties and the adjudicator, failing
which the rules shall be determined by the adjudicator.
Neither party shall be entitled to legal representation, unless
otherwise agreed to in writing by the parties

Page 488

30.6.3 A determination given by the adjudicator shall be immediately

binding upon, and implemented by the parties not
withstanding that either party may give notice to refer the
dispute to arbitration
30.6.4 Where the adjudicator has given a determination, either
party may give notice of dissatisfaction to the other party
and to the adjudicator within ten (10) working days of receipt
of the determination, or an extended time period provided in
the applicable rules for adjudication, where after such dispute
shall be referred to arbitration
30.6.5 Where the adjudicator has not given a determination within
the time period allowed or an extended time period provided
in the applicable rules for adjudication, either party may give
notice to the other party and to the adjudicator that if such
Copyright © 2019. Juta & Company, Limited. All rights reserved.

determination is not received within ten (10) working days of

receipt of this notice his appointment is thereupon
automatically terminated and such dispute shall be referred
to further adjudication or arbitration, at the option of the
referring party
30.6.6 The adjudicator shall not be eligible for subsequent
appointment as the arbitrator
Arbitration
30.7 Where the dispute is referred to arbitration:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
30.7.1 Arbitration shall not be construed as a review or appeal of an
adjudicator’s determination. Any determination by the
adjudicator shall remain in force and continue to be
implemented until overturned by an arbitration award
30.7.2 The resolution of the dispute shall commence anew
30.7.3 The referring party in the adjudication shall be the claimant in
the arbitration
30.7.4 The arbitrator shall be nominated by the nominating body
[CD] and shall be deemed to have been appointed by the
parties
30.7.5 The applicable rules shall be stated [CD] or shall be by
agreement between the parties and the arbitrator, failing
which, shall be determined by the arbitrator

Page 489

30.7.6 The arbitrator shall have the authority to finally determine the
dispute including the authority to make, open up and revise
any certificates, opinion, decision, determination, requisition,
or notice relating to the dispute as if no such certificate,
opinion, decision, determination, requisition, or notice had
been issued or given
30.7.7 The arbitrator’s award shall be final and binding on the
parties
Mediation
30.8 Notwithstanding the provisions relating to adjudication and arbitration, the
parties may, by agreement and at any time, refer a dispute to mediation,
in which event:
30.8.1 The provisions relating to adjudication and/or arbitration shall
be suspended from the time of such agreement until notice
by either party that they be resumed
Copyright © 2019. Juta & Company, Limited. All rights reserved.

30.8.2 The appointment of a mediator, the procedure, and the status

of the outcome shall be agreed between the parties
30.8.3 Regardless of the outcome of mediation the parties shall
bear their own costs concerning the mediation and equally
share the costs of the mediator and related expenses
General
30.9 The employer consents to the joining of any subcontractor with the
contractor as a party to any proceedings
30.10 Should the subcontractor give notice of any disagreement relating to the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
subcontract works consequent on a determination, action or inaction of
the employer and/or agent, then the contractor shall allow the
subcontractor to use the contractor’s name to institute proceedings as
provided for in the principal building agreement. The contractor may
elect to join the subcontractor in instituting such proceedings. Should the
subcontractor elect to proceed, the subcontractor shall:
30.10.1 Provide the contractor with an indemnity and security as
reasonably required by the contractor
30.10.2 Certify that the outcome of such proceedings shall be binding
on him
30.10.3 Initiate the proceedings as provided for in the principal
building agreement

Page 490

30.11 Where the parties fail to specify a body to nominate the adjudicator
[30.6.1] or the arbitrator [30.7.4] the referring party shall have the right to
choose a local recognised body to suggest one or more persons with
appropriate skills to be appointed as an adjudicator or an arbitrator. Such
nomination shall be binding on the parties
30.12 The parties shall continue to perform their obligations in terms of this
subcontract agreement, notwithstanding any disagreement or dispute
that exists between them
30.13 This clause shall, to the extent necessary to fulfil its purpose, exist
independently of this subcontract agreement

Commentary
30.0 Dispute resolution
The dispute resolution clauses in the NSSA follow the clauses in the PBA and
provide for the resolution of a disagreement between the contractor and
subcontractor [clause 30.1].
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Where a disagreement cannot be resolved within the ten-working-day period

[30.2], the disagreement will be deemed a dispute. The dispute shall be referred to
adjudication [30.6], arbitration [30.7] or mediation [30.8]. Refer to Section 2 chapter
30 for further commentary.

Page 491

Agreement

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
JBCC® N/S Subcontract agreement
This subcontract agreement comprises the entire contract between the parties. No
representations, terms, conditions or warranties not contained in this subcontract
agreement shall be binding on the parties. No agreement or addendum varying,
adding to, deleting or terminating this agreement including this clause shall be
effective unless reduced to writing and signed by the duly authorised representatives
of the parties
The contracting parties

The Parties Contractor Subcontractor

Business name

Business type

Business registration

Tax number (VAT/GST)

Contact Person

Telephone

Mobile number

E-mail

Address: Building name

Address: Street

Address: Suburb

Address: City

Address: P O Box

Address: Post Office

Address: Province

Address: Country

Project name

Project Location

Currency

Copyright © 2019. Juta & Company, Limited. All rights reserved.

Accepted contract sum including tax

Accepted contract sum including tax in
words

Signed – who by signature hereto warrants
authority

Name of signatory

Signed: Date

Signed: Location

Signed: Witness

Name of witness

JBCC® N/S Subcontract Agreement

The Joint Building Contracts Committee® – NPC

CONTRACT DATA
Nominated/Selected Subcontract Agreement
Edition 6.2—May 2018

©Copyright reserved: JBCC® NSSA, Edition 6.2—May 2018 Contract Data

This page does not form part of the JBCC® NSSA, Edition 6.2—May 2018

variables referred to in the JBCC® Nominated/Selected Subcontract Agreement and

the JBCC® General Preliminaries. The information provided in this document by the
principal agent is complete and accurate at the time of calling for tenders. Where
additional information becomes available, all tenderers will be informed in writing.
Reference to clause numbers in the JBCC® Nominated/ Selected Subcontract
Agreement are shown in [square brackets] in this contract data eg [3.2.1]. Spaces
requiring information must be filled in, or marked as ‘not applicable’ but not left blank
This contract data, when completed and submitted by the nominated/selected
subcontractor, becomes the form of tender. Where the subcontractor is appointed,
®

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
the contract documents comprise the signed JBCC® Nominated/Selected
Subcontract Agreement, this completed contract data, the priced document,
drawings and other listed documents
Warning!
The JBCC® Principal Building Agreement Edition 6.2 has been coordinated with the
JBCC® Nominated/Selected Subcontract Agreement Edition 6.2, the JBCC® General
Preliminaries and the JBCC® certificate forms and support documents. Forms from
previous editions are not compatible with the JBCC® Nominated/ Selected
Subcontract Edition 6.2

Page 493

Persons entering into or preparing contracts using the JBCC® suite of contract
agreements and support documents are warned of the dangers inherent in modifying
any part of it
Experience has shown that changes drafted by others, including members of the
building professions, often have unintended results that may be prejudicial to either,
or both, parties
Disclaimer
While the JBCC® aims to ensure that its publications represent best practice it does
not accept or assume any liability or responsibility for any events or consequences
which derive from the use of JBCC® documents
Copyright reserved
The name ‘The Joint Building Contracts Committee® NPC’, the abbreviation JBCC®,
the electronic version e-JBCC® and the JBCC® logo are registered trademarks. The
JBCC® claims authorship of this work. All rights are reserved. No part of this
publication may be reproduced, stored in any retrieval system or transmitted in any
form or by any means, electronic, mechanical, photocopying, scanning, recording, or
otherwise, without the prior permission in writing of the JBCC®. Unauthorised
Copyright © 2019. Juta & Company, Limited. All rights reserved.

reproduction of the work is an infringement of the copyright. Judicial proceedings can

and will be instituted to obtain relief and recovery of damages

Page 494

A Project information

A 1.0 Subcontract works [1.1]

Project name

A 2.0 Site [1.1]

Erf/stand number

Township/Suburb

Site address

Local authority

A 3.0 Contractor [1.1]

Name

Legal entity of above Contact person

Business registration number Telephone number

VAT/GST number Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

A 4.0 Principal agent [1.1]

Country E-mail

Postal address

Postal code

Physical address

Postal code

Page 495

Agents involved with the subcontract works only:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
A 5.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

A 6.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

A 7.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

A 8.0 Agent [1.1; 6.2]

Discipline

Name

Legal entity of above Contact person

Practice number Telephone number

Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

Page 496

B Subcontract information

B 1.0 Definitions [1.1]

Bills of quantities: System/Method of measurement

B 2.0 Law, regulations and notices [2.0]

Law applicable to the subcontract works, state country [2.1]

B 3.0 Offer and acceptance [3.0]

Currency applicable to this subcontract agreement [3.2]

B 4.0 Documents [5.0]

The original signed subcontract agreement is to be held by the
contractor [5.2], if not, indicate by whom

Number of copies of subcontract construction information issued to
the subcontractor at no cost [5.7]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
Documents comprising the subcontract agreement Page numbers
The JBCC® Nominated/Selected Subcontract Agreement, Edition 6.2 May 1 to 30
2018
The JBCC® Nominated/Selected Subcontract Agreement – Contract Data, 1 to 13
Edition 6.2 May 2018
The May 2018 edition of the JBCC® General Preliminaries 1 to 7

Subcontract drawings - description Number Revision Date

Page 497

B 5.0 Employer’s agents [6.0]

Authority is delegated to the following agents to issue contract instructions and perform duties for specific aspects of the
works [6.2]

Principal agent’s and agents’ interest or involvement in the works other than a professional interest [6.3]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

B 6.0 Insurances [10.0]

Insurances by employer Amount including Deductible
tax amount including
tax

Contract works insurance:

New works [10.1.1]
(contract sum or amount)

or Works with practical completion in sections [10.2] (contract
sum or amount)

or Works with alterations and additions [10.2] (reinstatement value
of existing structures with or including new works)

Direct contractors [10.1.1; 10.2]

Free issue [10.1.1; 10.2]

Escalation, professional fees and reinstatement costs if not
included above

Total of the above contract works insurance amount

Supplementary insurance [10.1.2; 10.2]

Public liability insurance [10.1.3; 10.2]

Removal of lateral support insurance [10.1.4; 10.2]

Other insurances [10.1.5]

Yes/no? If yes,
description 1

Yes/no? If yes,
Copyright © 2019. Juta & Company, Limited. All rights reserved.

description 2

Page 498

and/or

Insurances by contractor Amount including Deductible

tax amount including
tax

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

Contract works insurance:

New works [10.1.1]
(contract sum or amount)

Direct contractors [10.1.1; 10.2] where applicable, to be
included in the contract works insurance

Free issue [10.1.1; 10.2] where applicable, to be included in the
contract works insurance

Escalation, professional fees and reinstatement costs if not
included above

Total of the above contract works insurance amount

Supplementary insurance [10.1.2]

Public liability insurance [10.1.3]

Removal of lateral support insurance [10.1.4]

Other insurances [10.1.5]

Yes/no? If yes,
description 1

Yes/no? If yes,
description 2

B 7.0 Obligations of the employer and/or the contractor [12.1; 12.2]

Existing premises will be in use and occupied [12.1.2] Yes/no?
If yes, description

Restriction of working hours [12.1.2] Yes/no?
If yes, description

Natural features and known services to be preserved by the contractor [12.1.3] Yes/no?
If yes, description

Restrictions to the site or areas that the subcontractor may not occupy [12.2.3] Yes/no?
If yes, description

Page 499

B 8.0 Design by subcontractor [7.2]

Design responsibility Yes/no?
Amount including Deductible amount
Insurances by the subcontractor
tax including tax
Professional indemnity insurance where the subcontractor is responsible for
design (7.2.4)
Other insurances (10.1.5), if applicable:

B 9.0 Direct contractors [16.0]

Extent of work [12.1.11]

Extent of work [12.1.11]

Extent of work [12.1.11]

Extent of work [12.1.11]

Extent of work [12.1.11]

B 10.0 Description the sections [20.1]

Section 6

Section 7

Section 8

Section Remainder of the works

Page 500

B 11.0 Access to the site [12.1.5], interim completion [19.0;20.0] and

penalties [24.0]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
Interim completion Intended date of Period for inspection Date for interim Penalty amount
for the subcontract access to a portion of by the completion [12.2.17; applicable to the
works as a whole the site [12.2.5] contractor/agent 24.1] contractor [24.1]
[18.2.2]

Date working days Date Penalty per calendar
day

or where sections are applicable

Interim completion Intended date of Period for inspection Date for interim Penalty amount
of a section of the access to section by the completion [12.2.17; applicable to the
subcontract works [12.2.5] contractor/agent 24.1] contractor [24.1]
[18.2.2]

Date working days Date Penalty per calendar
day

Section 1

Section 2

Section 3

Section 4

Section 5

Section 6

Section 7

Section 8

Remainder of the
subcontract works

Criteria to achieve practical completion not covered in the definition of practical completion

B 12.0 Payment [25.0]

Date of month for issue of regular payment advices [25.2]

Cost fluctuations [25.3.4; 26.9.5] Yes/no?
If yes, method to calculate

Page 501

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
B 13.0 Dispute resolution [30.0]

Adjudication [30.6.1; 30.10] Name of nominating body

Applicable rules for adjudication [30.6.2]

Arbitration [30.7.4; 30.10] Name of nominating body

Applicable rules for arbitration [30.7.5]

B 14.0 JBCC® General Preliminaries – selections

Provisional bills of quantities [P2.2] Yes/no?

Availability of construction information [P2.3] Yes/no?

Previous work - dimensional accuracy - details of previous contracts [P3.1]

Previous work - defects - details of previous contracts [P3.2]

Inspection of adjoining properties -details [P3.3]

Handover of site in stages - specific requirements [P4.1]

Enclosure of the works - specific requirements [P4.2]

Geotechnical and other investigations - specific requirements [P4.3]

Existing premises occupied - details [P4.5]

Services - known - specific requirements [P4.6]

Water [P8.1] By contractor Yes/no?

By employer Yes/no?

By employer – metered Yes/no?

Electricity [P8.2] By contractor Yes/no?

By employer Yes/no?

By employer – metered Yes/no?

Ablution and By contractor Yes/no?
welfare facilities
[P8.3]

By employer Yes/no?

Communication facilities - specific requirements [P8.4]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Protection of the subcontract works - specific requirements [P11.1]

Protection / isolation of existing works and works occupied in sections - specific
requirements [P11.2]

Page 502

Disturbance - specific requirements [P11.5]

Environmental disturbance - specific requirements [P11.6]

Reference may be made to other documents forming part of this subcontract agreement

Page 503

C Tender closing

Tender closing date Time

Tender submission address

Tender may be submitted by e- Yes/no? E-mail
mail

D Tenderer’s selections

D 1.0 Securities [11.0]

Guarantee for construction: Select Option A or B

Option A Guarantee for construction (variable) by subcontractor [11.1.1]

Option B Guarantee for construction (fixed) by subcontractor and a payment reduction [11.1.2]

Guarantee for payment by contractor [11.5.1] Amount

Advance payment, subject to a guarantee for advance payment [11.2.2; 11.3] Amount
Copyright © 2019. Juta & Company, Limited. All rights reserved.

D 2.0 Contractor’s annual holiday periods during the construction

period

Year 1 contractor’s annual holiday start date end date
period

Year 2 contractor’s annual holiday start date end date
period

Year 3 contractor’s annual holiday start date end date
period

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

D 3.0 Payment of preliminaries [25.0]

Select Option A or B Where the subcontractor does not select an option, Option
A shall apply
Where the total amount of preliminaries is not identified (in a lump sum contract)
it shall be taken as 7.5% (seven and a half per cent) of the subcontract sum,
excluding contingency sums, and any provision for contract price adjustment (cost
fluctuation)

Option A Assessed by the principal agent, an amount prorated to the value of the subcontract works executed
in the same ratio as the amount of the preliminaries to the subcontract sum which subcontract sum
shall exclude the amount of preliminaries.
Contingency sum(s) and any provision for contract price adjustment (cost fluctuations) shall be excluded
for the calculation of the aforesaid ratio

Option B An amount agreed by the principal agent and the subcontractor in terms of the subcontract priced
document to identify an initial establishment charge, a time based charge and a final disestablishment
charge.
Payment of the time-based charge shall be adjusted from time to time as may be necessary to take into
account the progress of the subcontract works

D 4.0 Adjustment of preliminaries [26.9.4]

Select Option A or B Where the subcontractor does not select an option, Option
A shall apply
The amount of preliminaries shall be adjusted to take account of the effect of
changes in time and/or value on preliminaries. Such adjustment shall be based on
the particulars provided by the subcontractor for this purpose in terms of Options A
or B, shall preclude any further adjustment of the amount of preliminaries and shall
apply notwithstanding the actual employment of resources by the subcontractor in
the execution of the subcontract works
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 504

For the adjustment of preliminaries both the subcontract sum and the
subcontract value shall exclude the amount of preliminaries, contingency sum(s)
and any provision for contract price adjustment (cost fluctuations)
Where the total amount of preliminaries is not identified (in a lump sum contract)
it shall be taken as 7.5% (seven-and-a-half per cent) of the subcontract sum,
excluding contingency sums, and any provision for contract price adjustment (cost
fluctuation)

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
Option A The preliminaries shall be adjusted in accordance with an allocation of preliminaries amounts to be
provided by the subcontractor within fifteen (15) working days of the date of acceptance of the tender as
follows:
- An amount which shall not be varied;
- An amount varied in proportion to the subcontract value as compared to the subcontract sum;
- An amount varied in proportion to the number of calendar days extension to the date of Interim completion
to which the subcontractor is entitled with an adjustment of the subcontract value as compared to the number
of calendar days in the initial subcontract construction period
Where the above mentioned information is not provided the following allocation of preliminaries amounts
shall apply:

- Ten per cent (10%) shall not be varied
- Fifteen per cent (15%) shall be varied in proportion to the subcontract value as compared to the
subcontract sum
- Seventy-five per cent (75%) shall be varied in proportion to the number of calendar days extension to the
date of Interim completion to which the subcontractor is entitled with an adjustment of the subcontract value
as compared to the number of calendar days in the initial subcontract construction period
Where completion in sections is required the subcontractor shall provide an apportionment of preliminaries
per section. Should the subcontractor fail to provide the apportionment of preliminaries per section the
categorised amounts shall be prorated to the cost of each section within the subcontract sum as determined
by the principal agent

Option B The preliminaries shall be adjusted in accordance with a detailed breakdown of preliminaries amounts for
the works or of a section to be provided by the subcontractor within fifteen (15) working days of access to
the site. Such breakdown shall inter alia include administrative and supervisory staff charges and charges for
the use of subcontract construction equipment, all in terms of the programme

The adjustment of preliminaries shall be based on the number of calendar days extension to the date of
practical completion to which the subcontractor is entitled with an adjustment of the subcontract value as
compared to the number of calendar days in the initial subcontract construction period taking into account
the resources planned for the period of construction during which the delay occurred (not for the period added
to the initial or extended date for practical completion)

Where the subcontractor does not provide the detailed breakdown of preliminaries within the period stated,
Option A shall apply

Page 505

E Form of tender

E 1.0 Tenderer’s details

Name

Legal entity of above Contact person

Business registration number Telephone number

VAT/GST number Mobile number

Country E-mail

Postal address

Postal code

Physical address

Postal code

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

E 2.0 Acceptance of tender conditions

By submission of this tender to the contractor the tenderer offers and agrees to
execute and complete the subcontract works and to remedy any defects in
conformity with the specification for the tender amount stated
The tender shall remain in full legal force for forty-five (45) calendar days from
the closing date of the tender. The tenderer accepts liability for loss or damages that
may be suffered by the contractor should the tender validity period not be honoured
The lowest or any tender will not necessarily be accepted by the contractor nor
will reasons be given for such a decision

E 3.0 Tender amount compilation

Amount

Tenderer’s subcontract work excluding tax

Tax %

Total tender amount including tax

Total subcontract tender amount including tax, in words

Signature Tenderer who by signature hereto warrants Place
authority

Name Capacity Date

Signature Witness Place

Name Date

Page 506

E 4.0 Tender qualifications

Page 507

Commentary
JBCC N/S SUBCONTRACT AGREEMENT CONTRACT DATA

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
to be read in conjunction with CD for the PBA in Section 2 above
The JBCC NSSA CD is similar to the PBA CD in that it comprises four sections
being:
A The tender information
B Contract Data
C N/S Subcontract tender closing
D Subcontract Tenderer’s selection, tender sum compilation and tenderer’s
details
Sections A, B and C are to be completed by the principal agent and/or agent
whereas Section D is to be completed by the tenderer and is to be submitted as the
tender.

[1] For a discussion on the difference between a nominated subcontractor and a selected subcontractor see
section 2 chapter 25.
[2] It follows that in most instances the comments that are made in this work concerning provisions in the
PBA are equally applicable, with the necessary changes made, to the NSSA and separate references are
made to the NSSA only where the respective provisions differ.
[3] It would be advisable to use the JBCC NSSA Contract Data which contains the various conditions relating
to the tender and which includes the Tender Form.
[4] It is very important that the principal agent does not advise the subcontractor that either his employer or
even he himself accepts the subcontractor’s tender, as this action might well bring about a contract between
the tenderer and either the employer or himself.
[5] It would be politic for the principal agent to establish whether the contractor had any objection to the
intended subcontractor before his tender is accepted.
[6] The Agreement is generally referred to as the ‘JBCC N/S Subcontract Agreement’. In this work, for the
sake of brevity, it is referred to simply as the N/S Agreement.
[7] This must be provided within 15 working days of written acceptance of the subcontractor’s offer (clause
11.1.1 NSSA).
[8] Clause 15.2.1 in the case of a selected subcontractor.
[9] In the case of delay to practical completion caused by the tardy production by a nominated subcontractor
of his design documentation, this would be a default by a nominated subcontractor which would, in terms of
clause 23.2.9 entitle the contractor to a revision of the date for practical completion.
[10] It is submitted that in private sector contracts, it should be the contractor who is required to effect this
insurance unless there is a good reason for the employer to do so, as the risk lies with the contractor.
[11] Privity of contract means the existence of contractual obligations owed by one party to the other that can
Copyright © 2019. Juta & Company, Limited. All rights reserved.

be enforced by an order of specific performance.

[12] Stated in the definition of ‘programme’ in clause 1.1 of the NSSA and also clause 12.2.18.
[13] Where design of the subcontract works forms part of the scope of the subcontract, then in terms of
clause 7.2 of the NSSA, the subcontractor undertakes to prepare his design and all design documentation
timeously so as not to cause delay to the intended date for practical completion of the works.
[14] This does not imply that the subcontractor is given possession of the site or any portion of it, nor that the
subcontractor acquires a lien over any portion of the works.
[15] The commissioning of an installation such as air-conditioning may take considerable time and consume
considerable quantities of water, fuel and power, payment for which is detailed in the Preliminaries and /or
NSSA-CD.
[16] Clause 10.2 of the Preliminaries requires the priced document to make provision for the contractor to
separately price for special attendance on each subcontractor. Special attendance will, inter alia, include for

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
scaffolding requirements described in detail in the agreement.
[17] Scaffolding is usually hired by the contractor, and the charge to the subcontractor would therefore be the
cost of hiring the scaffolding for this extended period.
[18] Which entitles him to an extension of the date for practical completion – see clause 23.2.9.
[19] PBA Clause 23.2.10
[20] In Westminster Corporation v Jarvis [1970] 1 WLR 637 (HL), Lord Salmon stated: ‘It is in my view unjust
and absurd because . . . it leaves the employer to bear the loss caused by delay for which they are in no way
to blame, and allows the party at fault to escape from the liability which they would otherwise justly have to
bear.’
[21] Such delays would not entitle him to an extension of the date for practical completion.
[22] PBA clause 15.7.2.
[23] PBA clause 15.1.1–15.1.3.
[24] PBA clause 15.1.4.
[25] The existence and amount of this price could be established by a principal agent inviting two alternative
tenders for the principal contract, the first containing monetary allowances for work to be done by nominated
subcontractors and the second alternative containing the same monetary allowances for the same work to be
done by selected subcontractors. The comparison between the alternative tenders would be interesting, and
should reveal the extent to which the tenderer has recognised the risk of working with selected subcontractors
and has priced accordingly. A principal agent who has provided a nominated subcontract amount in the bills of
quantities cannot instruct the contractor to accept a successful tenderer as a selected subcontractor, firstly
because he cannot unilaterally change a provision of the agreement, and secondly because this could
prejudice the contractor and probably give rise to a claim for damages.
[26] PBA clause 1.1.
[27] See definition in clause 1.1. It follows from this definition that a principal agent may not omit work that
had been measured and billed as contractor’s work and instruct that it be done by a nominated subcontractor.
This conclusion is in line with the court’s reasoning in Hydro Holdings (Edms) Bpk v Minister of Public Works
and Another 1977 (2) SA 778 (T).
[28] The same form of agreement is used for both nominated and selected subcontracts, as the contractual
relationship between the contractor and the subcontractor is the same whether the subcontractor is nominated
or selected. The differences between the two forms of subcontract are dealt with in the PBA, as they affect the
contractor’s liability to the employer for the consequences of the subcontractor’s default or insolvency.
[29] It would be advisable to use the JBCC NSSA CD which contains the various conditions relating to the
tender and which includes the Tender Form.
[30] It is very important that the principal agent does not advise the subcontractor that either his employer or
even he himself accepts the subcontractor’s tender, as this action might well bring about a contract between
the tenderer and either the employer or himself.
[31] It would be politic for the principal agent to establish whether the contractor had any objection to the
intended subcontractor before his tender is accepted.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[32] The Agreement is generally referred to as the ‘JBCC N/S Subcontract Agreement’. In this work, for the
sake of brevity, it is referred to simply as the NSSA.
[33] See definition in clause 1.1. The principal agent cannot order the omission of work designated in the
contract documents to be done by the contractor, or even a nominated subcontractor, and instruct that it be
done by a selected subcontractor.
[34] The contractor is unlikely to be interested in the technical aspects of the tender documents, but will be
concerned about the contractual provisions. The involvement of the contractor in the tendering process has the
consequence that selected subcontract documents cannot be finalised and tenders invited until the contractor
has been appointed. If for any reason the principal agent wishes to invite tenders for subcontracts before the
contractor has been appointed, such subcontracts must be nominated, not selected. Attempts to circumvent
this difficulty, for example, by listing in the tender documents for the principal contract the names of
subcontractors from whom tenders for selected subcontracts are being invited, do not conform to the letter and
spirit of clauses 15.1.1 and 15.1.2, and the practice is strongly deprecated.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
[35] Although the contractor will have approved the list of prospective tenderers, circumstances may have
changed in respect of the chosen tenderer. He may have taken on substantial work in the interim and be
unable to handle further work satisfactorily, his tender price may be unreasonably low, thus exposing the
contractor to the risks attendant on his possible non-performance, and his financial position may have
deteriorated.
[36] Clause 16.1 PBA.
[37] Clause 24.3.
[38] Tenants, particularly of shops and offices, may lease undivided and unfitted space in the building and
then engage their own contractors to install partitioning, wall and floor finishes, fittings, possibly mechanical
equipment, catering equipment in kitchens, etc.
[39] Clause 17.1.16 PBA.
[40] This information is to be included in the contract data which the contractor will be given when tendering,
and which he will be able to take into account in pricing his tender and subsequently when preparing his
construction programme.
[41] In terms of clause 8.5.3 PBA he would not be liable for the cost of making good physical loss or repairing
damage to the works caused by such workmen.
[42] Typical examples would be subcontracts in respect of piled foundations, the supply and erection of
structural steelwork, the supply and laying of roof waterproofing and the installation of services which are to be
built into the structure.
[43] Clause 1.1.
[44] The intended date for interim completion is stated in the CD of the NSSA, but this yields to the date
indicated in the programme prepared by the contractor and agreed by the subcontractor.
[45] In Victoria Falls and Transvaal Power Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD 1 at 22, it
was stated by Innes CJ: ‘The sufferer by such breach should be placed in the position he would have occupied
had the contract been performed, so far as can be done by the payment of money, and without undue hardship
to the defaulting party’.
[46] In Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd 1977 (3) SA 670 (A) 687, Corbett CJ
stated: ‘Where two parties have made a contract which one of them has broken, the damages which the other
party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be
considered either arising naturally, i.e. according to the natural course of things, from such breach of contract
itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time
they made the contract, as the probable result of the breach of it’.
[47] This could be a very difficult exercise for the contractor. When a contractor himself completes after the
intended or revised date for practical completion and becomes liable to the employer for penalties, such
lateness is seldom the fault of one subcontractor alone; probably several subcontractors and possibly the
contractor himself may have contributed to the breach. A subcontractor would be liable only for damages for
the extent to which he himself contributed to the contractor’s breach. This may be established by conjecturing
how much earlier the contractor might have achieved practical completion if the subcontractor had not himself
been in breach. This would then be the extent of the subcontractor’s liability for damages.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

[48] The significance of this provision is that, if payment is not made by the latest date for payment, interest is
calculated from this due date.
[49] The amount may, however, be reduced by the amount of the NSSA Recovery Statement issued by the
contractor simultaneously with the payment advice.
[50] The subcontractor would need to submit his tax invoice to the contractor for payment.
[51] Contractors have long maintained that they are builders, not bankers, and should not be required to pay
subcontractors for work done by them when they themselves have not yet been paid for such work. This
leaves subcontractors in a very invidious position; as they have no privity of contract with the employer, they
cannot sue for payment.
[52] This will not assist the subcontractor if he has completed his work, or completed a stage of work and
would not, in terms of the programme, be required on site in the immediate future.
[53] This should be on the JBCC N/S guarantee for payment form.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
[54] This remedy is only available in respect of money which the contractor had been obliged to pay to the
subcontractor and had failed to pay. It does not entitle the employer to instruct the principal agent to certify
direct payments to a subcontractor of amounts that become due in the future.
[55] An employer should be cautious when approaching this issue and should be sure that, if the contractor
should become insolvent or go into liquidation, he would be able to recover fully the amount concerned. It is
very possible that he would be considered to be a concurrent creditor for the amount and recover only a small
portion of it, if anything at all.
[56] This situation would arise where the amount due to the subcontractor in terms of the interim payment
certificate was exceeded by the amount stated in the recovery statement, perhaps due to expense or loss
incurred by the contractor as a result of default by the subcontractor.
[57] The provisions of clause 29.0 of the NSSA are substantially similar to those of clause 29.0 of the PBA,
and the detailed comments on that clause in section 2 chapter 29 are equally applicable here.
[58] The most frequent breach is failure to pay the subcontractor in terms of the Agreements.
[59] As set out in clause 29.1 of the PBA and NSSA.
[60] Clause 15.7.1 of both Agreements. There is no requirement that the procedure in clauses 15.1.1 to
15.1.5 in both Agreements shall apply to the selection and appointment of this replacement selected
subcontractor.
[61] Clauses 14.7.1 of the NSSA and 14.7.1 of the PBA differ in that in the case of the NSSA the principal
agent and/or agents in conjunction with the contractor shall appoint another nominated subcontractor to
complete the subcontract works, whereas in the PBA clause 14.7.1 states that the principal agent shall instruct
the contractor to appoint another nominated subcontractor without reference to the contractor. There is no
mechanism whereby the employer can recover his financial loss from the subcontractor who caused it, as
there is no contractual nexus between the employer and the subcontractor that would enable him to sue for it.
This is one of the principal and continuing criticisms of the nominated subcontracting procedure.
[62] Clauses 23.2.9, 23.2.10 and 23.2.11 of the PBA. This would relieve the contractor of the liability for
penalties for the delay caused by the termination.
[63] Clauses 27.2.6 and 29.0 to 29.9 of the NSSA. In the case of a nominated subcontract the damages
might be no more than his overheads and profit for the period of delay, but in the case of a selected
subcontract it could be the additional cost of engaging a new subcontractor to complete the works as well as
additional preliminaries and probably penalties that have been levied for non-completion.
[64] Peters, Flamman and Co v Kokstad Municipality 1919 AD 427.
[65] Tweedie and Another v Park Travel Agency (Pty) Ltd t/A Park Tours 1998 (4) SA 802 (W).
[66] The most likely reason for such stoppage of work would be a prolonged strike.
[67] Such protective measures would be to ensure public safety and probably also to safeguard the works
against unauthorised entry. Where the termination was due to cessation of work, the contractor would not be
obliged to carry out these measures if he was prevented from doing so by reasons beyond his control.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Page 511

Standard Forms & Annexures

Section 5 of this book lists the standard JBCC documents available and which are to
be used in conjunction with the PBA and NSSA Edition 6.2 and MWA Edition 5.2
only. It is important to note that these documents have been compiled in the interests
of standardisation of documentation and good practice in the building industry and
for use specifically with the abovementioned documents and should, under no
circumstances, be used with earlier versions of the above agreements.

Page 512

General Preliminaries
for use with the May 2018 edition of the JBCC® agreements
(PBA and NSSA Edition 6.2, MWA Edition 5.2)

The Joint Building Contracts Committee® – NPC

This page does not form part of the JBCC® General Preliminaries, Edition 6.2—May 2018

JBCC®
EXPLANATORY NOTES AND INSTRUCTIONS
Introduction

® ®

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
The Joint Building Contracts Committee (JBCC®) has compiled the JBCC® General
Preliminaries in the interest of standardisation of documentation and good practice in
the building industry. The document generally covers all aspects of preliminaries for
most types of projects and should consequently simplify the procurement for and the
administration of building projects and produce economic advantages to all
concerned. Users should note that the JBCC® General Preliminaries have been
specifically formulated for use with the May 2018 edition of the JBCC® agreements
(PBA and NSSA Edition 6.2, MWA Edition 5.2)
How the document is structured
The JBCC® General Preliminaries is part of the building agreement and subcontract
documentation to be referred to in the priced document. It is intended that the JBCC®
General Preliminaries be used by reference only in the preparation of the priced
document. The project specific preliminaries comprises the following:

Section A A recital of the headings of the individual clauses in the JBCC® Principal Building Agreement (PBA),
JBCC® N/S Subcontract Agreement (NSSA) or JBCC®Minor Works Agreement (MWA) Modifications to the
standard clauses should be avoided. Amendments, modifications, corrections or supplements to the
aforementioned agreements may be recorded in the space provided in the relevant JBCC®Contract Data
or against the relevant clause numbers in this section.
Section B A recital of the headings of the individual clauses in the JBCC® General Preliminaries. Changes to the
standard clauses should be avoided. Any modifications should be recorded against the relevant clause
numbers in this section.

Page 513

Section C Any special clauses to meet the particular circumstances of a specific project are embodied in this section

The JBCC® agreements are for use with or without bills of quantities. This brings a
consistency in the contractual language used and the administrative procedures
required in building agreements
Preface to the project specific preliminaries
Copyright © 2019. Juta & Company, Limited. All rights reserved.

1 The project specific preliminaries of the priced document should contain the
following introduction: ‘The JBCC® General Preliminaries (May 2018)
published by the Joint Building Contracts Committee for use with the JBCC®
Principal Building Agreement Edition 6.2/JBCC® N/S Subcontract Agreement
Edition 6.2/JBCC® Minor Works Agreement Edition 5.2 shall be deemed to be
incorporated in these bills of quantities/this lump sum document, amended as
hereinafter described
The contractor is deemed to have referred to such document for the full intent
and meaning of each clause

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
The clauses in the document are hereinafter referred to by clause number and
heading only
Where standard clauses or alternatives are not entirely applicable to the
agreement such amendments, modifications, corrections or supplements as
will apply are given under each relevant clause heading and such
amendments, modifications, corrections or supplements shall take
precedence notwithstanding anything to the contrary contained in the JBCC®
General Preliminaries (May 2018)
2 Clauses marked with an asterisk (*) are optional clauses or clauses requiring
information relating to the specific project, selection and details of which are to
be included in the JBCC® Contract Data
3 Where clauses are not used for the specific project these should nevertheless
be listed in the preliminaries of the bills of quantities / project specific
preliminaries of the lump sum document but marked ‘Not applicable’ or ‘N/A’
Disclaimer
While the Joint Building Contracts Committee aims to ensure that its publications
represent best practice, the JBCC® does not accept or assume any liability or
responsibility for any events or consequences which derive from the use of the
General Preliminaries

Page 514

Copyright reserved
The name ‘The Joint Building Contracts Committee® NPC’, the abbreviation JBCC®
the electronic version e-JBCC® and the JBCC® logo are registered trademarks. The
JBCC® claims authorship of this work. All rights are reserved. No part of this
publication may be reproduced, stored in any retrieval system or transmitted in any
form or by any means, electronic, mechanical, photocopying, scanning, recording, or
otherwise, without the prior permission in writing of the JBCC®. Unauthorised
reproduction of the work is an infringement of the copyright. Judicial proceedings can
Copyright © 2019. Juta & Company, Limited. All rights reserved.

and will be instituted to obtain relief and recovery of damages

Page 515

General Preliminaries
Table of Contents

Section Clause No Description

DEFINITIONS AND INTERPRETATION 1.1 Definitions

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
1.2 Interpretation

DOCUMENTS 2.1 Checking of documents

2.2 Provisional bills of quantities

2.3 Availability of construction information

2.4 Ordering of materials and goods

PREVIOUS WORK AND ADJOINING PROPERTIES 3.1 Previous work – dimensional accuracy

3.2 Previous work – defects

3.3 Inspection of adjoining properties

THE SITE 4.1 Handover of site in stages

4.2 Enclosure of the works

4.3 Geotechnical and other investigations

4.4 Encroachments

4.5 Existing premises occupied

4.6 Services – known

MANAGEMENT OF CONTRACT 5.1 Management of the works

5.2 Progress meetings

5.3 Technical meetings

SAMPLES, SHOP DRAWINGS, ETC 6.1 Samples of materials

6.2 Workmanship samples

6.3 Shop drawings

6.4 Compliance with manufacturer’s instructions

DEPOSITS AND FEES 7.1 Deposits and fees

TEMPORARY SERVICES 8.1 Water

8.2 Electricity

8.3 Ablution and welfare facilities
Copyright © 2019. Juta & Company, Limited. All rights reserved.

8.4 Communication facilities

PRIME COST AMOUNTS 9.1 Responsibility for prime cost amounts

Page 516

Section Clause No Description

ATTENDANCE ON SUBCONTRACTORS 10.1 General attendance

10.2 Special attendance

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

GENERAL 11.1 Protection of the works

11.2 Protection/isolation of existing works and works
occupied in sections

11.3 Security of the works

11.4 Notice before covering work

11.5 Disturbance

11.6 Environmental disturbance

11.7 Works cleaning and clearing

11.8 Vermin

11.9 Overhand work

11.10 Tenant installations by direct contractors

11.11 Advertising

Interpretation
1.0 Definitions and interpretation

1.1 Definitions
A word or phrase in bold type in the JBCC® General Preliminaries shall have the
meaning assigned to it in the definitions listed in the JBCC® Principal Building
Agreement, the JBCC® N/S Subcontract Agreement or the JBCC® Minor Works
Agreement as the case may be. A word or phrase not in bold type shall be
interpreted in the context of its usage
The JBCC® General Preliminaries applies with the necessary changes made to the
JBCC® N/S Subcontract Agreement

1.2 Interpretation
1.2.1 In the JBCC® General Preliminaries, unless inconsistent with the context,
the words ‘accept, allow, appoint, approve, authorise, certify, decide,
Copyright © 2019. Juta & Company, Limited. All rights reserved.

demand, designate, grant, instruct, issue, list, notice, notify, object,

record, reduce, refuse, request, state’ and their derivatives, require such
acts to be in writing
1.2.2 The masculine gender includes the feminine and neuter genders and vice
versa, the singular includes the plural and vice versa and a person
includes juristic or artificial persons
1.2.3 The headings of clauses are for information only and shall not be used in
interpretation

Page 517
®

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
1.2.4 Documents and legislation referred to in the JBCC® General Preliminaries
shall mean the current edition thereof with all amendments thereto at the
date of submission of the tender unless otherwise stated
1.2.5 Clauses marked with an asterisk (*) are optional clauses or clauses
requiring information relating to the specific project, selection and details
of which are to be included in the JBCC® Contract Data

2.0 Documents

2.1 Checking of documents

The tenderer shall check the numbers of the pages of the tender documents and
should any be missing or duplicated, or the reproduction is indistinct, or if any doubt
exists as to the intent or meaning of any description, or where the agreement
contains any obvious errors, the tenderer shall give notice to the principal agent
forthwith thereof and the principal agent shall promptly give a written directive

2.2 *Provisional bills of quantities

The quantities in provisional bills of quantities are an indication of the works to be
executed and are subject to remeasurement

2.3 *Availability of construction information

Where the construction information for the works is incomplete and will only be
completed during the construction period the contractor and principal agent
shall work together to identify the requirements for the provision of construction
information. The contractor and principal agent shall agree the dates that are
reasonable by when the contractor is to be provided with each outstanding item of
the construction information in terms of the programme
The contractor and subcontractor shall agree dates by when the subcontractor is
to be provided with each item of the outstanding information in terms of the
programme
Copyright © 2019. Juta & Company, Limited. All rights reserved.

2.4 Ordering of materials and goods

Should the contractor use the quantities in the priced document for the ordering of
materials and goods, the contractor does so at his own risk

Page 518

3.0 Previous work and adjoining properties

3.1 *Previous work – dimensional accuracy

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
In successive contracts the contractor shall, within ten per cent (10%) of the initial
construction period or twenty (20) working days, after taking possession of the
site, whichever is the lesser, check the existing levels, lines, profiles and the like
affecting the works and satisfy himself as to the dimensional accuracy of work
previously executed. The contractor shall forthwith give notice to the principal
agent and request a contract instruction regarding any dimensional inaccuracy
found in work previously executed

3.2 *Previous work – defects

In successive contracts the contractor, on becoming aware of a defect in work
previously executed which affects the works, shall forthwith give notice to the
principal agent and request a contract instruction regarding such a defect

3.3 *Inspection of adjoining properties

Before commencing the works the principal agent and the contractor shall
arrange with the owners of adjacent buildings and properties and representatives of
local authorities to inspect, inter alia, the buildings, structures, pavings, kerbs,
channels and fences. The contractor shall record all conditions that the works
could affect and copy the principal agent accordingly. The contractor shall pay
particular attention to cracks, defects and existing levels related to structures,
pavings, kerbs, channels and fences which later could be claimed to have been
caused or disturbed by the works
Where instructed by the principal agent, levels and photographs shall be taken by
the contractor and the cost thereof shall be for the employer’s account. Certified
copies shall be lodged with the principal agent

4.0 The site

4.1 *Handover of site in stages

4.2 *Enclosure of the works

The contractor shall erect, maintain and remove at completion hoardings with
gantries, fans, safety screens, elements thereof, all for the protection of the public
and others. Specific hoarding requirements are described in the contract data

Page 519

4.3 *Geotechnical and other investigations

Information relating to geotechnical and/or other investigations are recorded in the

4.4 Encroachments
The contractor shall give notice to the principal agent within ten per cent (10%) of
the initial construction period or twenty (20) working days after taking possession
of the site, whichever is the lesser, if any encroachments of adjoining buildings,
structures, pavements, boundaries, services, etc exist in order that the necessary
arrangements may be made for the rectification of any encroachments

4.5 *Existing premises occupied

Existing premises will be in use and occupied during the execution of the works.
The contractor shall execute the works as will least interfere with the general
routine of the occupants of the premises and minimise any nuisance from dust, noise
or other causes with due regard for the safety of the occupants

4.6 *Services – known

All known existing services are described in the contract data indicating whether
such services are to be terminated, diverted or continued in use either temporarily or
permanently

5.0 Management of contract

5.1 Management of the works

The contractor is responsible for the management of the sequence for carrying out
of the works to avoid, inter alia, subsequent cutting or patching of finished work

5.2 Progress meetings

The principal agent and contractor shall hold meetings related to the progress of
the works at regular intervals and at such other times as may be necessary.
Subcontractors shall not be present at progress meetings unless specifically
Copyright © 2019. Juta & Company, Limited. All rights reserved.

requested by the contractor or principal agent. The principal agent shall record
and distribute the minutes of the meetings

5.3 Technical meetings

At the instance of the principal agent or the contractor, meetings shall be held to
deal with technical and subcontractors’ coordination matters

Page 520

6.0 Samples, shop drawings and manufacturer’s instructions

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
6.1 Samples of materials
The contractor shall furnish at his cost samples of materials and specimens of
finishes as may be called for by the principal agent for his approval

6.2 Workmanship samples

The principal agent may instruct the contractor to furnish samples of workmanship
for his approval. Where the principal agent requires an assembly of various
elements of the building or installation which is not incorporated in the works, the
contractor shall arrange such an assembly at the employer’s expense. The
contract value shall be adjusted accordingly

6.3 Shop drawings

Shop drawings are drawings, diagrams, designs, illustrations, schedules,
performance charts, brochures, setting out drawings, shop details and other data
which are prepared by the contractor, subcontractor, manufacturer, supplier or
distributor which illustrate manufacturing details and methods of execution of work
Only shop drawings and/or samples submitted for review shall be considered by the
principal agent. The principal agent’s approval of shop drawings and/or samples
shall be limited to checking for general conformity with design and specification and
shall not alter the design responsibilities in terms of the agreement. The principal
agent may refer shop drawings and/or samples to the relevant agent for revision
and/or approval
Where shop drawings are called for:
6.3.1 The contractor shall:
• Prepare or ensure that a subcontractor, manufacturer, supplier or
distributor prepares shop drawings at his/their own expense
• Prepare or ensure that a subcontractor, manufacturer, supplier or
distributor prepares shop drawings at his/their own expense
• Submit two (2) copies of shop drawings to the principal agent for
approval
Copyright © 2019. Juta & Company, Limited. All rights reserved.

• Allow the principal agent reasonable time to approve shop

drawings
• Keep a record of all shop drawings submitted to the principal
agent
• Ensure that shop drawings conform to the dimensions of built work

Page 521

• Submit two (2) copies of the approved shop drawings to

theprincipal agent for his use and for use in the works

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
• Ensure that work is not executed from shop drawings that have
not been approved by the principal agent and/or agents
• Not be entitled to payment for elements of the works (for example
steel roof truss components such as members, gussets,
connection plates and the like) for which shop drawings may have
been approved by the principal agent and/or the relevant agent
but which are in excess of the design parameters stipulated by the
relevant agent. Payment shall be based on the design parameters
stipulated by the relevant agent
6.3.2 The principal agent shall:
• Check timeously the shop drawings submitted by the contractor
• Give notice to the contractor timeously where shop drawings are
approved or are to be revised and resubmitted

6.4 Compliance with manufacturer’s instructions

The contractor shall take delivery of, handle, store, use, apply and fix all products in
strict accordance with the manufacturer’s instructions

7.0 Deposits and fees

7.1 Deposits and fees

The contractor shall arrange for and pay all deposits, fees and charges according to
law, regulation or bylaw of any local or other authorities that relate to hoardings, the
use of pavements, street encroachment or crossings, permission for the suspension
of parking facilities and the like

8.0 Temporary services

8.1 *Water
The employer does not warrant that any water supply that may exist is adequate for
the proper execution of the works. Where such supply is inadequate, the contractor
Copyright © 2019. Juta & Company, Limited. All rights reserved.

shall provide an adequate supply at his own expense. Water for the works, as
stated in the contract data shall be provided by:
8.1.1 Option A
The contractor including necessary temporary plumbing

Page 522

8.1.2 Option B
The employer free of charge to the contractor. The contractor shall

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
connect to the existing water supply at approved points and execute any
necessary temporary plumbing
8.1.3 Option C
The employer to the contractor. The contractor shall connect to the
existing water supply at approved points, supply and install meters and
execute any necessary temporary work. The employer shall meter the
consumption and invoice the contractor for payment thereof

8.2 *Electricity
The employer does not warrant that any electricity supply that may exist is adequate
for the proper execution of the works. Where such supply is inadequate, the
contractor shall provide an adequate supply at his own expense. Electricity for the
works, as stated in the contract data shall be provided by:
8.2.1 Option A
The contractor including necessary temporary installation work
8.2.2 Option B
The employer free of charge to the contractor. The contractor shall
connect to the existing electricity supply at approved points and execute
the necessary temporary installation
8.2.3 Option C
The employer to the contractor. The contractor shall connect to the
existing electricity supply at approved points, supply and install meters and
execute necessary temporary work. The employer shall meter the
consumption and invoice the contractor for payment thereof

8.3 *Ablution and welfare facilities

Ablution and welfare facilities, as stated in the contract data shall be provided for
the use of all persons on the site by:
8.3.1 Option A
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The contractor who shall maintain such facilities in a thoroughly clean

and tidy condition

Page 523

8.3.2 Option B
The employer who shall permit the use of existing facilities. The
contractor shall maintain such facilities in a thoroughly clean and tidy
condition and make good any damage thereto at his own expense

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
8.4 *Communication facilities
Communication facilities, as stated in the contract data, shall be provided by the
contractor who shall be entitled to recover usage costs from the users thereof

9.0 Prime cost amounts

9.1 Responsibility for prime cost amounts

All prime cost amounts are for materials and goods delivered to the site. The
priced document shall make provision for the contractor to separately price for
overheads and profit and for taking delivery, unloading, checking against invoices
and/or delivery notes, unpacking, storing, hoisting and fixing of such materials and
goods. The contractor shall check the quantity and condition of all materials and
goods on taking delivery as any materials and goods subsequently found missing
or damaged shall be replaced at the contractor’s expense

10.0 Attendance on subcontractors

10.1 General attendance

General attendance is defined as being the duties of the contractor as described in
clause 12.2 of the JBCC® N/S Subcontract Agreement

10.2 Special attendance

The priced document shall make provision for the contractor to separately price
for special attendance on each subcontractor. Special attendance such as
unloading, storing, placing in position, providing special power supplies, specific
hoisting, use of cranes and scaffolding requirements, provision of temporary casing
and/or other specific protection of the works, special security and clearing away
rubbish are described in detail in the priced document

11.0 General

11.1 *Protection of the works

Where specific protection of the works is required this shall be described in the
contract data

11.2 *Protection/isolation of existing works and works occupied in

sections
The contractor shall provide all reasonable temporary measures to protect/isolate

11.3 Security of the works

The contractor shall take all appropriate measures for general security of the works

11.4 Notice before covering work

The contractor shall give adequate notice to the principal agent whenever any
work or material such as foundations, plumbing, drainage and the like which is
subject to inspection or remeasurement is to be covered or concealed in any way. In
default of such a notice being received timeously by the principal agent such work
shall be exposed and later made good at the contractor’s expense

11.5 *Disturbance
The contractor shall execute the works with a minimum of disturbance to adjoining
premises, any parts of the works already handed over and the occupants of those
premises and/or parts

11.6 *Environmental disturbance

The contractor shall execute the works without any unreasonable adverse effect on
the environment

11.7 Works cleaning and clearing

The contractor shall regularly clean and clear away all rubbish and excess
materials as the works proceed and leave the works in a clean and satisfactory
state for use and occupation in terms of the agreement

Page 525

The contractor shall take all necessary precautions to keep the works and the site
free from vermin and shall leave the works vermin-free on completion

11.9 Overhand work

No provision has been made for overhand work. Where necessary, the contractor
shall make his own arrangements with the owners of adjoining properties to execute
such work

11.10 Tenant installations

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
On practical completion of a section of the works and where the principal agent
instructs that tenant installation work is to be executed by others, then:
11.10.1 The contractor shall allow reasonable access
11.10.2 The contractor shall not receive any mark-up for overheads and profit on
any omissions in this regard. Claims for loss of profit shall not be
entertained
11.10.3 The principal agent shall carry out an inspection of such areas where
tenant installation work is to be executed and record the state of
completion and issue a list of defects pertaining to such areas

11.11 Advertising
All advertising rights on the site and the hoardings are reserved exclusively for the
employer

Page 526

Commentary
JBCC General preliminaries
See Section 1 chapter 4.2.4 for commentary on the JBCC General preliminaries.
JBCC Standard forms
The standard forms published by the JBCC are only to be used with the PBA edition
6.2; NSSA edition 6.2 and MWA edition 5.2.
The JBCC standard forms and documents listed hereunder are as follows:
5.1 Certificate of Site Possession (PBA & MWA)
5.2 Waiver of Contractor’s Lien (PBA & MWA)
5.3 Certificate of Completion (MWA – practical & final)
5.4 Certificate for Payment (MWA)
5.5 Certificate of Interim Completion (NSSA)
5.6 Subcontractor’s Payment Advice (NSSA)
Copyright © 2019. Juta & Company, Limited. All rights reserved.

5.7 Subcontractor’s Recovery Statement (NSSA)

5.8 Recovery Statement (PBA)
5.9 Certificate for Payment (PBA)
5.10 Subcontractor’s Payment Notification (PBA)
5.11 Certificate of Practical Completion (PBA)
5.12 Certificate of Final Completion (PBA)
5.13 JBCC Adjudication Rules (see pages 551 to 556)
5.14 Guideline Description for Practical Completion (see pages 558 to 560)
5.15 Guidelines for Completing a Payment Certificate (see pages 560 to 564)
5.16 JBCC Security Forms

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
1 Security for Construction
2 Security for Payment
3 Security for Advance Payment
4 NSSA Security for Construction
5 NSSA Security for Payment
6 MWA Security for Construction
7 MWA Security for Deposit

Page 527

Certificate of Site Possession

Certificate of Site Possession for use with the ...

Principal Building Agreement Edition
used

Minor Works Agreement Edition
used

PROJECT DETAILS

Works

Employer

Contractor

Agent

Note: A professional Land Surveyor may be appointed to perform this function

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

The following particulars of the site were pointed out to the contractor by the agent

Pegs

Benchmark

Other features

Information attached hereto:

This certificate records the hard-over of the site to the contractor for the purpose of constructing the works in terms of the
agreement. A copy of this certificate shall be provided to the contractor

Contractor’s Representative: Signature Date
Name

Contractor Signed at

Employee(‘s representative): Signature Date
Name

Name and address of the principal agent’s practice

Page 528

Commentary
5.1 Certificate of Site Possession
This form was introduced for use by the parties at the time of giving the contractor
possession of the site to commence with construction.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
The form is designed for use with either the PBA or the MWA and requires the
applicable edition to be inserted in the appropriate blocks at the top-right hand
corner to be completed to suit the agreement being used.
The project details are to be recorded in the spaces provided and provision has
been made for the name of the agent, who has been appointed to hand over the site
to be recorded. This agent is to be a registered land surveyor appointed by the
employer.
The second main block is where the particulars of the site, including pegs, bench
mark and other features are recorded.
The certificate is to be signed by the representatives of the contractor and
employer and the details of the principal agent are to be recorded.
The certificate records that a copy shall be provided to the contractor and it is
recommended that a copy of this certificate be attached to the minutes of the site
handover meeting.

Page 529

Waiver of the Contractor’s Lien

Waiver of the Contractor’s Lien for use with the ...

Principal Building Agreement Edition
used ?

Contractor

Employer

Works

Site

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

AGREEMENT

The contractor waives in favour of the employer any lien or right of retention that is or may be held in respect of the works to
be executed on the site

This waiver shall only come into effect on provision by the employer of a security for payment in fulfilment of obligations in
terms of the identified agreement

This done and signed at Date

Name of Signatory Capacity

For and on behalf of the contractor who by signature hereto Signature of Witness
warrants such authorisation

Contractor

Street Address Code

Postal Address Code

E-mail Mobile

Fax Telephone

Page 530

Commentary
5.2 Waiver of Contractors Lien
This form is designed for use with either the PBA or the MWA and provision has
been made for the edition of the agreement used to be inserted in the blocks at the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
top right-hand corner.
The population of the remainder of the blocks is self-explanatory and the
document specifically states that the waiver shall only come into effect on provision
by the employer of a security for payment in fulfillment of obligations in terms of the
identified agreement.

Page 531

Certificate of Completion

Employer

Contractor

Works

The principal agent certifies that:

Practical Completion was achieved (yes/no) on-Date:

Where Practical Completion is certified the Defects Liability Period ends ninety (90) calendar days from the date of Practical
Completion subject to clause 16.0 (final completion)

Where Final Completion is certified the Latent Defects Liability Period ends 5 years from the date of Final Completion

The Latent Defects Liabity Period ends ... on-Date:

Date

Signed by the principal agent who, as agent for the employer, certifies that the works has been completed in accordance
with the specified criteria for practical or final completion on the date stated, irrespective of the date of signature of this
certificate

Name and address of the principal agent’s practice

Page 532

This certificate is designed for use with the MWA edition 5.2 and is to be used for
both practical and final completion.
The principal agent is to complete all blocks where applicable and is to record the
date on which practical completion was achieved, or the date on which final
completion was achieved, as applicable.
The date on which the latent defects liability period ends is to be recorded in the
block provided for that purpose.
This certificate is to be signed by the principal agent who shall issue copies to the
contractor and employer.

Payment certificate (MWA)

Payment certificate

Issued in terms of Clause 19 of the Certificate No:

Minor Works Agreement Edition 5.2 - May Interim or Final
2018

Employer

Contractor

Works

Site

date

A B C D
CONTRACT CURRENT CURRENT CURRENT
SUM CONTRACT VALUATION CERTIFICATION
VALUE

1.0 Value of the work executed [19.3.1]

2.1 Materials and goods on site [19.3.2]

3.0 Subtotal

4.0 Security adjustments applicable If applicable, state %
[19.3.3] %

5.0 Net subcontract sum

6.0 Authorised adjustments to contract value [20.0]

7.0 TOTAL AMOUNT CERTIFIED

8.0 Less Previous amount certified [19.3.5]

9.0 NET AMOUNT CERTIFIED

10.1 Less Expense and loss payable to the employer [Recover, Statement 1.1]

10.2 Less Penalties levied and payable to the employer [Recovery Statement
1.2]

10.3 Add Damages payable to the contractor [Recovery Statement 2.3]

11.0 Subtotal

12.0 Add Tax on 11.0 %
[19.3.7]

13.2 Less Recoupment from contractor of a deposit [Recovery Statement 1.8]

13.3 Add Default interest payable to the contractor [Recovery Statemen 2.1]

13.4 Add Advance payment made to the contractor [Recovery Statement 2.2]

13.5 Add Other non-taxable amounts [19.3.9]

14.0 TOTAL

15.0 Currency CERTIFIED AMOUNT DUE FOR PAYMENT to
the:

16.0 Contract sum execution (Security for construction- variable - (D7.0/A11.0*100) %
only)

Security status

Mark each box as appropriate: ✔ or X D16.0 < 50% D Practical Final
16.0> Completion Completion
50%

..............................................................

Signature Date:

Signed by the principal agent who, as agent for
the employer, certifies that the positive or
negative amount stated in D15.0 is due and
payable by the date stated, irrespective of the
date of signature of this certificate

Name and address of the principal agent’s
practice

Page 534

Commentary
5.4 Certificate for Payment for use with MWA edition 5.2
This certificate for payment differs from the certificate for payment used in conjuntion
with the PBA in that it does not provide for Contract Price Adjustments (line 7.0 in
PBA certificate for payment) nor does it make provision for compensatory interest.
The guidelines for completing a payment certificate may be found on page 533 in
this Section 5.

Page 535

Certificate of Interim Completion

Contractor

N/S subcontract works

Site

The contractor certifies that interim completion for:

(Clause section # of ‘Name’
20.2.1)

was achieved on ... Date:

Where practical completion has been certified
the Defects Liability Period ends ninety (90) calendar days from
the date of practical completion
subject to clause 21 (final completion)

Date

Signed by the contractor who certifies that the n/s subcontract works has been completed in accordance with the specified
criteria for interim completion on the date stated, irrespective of the date of signature of this certificate

Name and address of the contractor

Commentary
5.5 Certificate of Interim Completion
This certificate is only to be used by the contractor when he certifies that interim
completion has been achieved by either a nominated or selected subcontractor as
the case may be.
The contractor is obliged to issue a separate certificate for interim completion for
each nominated or selected subcontractor engaged on the works.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
This certificate provides for interim completion either for the subcontract works as
a whole or in sections where completion in sections is required.

Page 537

Subcontract Payment Advice

Issued in terms of Clause 25.3 of the Statement No:

N/S Subcontract Agreement Interim or Final
Edition 6.2 - May 2018

Contractor

Subcontractor

N/S Works

Site

Valuation date A B C D
SUB- CURRENT CURRENT CURRENT
CONTRACT SUB- VALUATION CERTIFI-
SUM CONTRACT CATION
VALUE

Payment date

1.0 Value of the subcontract works executed [25.3.1]

2.1 Materials and goods on site [25.3.2]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

2.2 Materials and goods off site [25.3.2]

3.0 Subtotal

4.0 Security adjustments [11.1; 11.4.1] no/yes, %
percentage ?

5.0 Net subcontract sum

6.0 Adjustments to subcontract value [26.0]

7.0 Cost fluctuations [25.3.4]

8.0 GROSS AMOUNT CERTIFIED

9.0 Less Previous amount certified [25.3.6]

10.0 NET AMOUNT CERTIFIED

11.2 Add Amounts due [Recovery Statement 2.3; 2.4; 2.6;
2.7; 2.8]

12.0 Subtotal

13.0 Add Tax on 12.0 %
[25.3.8]

14.2 Less Recoupment from subcontractor of an advance payment [Recovery Statement 1.10]

14.3 Add Default interest payable to the subcontractor [Recovery Statement 2.1]

14.4 Add Compensatory interest payable to the subcontractor [Recover, Statement 2.2]

14.5 Add Damages [Recovery Statement 2.3]

14.6 Add Expense and loss caused by a direct contractor [Recover, statement 2.4]

14.7 Add Advance payment made to the subcontractor [Recover, Statement 2.5]

14.8 Add Termination of a subcontract agreement, employer’s default [Recovery Statement 2.6]

14.9 Add Contractor’s instruction consequent on contract instruction [27.1.10]

14.10 Adjustment of the subcontractor’s preliminaries [27.1.11]

15.0 TOTAL

17.0 Subcontract sum execution % (Security for construction (variable) only) (D8.0/A12.0*100) %

Security status

Mark each box as appropriate: ✔ or X D17.0 < 50% D Practical Final
17.0> Completion Completion
50%

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

Signature Date:

Signed by the contractor who certifies that the
positive or negative amount stated in D16.0 is due
Name and address of the contractor and payable by the date stated to the named
subcontractor irrespective of the date of
signature of this subcontract payment advice
© Copyright reserved: JBCC® NSSA Edition 6.2 PAYMENT ADVICE - May 2018

Page 538

Commentary
5.6 Subcontractor’s Payment Advice
The subcontrator’s payment advice form is to be completed and signed by the
contractor and issued to each individual nominated or selected subcontractor as the
case may be.
This form replicates the certificate for payment form and indicates the amount due
to either the subcontractor or the contractor.

Page 539

Subcontractor’s Recovery Statement

Subcontractor’s Recovery
Statement

N/S Subcontract Agreement Date of Advice
Edition 6.2 - May 2018

Contractor

Subontractor

N/S Works

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

Site

The following amounts, detailed in separate documents, are to be recovered in the stated subcontract payment
advice

Payment Advice number/date A B C

TOTAL TO LESS RECOVERY
BE PREVIOUS THIS
RECOVERED RECOVERY PERIOD

1.0 AMOUNTS DUE TO THE CONTRACTOR

1.1 Paying charges [27.2.1]

1.1 Effecting insurances [27.2.2]

1.2 Work executed by other parties [27.2.3]

1.3 Damages [27.1.1]

1.4 Subcontractor not paying the contractor an amount due
[27.2.5]

1.5 Termination of a nominated subcontract agreement
[27.2.6]

1.7 Additional cost of scaffolding [27.2.10]

Subtotal 1.0 [10.1]

1.9 Default interest [27.1.2]

2.0 AMOUNTS DUE TO THE
SUBCONTRACTOR

2.1 Default interest [27.1.4]

2.2 Compensatory interest [27.1.5]

2.3 Damages [27.1.6]

2.4 Expense and loss caused by a direct contractor [27.1.7]

2.5 Advance payments [27.1.8]

2.6 Termination of a subcontract agreement [27.1.9]

2.7 Contractor’s instruction consequent on contract
instruction [27.1.10]

2.8 Adjustment of the subcontractor’s preliminaries [27.1.11]

Currency Note: all amounts exclude tax

Signature Date:

Signed by the contractor who certifies that
amounts stated above are included in the current
subcontract payment advice

Name and address of contactor
© Copyright reserved: JBGG® NSSA Edition 6.2 RECOVERY STATEMENT - May 2018

Page 540

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
Commentary
5.7 Subcontractor’s Recovery Statement
The subcontractor’s recovery statement is to be completed and signed by the
contractor and sets out the amounts to be recovered and due to the contractor or the
subcontractor as the case may be.
This document replicates the PBA Recovery Statement which is used between
employer and contractor but with changes made to certain clauses applicable to
subcontractors.

Page 541

Recovery Statement

Issued in terms of Clause 27.0 of the Certificate No:

Principal Building Agreement Edition Date of Certificate:
6.2 © February 2018

Employer

Contractor

Site

The following amounts, detailed in supplementary documentation where required, are recovered in the current
Payment Certificate

A B C

1.0 AMOUNTS DUE TO THE EMPLOYER

1.1.1 Effecting insurances, or paying charges [27.2.2]

1.1.2 Work executed by others [27.2.3]

1.1.3 Termination of a n/s subcontract agreement
[27.2.8]

1.1.4 Contractor not paying the employer an amount
due [27.2.5]

1.1.5 Termination of the agreement [27.2.6]

1.1.6 Default by the contractor [27.2.9]

1.1.7 Direct payments to a subcontractor [27.2.8]

Subtotal of 1.1 [11.1]

1.2 Penalties levied [27.1.1] [10.2]

Subtotal of 1.2 [11.2]

1.3.1 Default interest [27.1.2;
25.7.4]

1.3.2 Recoupment from contractor of an advance
payment [27.2.4]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

Subtotal of 1.3 [13.1]

2.0 AMOUNTS DUE TO THE CONTRACTOR

2.1.1 Compensatory interest
[27.1.4]

2.1.2 Default interest [27.1.5]

2.1.3 Advance payment made
[27.1.8]

Subtotal of 2.1 [13.2]

2.2 Damages Subtotal of 2.2 [1 1.3]
[27.1.6]

Currency Note: all amounts exclude tax

Signature Date:

Signed by the principal agent who, as agent for
Name and address of the principal the employer, certifies that the amounts stated
Copyright © 2019. Juta & Company, Limited. All rights reserved.

agent’s practice above are included in the current payment

certificate

Page 542

Commentary
5.8 Recovery Statement for use with PBA Edition 6.2

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
The recovery statement which is to be populated and issued by the principal agent
with the issue of each payment certificate reflects amounts due by the contractor to
the employer and by the employer to the contractor where applicable.
Amounts due to the employer include payments made by the employer which are
recoverable from the contractor in terms of the contract, penalties levied for late or
non-completion, default interest and recoupment of an advance payment.
The amounts due to the contractor are compensatory and default interest,
advance payment made and damages where applicable.
The recovery amounts are to be included in the relative certificate for payment.

Page 543

Payment certificate (PBA)

Payment certificate

Issued in terms of Clause 25 of the Certificate No:

Principal Building Agreement Interim or Final
Edition 6.2 - May 2018

Employer

Works

Site

Valuation date Issue Date Payment due
date

A B C D
SUBCONTRACT CURRENT CURRENT CURRENT
SUM CONTRACT VALUATION CERTIFICATION

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
VALUE

1.0 Value of the work executed [25.3.1]

2.1 Materials and goods on site [25.3.2]

2.2 Materials and goods off site [25.3.2]

3.0 Subtotal

4.0 Security adjustments applicable [25.3.3] If applicable, %
state %

5.0 Net contract sum

6.0 Authorised adjustments to contract value [26.0]

7.0 Cost fluctuations [25.3.4]

8.0 TOTAL AMOUNT CERTIFIED

9.0 Less Previous amount certified [25.3.6]

10.0 NET AMOUNT CERTIFIED

11.1 Less Expense and loss payable to the employer [Recovery Statement
subtotal 1.0]

11.2 Less Penalty levied and payable to the employer [Recovery Statement
1.11]

12.0 Subtotal (excluding
tax)

13.0 Add Tax on 12.0 %
[25.3.8]

14.1 Less Default interest payable to the employer [Recovery Statement
1.12]

14.2 Less Recoupment from contractor of an advance payment [Recovery
Statement 1.10]

14.3 Add Default interest payable to the contractor [Recovery Statement
2.1]

14.4 Add Compensatory interest payable to the contractor [Recovery
Statement 2.2]

14.5 Add Expense and loss caused by a direct contractor [Recovery
statement 2.4]

14.6 Add Damages [Recovery Statement 2.3]

14.7 Add Advance payment made to the contractor [Recovery Statement
2.5]

14.9 Add Other non-taxable amounts [25.3.10]

15.0 TOTAL

16.0 Currency CERTIFIED AMOUNT DUE FOR
PAYMENT to the:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

17.0 Contract sum execution (Security for construction - variable - (D8.0/A12.0x100) %
only)

Security status

Mark each box as appropriate: ✔ or X D17.0 < 50% D 17.0 Practical Final
> Completion Completion
50%≥

Signature Date:

Signed by the principal agent who, as agent for
the employer, certifies that the positive or
Name and address of the principal agent’s negative amount stated in D16.0 is due and
practice payable by the date stated, irrespective of the
date of signature of this certificate

Page 544

Commentary
5.9 Certificate for Payment for use with the PBA Edition 6.2
The certificate for payment is to be completed by the principal agent and issued to
the contractor together, with the recovery statement, on the dates provided for in the
contract data, with a copy to the employer and where applicable, the quantity
surveyor.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The guidelines for completing the payment certificate are dealt with on page 543
in this Section 5.
At the same time that the payment certificate is issued, the principal agent is
required to issue a Subcontractor’s Payment Certificate Notification—this notification
form follows as item 5.10.

Page 545

Subcontractor’s Payment Notification

Issued in terms of Clause 25.7.3 of Notification No
the

Principal Building Agreement Interim or Final
Edition 6.2 - May 2018

Contractor

Subcontractor

N/S Works

Site

* The payment certificate identified above has been issued to the contractor including an amount due for payment
to or by the named subcontractor

* Where applicable, the adjusted amount certified is in terms of the security provided by the contractor

* This adjustment may or may not affect the amount certified to the subcontractor.

* No account is taken of other amounts that may be due between the parties

VALUE

Date of issue

1.0 Value of the work executed [25.3.1]

2.1 Material and goods on site [25.3.2]

2.2 Materials and goods off site [25.3.2]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

3.0 Subtotal

4.0 Security adjustments applicable [25.3.3] If applicable, %
state %

5.0 Net subcontract sum

6.0 Authorised adjustments to subcontract value [26.0]

7.0 Cost fluctuations [25.3.4]

8.0 TOTAL AMOUNT CERTIFIED

9.0 Less Previous gross amount certified [25.3.6]

10.0 Subtotal

11.0 Add Tax on 10.0 %
[25.3.8]

12.1 Less Interest / Advance payment recoupment [27.2.4]

12.2 Add Interest / Advance payment made [27.1.8]

13.0 TOTAL

15.0 Subcontract sum execution (Security for construction - (D8.0/A10.0*100) %
‘Variable’ only)

Contractor completion status Practical Final
Completion Completion

Signature Date:

Signed by the principal agent who, as agent for
the employer, certifies that the amount stated in
Name and address of the principal D 15.0 is included in the current payment
agent’s practice certificate
© Copyright reserved: JBCC® PBA Edition 6.2 SUBCONTRACTPOR’S PAYMENT NOTIFICATION - May 2018

Page 546

Commentary
5.10 Subcontractor’s Payment Certificate Notification
The PBA Edition 6.2 requires the principal agent to issue a subcontractor’s payment
certificate notification to each nominated or selected subcontractor, to indicate to
such subcontractor the amount due to the subcontractor and included in a certificate
for payment.
The amount indicated in the notification may be adjusted by the contractor when
payment is made to the subcontractor to cater for amounts that may be due between
the contractor and the subcontractor.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Separate notifications are to be issued to each subcontractor and on large

projects where a great number of subcontractors are employed this task could
become rather onerous.

Page 547

Certificate of Practical Completion

Employer

Contractor

Works

Site

The principal agent certifies that practical completion for:

(Clause 19) the works as a whole yes / no ?

(Clause 20) section # of ‘Name’

Where practical completion has been certified
the Defects Liability Period ends ninety (90) calendar days from
the date of practical completion

subject to clause 21 (final completion) Date:

Date

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
Signed by the principal agent who, as agent for the employer, certifies that the works has been completed in accordance
with the specified criteria for practical completion on the date stated, irrespective of the date of signature of this certificate

Name and address of the principal agent’s practice

Page 548

Commentary
5.11 Certificate of Practical Completion for use with the PBA Edition
6.2
This certificate is prepared and issued by the principal agent to the contractor, with a
copy to the employer.
This certificate makes provision for practical completion of the works as a whole,
or for a section of the works where completion in sections is prescribed.
The principal agent is to determine the date on which the defects liability period
ends and insert such date in the block provided (90 calendar days from the certified
date of practical completion).

Page 549

Certificate of Final Completion

Employer

Contractor

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

Works

Site

The principal agent certifies that final completion for:

(Clause 21) the works as a whole yes / no ?

(Clause 20) section # of ‘Name’

was achieved on ... Date:

Where Final Completion is certified
the Latent Defects Liability Period

ends 5 years from the date of Final Completion Date:

Date

Signed by the principal agent who, as agent for the employer, certifies that the works has been completed in accordance
with the specified criteria for final completion on the date stated, irrespective of the date of signature of this certificate

Name and address of the principal agent’s practice

Page 550

Commentary

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
5.12 Certificate of Final Completion for use with PBA Edition 6.2
This certificate is similar to the format of the certificate of practical completion and is
to be completed and issued by the principal agent when he certifies that the works
as a whole, or a section where completion in sections is applicable, has achieved
final completion.
The principal agent is to insert the date on which the latent defects period ends in
the block provided. This date is five years from the date of final completion.

Page 551

5.13 Adjudication Rules

JBCC Adjudication Rules

(published: October 2014)

Forming part of the Adjudicator’s appointment, in terms of the dispute resolution
clause of–
The JBCC® Principal Building Agreement (PBA) and/or the JBCC® Nominated /
Selected Subcontract Agreement (NSA), or the JBCC® Minor Works Agreement
(MWA), or the MBSA Domestic Subcontract Agreement (DSA)
1.0 Interpretation
1.1 Adjudication is an accelerated form of dispute resolution in which a neutral
person determines the dispute as an expert and not as an arbitrator and
Copyright © 2019. Juta & Company, Limited. All rights reserved.

whose determination is binding unless and until varied or overturned by an

arbitration award
1.2 These rules may be varied by the mutual agreement of the parties in
conjunction with the adjudicator provided that, should an adjudicator have
been appointed, his consent to such variation shall not be unreasonably
withheld; failing which, these rules shall apply
The application of these rules shall be read in conjunction with the
‘Dispute Resolution’ clause of the listed agreements hereinafter referred to
as the agreement. The interpretation of other clauses in these
agreements are deemed to be incorporated in these rules

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
2.0 Appointment of the adjudicator
2.1 The parties shall appoint the adjudicator by mutual agreement at any time
but not later than five (5) working days after the date on which the
disagreement was deemed to be a dispute in terms of the Dispute
Resolution clause of the respective agreement(s)
2.2 Where the parties have failed to make an appointment within such period,
either party may request the Chairman of the Association of Arbitrators
(Southern Africa) to appoint an adjudicator and shall furnish the other
party with a copy of such request. No objection to such an appointment by
either party shall be admissible
2.3 The adjudicator shall notify the parties of his acceptance of the
appointment in terms of these rules within three (3) working days of the
date of receipt of the party’s request to appoint the adjudicator

Page 552

2.4 Should the appointment of the adjudicator be terminated in terms of rule

7.0 a replacement adjudicator shall be appointed
2.5 The adjudicator’s appointment shall be limited to the current dispute. The
parties may re-appoint the adjudicator should a further dispute arise during
the construction period on the same project
3.0 Terms of appointment of the adjudicator
3.1 The adjudicator shall at all times act impartially and independently of the
parties and shall inform the parties immediately of anything which could
affect his impartiality or independence
3.2 The adjudicator shall not give advice to the parties or their representatives
concerning any aspect of the agreement in respect of which he has been
appointed other than in accordance with these rules
3.3 The adjudicator shall treat all matters which have been referred to him for
adjudication as confidential and shall not disclose such information without
the prior written consent of the parties
Copyright © 2019. Juta & Company, Limited. All rights reserved.

3.4 The adjudicator may not be called as a witness by either party to give
evidence concerning the matter referred or adjudicated by him save as
may be necessary for a party to secure the enforcement of a
determination
3.5 The adjudicator shall not assign, delegate or obtain specialist assistance
related to his work under these rules without the prior approval of the
parties, which approval shall not be unreasonably withheld. The parties
shall respond to such request within three (3) working days failing which
approval by the parties shall be deemed to have been given

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
4.0 The fees of the adjudicator
4.1 The adjudicator shall be entitled to:
4.1.1 Be paid fees as notified by the adjudicator
4.1.2 Require the parties to pay an initial deposit and further deposits where
necessary in respect of his anticipated fees and disbursements. He shall
be entitled to suspend the adjudication procedure where a required
deposit is not paid within ten (10) working days of such request
4.1.3 Be reimbursed by the parties for disbursements reasonably incurred in
carrying out his duties. Where exceptional expenditure

Page 553

is contemplated the adjudicator shall obtain the prior approval of the

parties, which approval shall not be unreasonably withheld. Failure by a
party to respond to such request within three (3) working days shall be
deemed to be approval thereof
4.1.4 Exercise his lien on his determination until any outstanding amount(s) due,
owing and payable have been paid in full
4.2 Where a party fails to comply with a request for payment within the period
stipulated by the adjudicator the other party may make and recover such
payment from the defaulting party
4.3 All fees and disbursement due to the adjudicator shall be shared equally
by the parties unless otherwise directed by the adjudicator in his
determination. Such payments shall be made within ten (10) working days
of receipt of the adjudicator’s account for payment
4.4 The adjudicator shall (subject to rule 4.1.4) not be entitled to any fees or
disbursements where he knowingly breaches any of the provisions of rule
3.0, acts in bad faith or fails to submit a written determination of the
dispute to the parties in terms of rule 6.1. The adjudicator shall reimburse
the parties all fees and disbursements received from the parties where any
such breach, act of bad faith or failure occurs
Copyright © 2019. Juta & Company, Limited. All rights reserved.

5.0 Procedure
5.1 The referring party shall submit full details of a dispute arising in terms of
the ‘Dispute Resolution’ clause of the respective agreements, together
with copies of all relevant documents to the adjudicator for determination
on confirmation of the adjudicator’s appointment together with its notice of
adjudication in terms of such agreement(s). The adjudicator shall notify the
parties of the date of receipt of such details (the ‘referral date’)
5.2 The other party may submit a written response to the details of dispute not
later than ten (10) working days after the referral date
5.3 The claimant may:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
5.3.1 Within five (5) working days of receipt of the response from the other party
[5.2] submit a replication to the adjudicator and the other party
5.4 The adjudicator shall:
5.4.1 Act as an expert and not as an arbitrator in determining the dispute
5.4.2 Act independently with fairness and impartiality to both parties

Page 554

5.4.3 Ensure that each party is furnished with a copy of any written
communication sent to or received from either party
5.4.4 Meet in his sole discretion jointly with the parties together with any agent
or others involved in the dispute
5.4.5 Decide on the liability to be apportioned, if any, between the parties for the
payment of his fees and disbursements subject to rule 4.3
5.4.6 Adopt the most cost and time effective procedure consistent with fairness
to determine the dispute
5.5 The adjudicator may:
5.5.1 Conduct a hearing but is not obliged to do so
5.5.2 Determine the dispute on the basis of the submitted documents only
and/or an inspection of work related to the dispute as may be appropriate
5.5.3 On a written request of either party the adjudicator may grant an extension
of time for an action required of either party by a maximum of five (5)
working days. Further, the adjudicator, on his own discretion, may grant an
extension of time of (5) five working days in respect of the time available to
him, after receipt of the initial details of the dispute, the response from the
other party and receipt of the replication, if any, to deliver his determination
to the parties
5.5.4 Give notice of a hearing with the parties within five (5) working days of
such notice on a specified date and time and location. At such hearing the
adjudicator may adopt an inquisitorial procedure and shall observe
procedural fairness but shall not be obliged to comply with the rules of
evidence. The parties shall not be entitled to be represented at such
Copyright © 2019. Juta & Company, Limited. All rights reserved.

hearing by practicing lawyers

5.5.5 Decide on his own jurisdiction
5.5.6 Apply his specialist knowledge in determining the dispute
5.5.7 Require a party within a period determined by the adjudicator to submit
any further information, document or evidence which he may reasonably
require to make a determination
5.5.8 Open up, review and revise any opinion, instruction, determination,
certificate or valuation related to the dispute
5.5.9 Decide on the payment of interest in accordance with the agreement

5.5.10 Refuse admission to any persons other than the parties and their
respective representatives and witnesses to any hearings
5.5.11 Conclude the adjudication and make a determination notwithstanding a
party’s failure to attend meetings, hearings or to provide information
requested
6.0 Determination
6.1 The adjudicator’s written determination of the dispute shall:
6.1.1 Be delivered to the parties not later than ten (10) working days after
receipt of (a) the initial details of the dispute, (b) the response from the
other party and (c) receipt of the replication, if any (rule 5.3). The time limit
shall also be extended in respect of a delay caused by suspension of work
by the adjudicator in terms of rule 4.1.2
6.1.2 Include reasons for his decisions
6.1.3 Be delivered to the parties at their physical addresses as recorded in the
agreement or by facsimile or by E-mail. The parties shall give immediate
effect to any requirements of such determination
6.1.4 Be binding on the parties unless and until such determination of the
dispute is overturned or varied in whole or in part by an arbitration in terms
of the Dispute Resolution clause of the agreement
6.2 Either party may:
6.2.1 In writing request the adjudicator to correct any patent clerical or
arithmetical error or clarify any ambiguity in the determination. Such party
shall furnish the other party with a copy of such request within five (5)
working days of receipt of the determination. The adjudicator shall comply
with such request within a further five (5) working days
6.2.2 Apply to the High Court for the enforcement of the determination. The
parties shall accept the jurisdiction of such court
7.0 Termination of the appointment of the adjudicator
Copyright © 2019. Juta & Company, Limited. All rights reserved.

7.1 The adjudicator may resign his appointment by giving five (5) working
days notice to the parties

Page 556

7.2 The appointment of the adjudicator:

7.2.1 May be terminated at any time by the mutual agreement of the parties
7.2.2 Shall be deemed to be terminated should he not perform his duties within
ten (10) working days of receipt of a notice from either party specifying
such breach of his appointment. A copy of such notice shall be given to

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
the other party
7.3 The adjudicator shall not be liable for any claims in respect of any act or
omission in discharging his duties unless such act or omission is shown to
have been in bad faith
Dispute adjudication agreement – appointment of the adjudicator

Works *
Site *
CLAIMANT *
Physical address *
Electronic address *
Telephone number(s) *
DEFENDANT *
Physical address *
Electronic address *
Telephone number(s) *
ADJUDICATOR *
Physical address *
Electronic address *
Telephone number(s) *
Law of the country *

The parties have entered into the agreement for the execution of the works on the
site and desire to appoint the adjudicator – as recorded above;
The parties and the adjudicator jointly agree that – the agreement(s) and these
JBCC® Adjudication Rules (October 2014) and this Dispute Adjudication Agreement
are deemed to be mutually explanatory of one another. In the event of ambiguity,
discrepancy, divergence or inconsistency in or between them,

this Dispute Adjudication Agreement shall prevail over all other contract documents.
The following fees of the adjudicator in terms of rule 4.1 shall be paid by the
parties:
An hourly or daily fee of:
A deposit of:
Disbursements to cover . . .
The parties jointly undertake to pay the adjudicator the consideration due in
accordance with these JBCC Adjudication Rules

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
Signed by Signed by Signed by
For and on behalf of the Claimant For and on behalf of the Defendant For and on behalf of the Adjudicator
(......................................) (...............................) (..................................)
In the presence of In the presence of In the presence of
Witness Witness Witness
Name Name Name
Address Address Address
Date Date Date
TIMETABLE not part of the JBCC® Adjudication Rules
Disagreement not resolved = Notice of dispute within 10 working days

Appointment of adjudicator

Confirm fees/pay deposit

Claimant submits details

Adjudicator: Receipt of details = referral date
Response by other party . . . 15 working days = 15 working days
Replication 25 working days = 25 working days

Adjudicator: may convene hearing (05 working days)
Adjudicator: formulate determination (from 10 (+5) working days = 35–40 working days
referral/replication)
Parties request corrections etc 05 working days = 40–45 working days
Adjudicator makes corrections, etc 05 working days = 45–50 working days

Page 558

Commentary
It is strongly recommended that at the first meeting with the disputing parties, the
adjudicator presents the parties with a copy of the above Adjudication Agreement for
signature even if the adjudicator has already submitted a letter of appointment to the
parties.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Practical Completion Guidelines

5.14 Guideline description for practical completion

Definition Per PBA 6.2
PRACTICAL COMPLETION: The stage of completion as certified by the
principal agent where the works or a section thereof has been completed free
of patent defects other than minor defects identified in the list for completion
and can be used for the intended purpose [CD]

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
The fact that works completion has been removed from the PBA puts
greater emphasis on having a detailed definition for practical completion in the
CD which tenderers will be required to allow for in the compilation of their
tenders.
Recommended wording for various project types to be included in the CD
1 Residential – Private dwelling
The stage of completion where the principal agent has certified that works may be
occupied by the owner/tenant with minor disruption to carry out remedial work during
the defects liability period to achieve final completion
2 Flats/Cluster home/Townhouse/Hostels
The stage of completion where the principal agent has certified that works may be
occupied by the owner/tenant after all work listed on the List for Practical Completion
has been completed and can be used without disruption to the owner/tenant
[COMMENT: The reason for this state of practical completion is that once
occupied, the premises may, in most instances, not be accessible to the contractor
to attend to any outstanding defects. Certain developers previously relied on only
taking occupation on the achievement of works completion when using the PBA
Edition 5.0.]
3 Residential – Hotel and/or Retirement home
The stage of completion where the principal agent has certified that the works may
be occupied by the owner/tenant for the purpose of installing built in furniture, fittings
and equipment (FF&E) and with minor disruption to carry

Page 559

out remedial work during the defects liability period to achieve final completion
4 Industrial buildings – Warehouse/Factory/Distribution centres
Copyright © 2019. Juta & Company, Limited. All rights reserved.

The stage of completion where the principal agent has certified that the works may
be occupied by the owner/tenant for the purpose of installing built in fixtures, fittings,
plant and equipment and where loading bays and parking areas are available for
owner/tenant use and with minor disruption to carry out remedial work during the
defects liability period to achieve final completion
5 Commercial – Office buildings
The stage of completion where the principal agent has certified that the works may
be occupied by the owner/tenant with minor disruption to carry out remedial work
during the defects liability period to achieve final completion

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
6 Commercial – Shopping centres
The stage of completion where the principal agent has certified that the works may
be occupied by the owner/tenant for the purpose of installing built in fixtures, fittings,
plant and equipment and where loading bays and parking areas are available for
owner/tenant use and with minor disruption to carry out remedial work during the
defects liability period to achieve final completion
7 Buildings for education – Schools/Universities/Colleges
The stage of completion where the principal agent has certified that the works may
be occupied by the owner/tenant for the purpose of installing built-in fixtures, fittings,
and equipment with minor disruption to carry out remedial work during the defects
liability period to achieve final completion
8 Correctional services – Prisons
The stage of completion where the principal agent has certified that the works may
be occupied by the owner/tenant and all remedial work as listed by the principal
agent in a List for Practical Completion has been completed
[COMMENT: The reason for this state of practical completion is that once
occupied, the premises, due to security reasons may not be accessible to the
contractor to attend to any work during the defects liability period.]

Page 560

9 Health care buildings – Hospitals/Clinics

The stage of completion where the principal agent has certified that the works may
be occupied by the owner/tenant and all remedial work as listed by the principal
agent in the List for Practical Completion has been completed
[COMMENT: The reason for this state of practical completion is that once
occupied and in use, the premises, due to health and sanitary reasons may not be
accessible to the contractor to attend to any work during the defects liability period.]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

10 Public buildings – Theatres/Museums/Libraries/Fire stations

The stage of completion where the principal agent has certified that the works may
be occupied by the owner/tenant for the purpose of installing built in fixtures, fittings,
plant and equipment and where loading bays and parking areas are available for
owner/tenant use and with minor disruption to carry out remedial work during the
defects liability period to achieve final completion
11 Other
To be described by the principal agent in the CD when preparing the tender enquiry
document and should cover the specific building type if not listed above

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
[COMMENT: In certain instances where the occupier of the building may have
strict security requirements, access control systems and other confidential
requirements, the certifying of practical completion by the principal agent may need
to include a clause providing for all work listed on the List for Practical Completion to
have been completed prior to the issuing of the certificate of practical completion as,
here again, the contractor would not be able to easily gain access to the building to
carry out remedial work during the defects liability period.]

5.15 Guidelines for completing a payment certificate

The same form is used for both interim and final payment certificates, the status of
the certificate being indicated in the box at the top right-hand corner below the
certificate number. Certificates should be consecutively numbered, and the number
indicated in the box above interim or final.
The names of the employer and the contractor, and the description of the works
and identification of the site, should all be as stated in the CD to the PBA.

Page 561

The three boxes below the site identification are to be filled in with the valuation
date, the date of issue of the certificate and the date on which payment is due, the
latter being the date calculated in terms of clause 25.7 which is 14 calendar days
from the date of issue unless otherwise stated in the CD.
The certificate presents four sets of information in four columns, being,
respectively, A: Contract sum, B: Current contract value, C: Current valuation and D:
Current certification.
Column A: Contract sum – sets out the components of the contract sum and in
box A14.0 shows the total contract sum, inclusive of VAT, which is stated in the CD
to the PBA. The amounts in this column remain unchanged for the duration of the
contract.
Column B: Current contract value – the value of variations consequent on
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contract instructions and cost fluctuations (where applicable) is added to the

information in column A, and box B14.0 shows the adjusted value of the contract,
inclusive of VAT, as at the date of the certificate. A comparison between the values in
box A14.0 and B14.0 indicates whether the employer’s payment obligations have
increased during the construction period, and if so, by how much. While the
information in columns A and B is not essential to the certificate, it is helpful in
monitoring cost increases or decreases and is used in calculating the percentage
work completed.
Column C: Current Valuation – this does not present a total amount, but
indicates the value of work executed, valuation of materials both on and off the site

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
and the adjustment, if applicable of the security and the information in it is carried
across to column D.
Column D: Current certification – presents, in box D15.0, the amount certified
as due and payable either by the employer to the contractor or by the contractor to
the employer in the month in question, and in this column the various amounts that
add to or reduce the amount certified for payment are indicated.
The total value of work that has been executed at the date of valuation is shown
in box D11.0. This should be valued at the rates shown in the bills of quantities or
priced document in accordance with clause 25.3 and should include the value of
work carried out by nominated and selected subcontractors, the actual or estimated
value of such variations as may have been executed by the date of valuation, and a
proportion of preliminaries. [1] It should exclude any provision for cost fluctuations or
tax. This valuation is

Page 562

prepared usually by the quantity surveyor and issued in the payment certificate by
the principal agent.
In box C2.1 the value of materials and goods on site is stated, and in box C2.2
the value of goods and materials off site is shown. Again, these amounts should
exclude any provision for cost fluctuations or tax.
The total of the amounts in boxes C1.0, C2.1 and C2.2 should be inserted in box
C3.0. Where any security other than a fixed construction guarantee has been
provided by the contractor, the percentage adjustment should be inserted in the %
box in line 4.0, and the total shown in box C4.0. The security adjustment amount
should be deducted from the subtotal in box C3.0 and the resultant amount be
inserted in box D4.0. Where a fixed guarantee for construction has been provided,
0.00 should be inserted in the % box, and the appropriate adjustment [2] shown in the
adjoining box. The amount to be stated in box D4.0 is to be adjusted as provided for
in the guarantee for construction as the case may be. [3]
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Boxes A5.0 and B5.0 show the net contract amount, ie the amount shown in the
contract data, contractor’s tender less any provisional allowance that might have
been included in respect of cost fluctuations and less tax.
Box B6.0 should state the total value, actual or estimated, of all variations ordered
in terms of clause 17.0. This would include the adjustment of nominated and
selected subcontract amounts and prime cost amounts, where known, against the
amounts provisionally allowed for them in the contract sum. Any budgetary
allowances and contingency sums should be deducted, including any provisional
amount allowed in respect of cost fluctuations. Once again, these amounts should
exclude tax.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
The total amount in box D7.0 represents the total value of work done and
materials provided to the date of valuation.
Box D8.0 shows the total value of work done and materials provided in the
previous certificate, in other words, the amount shown in box D7.0 of the previous
certificate. The difference between the amounts in boxes D8.0 and D7.0 represents
the net amount certified for the period since the date of the previous certificate.

Page 563

This amount is now subject to adjustment in respect of items in the recovery

statement which is to be issued concurrently with the payment certificate, and which
will need to be completed before this certificate can be completed. In box D10.1 the
amount of expense or loss due by the contractor to the employer should be inserted,
as shown in box C1.1 of the recovery statement, and in box D10.2 the amount of
penalties due should be shown as in box C1.2 of the recovery statement. Should the
employer be liable to the contractor for damages in terms of clause 27.1.8, [4] this
amount would be shown in box D2.1 of the recovery statement and should be
inserted in box D10.3 of the payment certificate.
Columns A, B and D are sub-totalled in line 11.0, and in line 12.0, tax is calculated
on each amount and shown.
Box D13.1 shows any interest due by the contractor to the employer as shown in
box C1.3 of the recovery statement, and box D13.2 shows any interest due by the
employer to the contractor, as shown in box C2.1 of the recovery statement. The
total amount of the items in boxes D11.0, D12.0, D13.1 (which would be a negative
amount) and D13.2 is to be inserted in box D15.0. If this is a positive amount, it
would represent an amount due and owing by the employer to the contractor, and
the word ‘contractor’ would be inserted in the box in line 15.0, but if it is a negative
amount, it would represent an amount due and owing by the contractor to the
employer and the word ‘employer’ would be inserted in the box.
In line 16.0, the quotient of the amount stated in box D7.0 divided by the amount
shown in box A11.0, expressed as a percentage, indicates the percentage of the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

contract sum executed. [5] In the four boxes underneath, the appropriate stage of
completion should be shown as an indication of the required level of security in
terms of clause 11.0. [6]

Page 564

It is important that the person who signs the certificate is the person identified in
the contract data as the principal agent or who has been properly authorised to sign
on behalf of the principal agent.

Security for Construction

For use with the JBCC® Principal Building Agreement state edition/date

GUARANTOR DETAILS

Guarantor:

Physical address:

Guarantor’s signatory 1: Capacity

Guarantor’s signatory 2: Capacity

Employer:

Contractor:

Principal Agent:

Site:

Name of Signatory:

Contract Sum: Accepted amount inclusive of tax Currency

. . . amount in words:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

Guaranteed Sum: The maximum aggregate amount Currency

. . . amount in words:

Security for Construction (insert variable or fixed) Expiry date

AGREEMENT DETAILS

Sections Total number / not Last section
applicable

Principal Agent issues ‘JBCC® format Interim Payment Certificates, the Final Payment Certificate, the Certificate
of Practical Completion and the Certificate of Final Completion

1.0 SECURITY for CONSTRUCTION (Variable)

1.1 Where a Security for Construction (Variable) in terms of the Agreement has been selected this clause 1.0 and 3.0 to
13.0 shall apply. The Guarantor’s liability shall be limited to the diminishing amounts of the Guaranteed Sum as
follows:

GUARANTOR’S LIABILITY PERIOD OF LIABILITY

1.1.1 Maximum Guaranteed Sum (not exceeding 10.0% of the From and including the date of issue of this Security for
contract sum) in the amount of: Construction and up to and including the date of issue of
the interim payment certificate certifying in excess of
50% of the contract sum

1.1.2 Reducing to the Guaranteed Sum (not exceeding 6.0% of From and including the day after the date of the
the contract sum) in the amount of: aforesaid interim payment certificate and up to and
including the date of issue of the only Certificate of
Practical Completion or last Certificate of Practical
Completion where there are sections

Amount in words:

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
1.1.3 Reducing to the Guaranteed Sum (not exceeding 4.0% of From and including the day after the date of the
the contract sum) in the amount of: applicable Certificate of Practical Completion and up to
and including the date of issue of the only Certificate of
Final Completion or the last Certificate of Final
Completion where there are sections

Amount in words:

1.1.4 Reducing to the Guaranteed Sum (not exceeding 2.0% of From and including the day after the date of the
the contract sum) in the amount of: applicable Certificate of Final Completion and up to and
including the date of issue of the Final Payment
Certificate where payment is due to the Contractor,
whereafter this Security for Construction shall expire.
Where the Final Payment Certificate reflects payment
due to the Employer this Security for Construction shall
expire upon payment of the full amount certified

Amount in words:

1.2 The Guarantor’s liability limits set out in 1.1.1 to 1.1.4 shall apply in respect of any claim received by the Guarantor
during the Security validity
2.0 SECURITY for CONSTRUCTION (Fixed)
2.1 Where a Security for Construction (Fixed) in terms of the Agreement has been selected this clause 2.0 and 3.0 to 13.0
shall apply. The Guarantor’s liability shall be limited to the amount of the Guaranteed Sum as follows:-

GUARANTOR’S LIABILITY PERIOD OF LIABILITY

Maximum Guaranteed Sum (not exceeding 5,0% of the From and including the date of issue of this Security for
contract sum) in the amount of: Construction and up to and including the date of the only
Certificate of Practical Completion or the last Certificate
of Practical Completion where there are sections,
whereafter this Security for Construction shall expire
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Amount in words:

3.0 The Guarantor acknowledges that:-

3.1 Any reference in this Security for Construction to the Agreement is made for the purpose of convenience and shall not
be construed as any intention to create an accessory obligation or any intention to create a suretyship
3.2 Its obligation under this Security for Construction is restricted to the payment of money

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
3.3 Reference to a recovery statement or an Interim or Final Payment Certificate, or a Certificate(s) of Practical or Final
Completion shall mean such certificate issued by the Principal Agent
4.0 Subject to the Guarantor’s maximum liability referred to in clauses 1.0 or 2.0, the Guarantor hereby undertakes to pay
the Employer the sum certified upon receipt of the documents identified in 4.1 to 4.3:-
4.1 A copy of a first written demand notice issued by the Employer to the Contractor stating that payment of a sum certified
by the Principal Agent in an interim or Final Payment Certificate has not been made in terms of the Agreement and
failing such payment within seven (7) calendar days, the Employer intends to call upon the Guarantor to make
payment in terms of 4.2
4.2 A first written demand notice issued by the Employer to the Guarantor at the Guarantor’s physical address with a copy
to the Contractor stating that a period of seven (7) calendar days has elapsed since the issue of the first written
demand notice in terms of 4.1 and that the sum certified has not been paid to date. The Employer herewith calls up
this Security for Construction and demands payment of the sum certified from the Guarantor
4.3 A copy of the applicable payment certificate which entitles the Employer to receive payment in terms of the Agreement
of the sum certified in 4.0
5.0 Subject to the Guarantor’s maximum liability referred to in 1.0 or 2.0, the Guarantor undertakes to pay the Employer
the Guaranteed Sum or the full outstanding balance upon receipt of a first written demand notice from the Employer to
the Guarantor at the Guarantor’s physical address calling up this Security for Construction stating that:-
5.1 The Agreement has been terminated due to the Contractor’s default and that the Security for Construction is called up
in terms of 5.0. The demand notice shall enclose a copy of the notice of termination; or
5.2 A provisional sequestration or liquidation court order has been granted against the Contractor and that the Security for
Construction is called up in terms of 5.0. The demand notice shall enclose a copy of the court order
6.0 The aggregate amount of payment to be made by the Guarantor in terms of 4.0 and 5.0 shall not exceed the
Guarantor’s maximum liability in terms of 1.0 or 2.0
7.0 Where the Guarantor is a registered insurer and has made payment in terms of 5.0, the Employer shall within one
hundred and eighty (180) calendar days of receipt of payment submit an expense account to the Guarantor showing
how all monies received in terms of the Security for Construction have been expended, or will be expended, and shall
refund to the Guarantor any surplus amount. All monies refunded to the Guarantor in terms of this Security for
Construction shall bear interest at the prime overdraft rate of the Employer’s bank compounded monthly and
calculated from the date of payment by the Guarantor to the Employer until the date of refund
8.0 Payment by the Guarantor in terms of 4.0 or 5.0 shall be made within seven (7) calendar days upon receipt of the first
written demand notice to the Guarantor
9.0 The Employer shall have the absolute right to arrange his affairs with the Contractor in any manner which the
Employer deems fit and the Guarantor shall not have the right to claim his release from this Security for Construction
on account of any conduct alleged to be prejudicial to the Guarantor
10.0 The Guarantor chooses the physical address stated above for all transactions in relation to this security
11.0 This Security for Construction is neither negotiable nor transferable and shall expire in terms of either 1.1.4 or 2.1, or
on payment in full of the Guaranteed Sum or on the Security expiry date, whichever is the earlier, where after no
claims will be considered by the Guarantor. The original Security for Construction form shall be returned to the
Guarantor after it has expired
12.0 This Security for Construction, with the required demand notices in terms of 4.0 or 5.0, shall be regarded as a liquid
document for the purpose of obtaining a court order
Copyright © 2019. Juta & Company, Limited. All rights reserved.

13.0 Where this Security for Payment is issued in the Republic of South Africa the Guarantor hereby consents to the
jurisdiction of a court in the area where the project is located

Signed at Date

Guarantor’s Signatory 1 Guarantor’s Signatory 2

Guarantor’s seal or stamp

Security for Payment

For use with the JBCC® Principal Building state
Agreement edition/date

For use with the JBCC Minor Works Agreement
® state
edition/date

GUARANTOR DETAILS AND DEFINITIONS

Principal Agent

Works

Site

Contract Sum Accepted amount Currency
inclusive of tax

… amount in words

Guaranteed Sum Currency

Security expiry date

AGREEMENT DETAILS

Principal Agent issues JBCC® format Interim Payment Certificates and a Final Payment Certificate

1.0 The Guarantor acknowledges that:-

1.1 Any reference in this Security for Payment to the Agreement is made for the purpose of convenience and
shall not be construed as any intention to create an accessory obligation or any intention to create a
suretyship

1.2 Its obligation under this Security for Payment is restricted to the payment of money

1.3 Reference to a Certificate of Practical Completion or to a Certificate of Final Completion shall mean such
certificate issued by the Principal Agent
2.0 Subject to the Guarantor’s maximum liability in terms of the Guaranteed Sum, the Guarantor undertakes to pay the
Contractor the sum certified upon receipt of the documents identified in 2.1 to 2.3:-

2.1 A copy of a first written demand notice issued by the Contractor to the Employer stating that payment of a
sum certified by the Principal Agent has not been made in terms of the Agreement and failing such
payment within seven (7) calendar days, the Contractor intends to call upon the Guarantor to make
payment in terms of 2.2

2.2 A first written demand notice issued by the Contractor to the Guarantor at the Guarantor’s physical address
with a copy to the Employer stating that a period of seven (7) calendar days has elapsed since the date of
issue of the first written demand notice in terms of 2.1 and that the sum certified has not been paid to date.
The Contractor herewith calls up this Security for Payment and demands payment of the sum certified from
the Guarantor

2.3 A copy of the payment certificate which entitles the Contractor to receive payment in terms of the
Agreement of the sum certified in 2.0
3.0 Subject to the Guarantor’s maximum liability in terms of the Guaranteed Sum, the Guarantor hereby undertakes to
pay the Contractor the demanded sum upon the receipt of the documents identified in 3.1 and 3.2:-

3.1 A copy of a first written demand notice issued by the Contractor to the Employer stating that the Contractor
demands the issue of a payment certificate and failing such issue within seven (7) calendar days, the
Contractor intends to call upon the Guarantor to make payment in terms of 3.2 of the demanded sum as set
out in the demand

3.2 A first written demand notice issued by the Contractor to the Guarantor at the Guarantor’s physical address
with a copy to the Employer stating that a period of seven (7) calendar days has elapsed since the issue of
a first written demand notice in terms of 3.1 and that a payment certificate has still not been issued. The
Contractor herewith calls up this Security for Payment and demands payment of the demanded sum from
Copyright © 2019. Juta & Company, Limited. All rights reserved.

the Guarantor
4.0 The aggregate amount of payments to be made by the Guarantor in terms of 2.0 and 3.0 shall not exceed the
Guaranteed Sum
5.0 Where the Guarantor is a registered insurer and has made payment in terms of 3.0, the Contractor shall within one
hundred and eighty (180) calendar days of receipt of payment submit an expense account to the Guarantor showing
how all monies received in terms of the Security for Payment have been expended, or will be expended, and shall
refund to the Guarantor any surplus amount. All monies refunded to the Guarantor in terms of this Security for
Payment shall bear interest at the prime overdraft rate of the Contractor’s bank compounded monthly and calculated
from the date of payment by the Guarantor to the Contractor until the date of refund
6.0 The Guarantor shall make payment in terms of 2.0 or 3.0 within seven (7) calendar days of receipt of the first written
demand notice to the Guarantor
7.0 The Contractor shall have the absolute right to arrange his affairs with the Employer in any manner which he deems
fit and the Guarantor shall not have the right to claim his release on account of any conduct alleged to be prejudicial

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
to the Guarantor
8.0 The Guarantor chooses the physical address stated above for all transactions in connection with this Security

9.0 This Security for Payment is neither negotiable nor transferable and shall expire upon payment of the final payment
certificate in terms of the Agreement or on payment in full of the Guaranteed Sum or on the Security expiry date,
whichever is the earlier, whereafter no claims will be considered by the Guarantor. The original Security for Payment
form shall be returned to the Guarantor after it has expired
10.0 This Security for Payment, with the required demand notices in terms of 2.0 or 3.0, shall be regarded as a liquid
document for the purpose of obtaining a court order
11.0 Where this Security for Payment is issued in the Republic of South Africa the Guarantor hereby consents to the
jurisdiction of a court in the area where the project is located

Signed at Date

Guarantor’s Signatory 1 Guarantor’s Signatory 2

Witness Witness

Guarantor’s seal or stamp

Security for Advance Payment

For use with JBCC® Principal Building Agreement state edition/date

For use with JBCC NSSA Subcontract Agreement
® state edition/date

GUARANTOR DETAILS

Guarantor:

Physical address:

Guarantor’s signatory 2: Capacity

Employer:

Recipient:

Contractor:

Principal Agent:

Works:

Site:

Guaranteed Advance Payment Sum (maximum aggregate amount) Currency

. . . amount in words:

1.0 SECURITY FOR ADVANCE PAYMENT

1.1 The particulars of the recoupment of the guaranteed Advance Payment sum are set out in the following schedule:-

Recoupment period (no. of months)

Recoupment period commencement (start month)

Monthly recoupment (amount)

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

Note: Where the recoupment amounts and/or periods are

irregular a schedule of recoupment amounts and dates must
be attached

1.2 The Guarantor’s liability shall be limited to the outstanding diminishing amounts of the guaranteed Advance Payment
sum as follows:
1.2.1 The guaranteed Advance Payment sum on receipt thereof by the Recipient
1.2.2 The full outstanding balance after the deduction of each recoupment made in terms of the monthly payment certificate
as stated in 1.1
1.2.3 After the deduction of the last scheduled recoupment payment or on settlement of the full outstanding balance this
Security for Advance Payment shall expire
2.0 The Guarantor acknowledges that:Ã‚Â
2.1 Any reference in this Security for Advance Payment to the Agreement is made for the purpose of convenience and
shall not be construed as any intention to create an accessory obligation or any intention to create a suretyship
2.2 Its obligation under this Security for Advance Payment is restricted to the payment of money
2.3 Reference to a recovery statement or a Payment Certificate shall mean such certificate issued by the Principal Agent
3.0 Subject to the Guarantor’s maximum liability referred to in 1.0 the Guarantor undertakes to pay the Employer the sum
certified on receipt of the documents identified in 3.1 to 3.3:-
3.1 A copy of a first written demand notice issued by the Employer to the Recipient stating that payment of a sum certified
by the Principal Agent has not been made in terms of the Agreement and failing such payment within seven (7)
calendar days, the Employer intends to call upon the Guarantor to make payment in terms of 3.2
3.2 A first written demand notice issued by the Employer to the Guarantor at the Guarantor’s physical address with a copy
to the Recipient stating that a period of seven (7) calendar days has elapsed since the issue of the first written demand
notice in terms of 3.1 and that the sum certified has not been paid to date. The Employer herewith calls up this
Security for Advance Payment and demands payment of the sum certified from the Guarantor
3.3 A copy of the recovery statement and payment certificate which entitles the Employer to receive payment in terms of
the Agreement of the sum certified in 3.0
4.0 Subject to the Guarantor’s maximum liability referred to in 1.0 the Guarantor undertakes to pay the Employer the
guaranteed Advance Payment sum or the full outstanding balance upon receipt of a first written demand notice from
the Employer to the Guarantor at the Guarantor’s physical address calling up this Security for Advance Payment
stating that:-
4.1 The Agreement has been terminated due to the Recipient’s default and that the Security for Advance Payment is
called up in terms of 4.0. The demand notice shall enclose a copy of the notice of termination; or
4.2 A provisional sequestration or liquidation court order has been granted against the Recipient and that the Security for
Advance Payment is called up in terms of 4.0. The demand notice shall enclose a copy of the court order
5.0 The aggregate amount of payments to be made by the Guarantor in terms of 3.0 and 4.0 shall not exceed the
Guarantor’s maximum liability in terms of 1.0
Copyright © 2019. Juta & Company, Limited. All rights reserved.

6.0 Payment by the Guarantor in terms of 3.0 or 4.0 shall be made within seven (7) calendar days on receipt of the first
written demand notice to the Guarantor
7.0 The Employer shall have the absolute right to arrange his affairs with the Recipient in any manner which the Employer
deems fit and the Guarantor shall not have the right to claim his release from this Security for Advance Payment on
account of any conduct alleged to be prejudicial to the Guarantor
8.0 The Guarantor chooses the physical address as stated above for all transactions in connection with this Security
9.0 This Security for Advance Payment is neither negotiable nor transferable and shall expire upon payment of the final
payment certificate in terms of the Agreement or on payment in full of the guaranteed Advanced Payment Sum or on
the expiry date of the Security, whichever is the earlier, whereafter no claims will be considered by the Guarantor. The
original Security for Advance Payment form shall be returned to the Guarantor after it has expired
10.0 This Security for Advance Payment, with the required demand notices in terms of 3.0 or 4.0, shall be regarded as a
liquid document for the purpose of obtaining a court order

Guarantor’s Signatory 1 Guarantor’s Signatory 2

Witness Witness

Guarantor’s seal or stamp

NSSA Security for Construction

For use with the JBCC® NSSA Subcontract state
Agreement edition/date

Guarantor’s signatory 2 Capacity

Contractor

Subcontractor

Principal Agent

Works

Site

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
Name of Signatory

Contract Sum Accepted amount Currency
inclusive of vat

… amount in words

Guaranteed Sum The maximum Currency
aggregate amount

… amount in words

Security for Construction (insert variable or fixed) Expiry date

AGREEMENT DETAILS

Sections Total number/not Last section
applicable

Contractor issues ‘JBCC® format Interim Payment Advices, the Final Payment Advice
Principal Agent issues ‘JBCC® format Interim Payment Certificates, the Final Payment Certificate, the
Certificate(s) of Practical Completion and the Certificate(s) of Final Completion

1.0 SECURITY for DEPOSIT

1.1 Where a NSSA Security for Construction (Variable) in terms of the Agreement has been selected this
clause 1.0 and 3.0 to 13.0 shall apply. The Guarantor’s liability shall be limited to the diminishing amounts
of the Guaranteed Sum as follows:-

GUARANTOR’S LIABILITY PERIOD OF LIABILITY

1.1.1 Maximum Guaranteed Sum (not From and including the date of issue of this NSSA
exceeding 5,0% of the subcontract sum) in Security for Construction and up to and including
the amount of: the date of issue of the interim payment advices
certifying in excess of 50% of the contract sum

Amount in words:

Copyright © 2019. Juta & Company, Limited. All rights reserved.

1.1.2 Reducing to the Guaranteed Sum (not From and including the day after the date of the
exceeding 6.0 % of the subcontract sum) aforesaid interim payment advice and up to and
in the amount of including the date of issue of the only Certificate of
Practical Completion or last Certificate of Practical
Completion where there are sections

Amount in words:

1.1.3 Reducing to the Guaranteed Sum (not From and including the day after the date of the
exceeding 4.0% of the subcontract sum) in applicable Certificate of Practical Completion and
the amount of: up to and including the date of issue of the only
Certificate of Final Completion or the last Certificate
of Final Completion where there are sections

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

Amount in words:

1.1.4 Reducing to the Guaranteed Sum (not From and including the day after the date of the
exceeding 2.0% of the subcontract sum) in applicable Certificate of Final Completion and up to
the amount of: and including the date of issue of the Final Payment
Advice where payment is due to the Subcontractor,
whereafter this NSSA Security for Construction
shall expire. Where the Final Payment Certificate
reflects payment due to the Contractor this NSSA
Security for Construction shall expire upon payment
of the full amount certified

Amount in words:

1.2 The Guarantor’s liability limits set out in 1.1.1 to 1.1.4 shall apply in respect of any claim received by the
Guarantor during the Security validity period
2.0 SECURITY for CONSTRUCTION (Fixed)

2.1 Where a NSSA Security for Construction (Fixed) in terms of the Agreement has been selected this clause
2.0 and 3.0 to 13.0 shall apply. The Guarantor’s liability shall be limited to the amount of the Guaranteed
Sum as follows:-

GUARANTOR’S LIABILITY PERIOD OF LIABILITY

Maximum Guaranteed Sum (not exceeding 5,0% of From and including the date of issue of this NSSA
the subcontract sum) in the amount of: Security for Construction and up to and including
the date of the only Certificate of Practical
Completion or the last Certificate of Practical
Completion where there are sections, whereafter
this NSSA Security for Construction shall expire

Amount in words:

3.0 The Guarantor acknowledges that:-

3.1 Any reference in this NSSA Security for Construction to the Agreement is made for the purpose of
convenience and shall not be construed as any intention to create an accessory obligation or any intention
Copyright © 2019. Juta & Company, Limited. All rights reserved.

to create a suretyship

3.2 Its obligation under this NSSA Security for Construction is restricted to the payment of money

3.3 Reference to a recovery statement or a interim or final Payment Advice shall mean such advice issued by
the Contractor Reference to a recovery statement or an Interim or Final Payment Certificate, or a
Certificate(s) of Practical or Final Completion shall mean such certificate issued by the Principal Agent
4.0 Subject to the Guarantor’s maximum liability referred to in clauses 1.0 or 2.0 , the Guarantor undertakes to pay the
Contractor the sum certified on receipt of the documents identified in 4.1 to 4.3:-

4.1 A copy of a first written demand notice issued by the Contractor to the Subcontractor stating that payment
of a sum certified by the Principal Agent in an interim or Final Payment Certificate has not been made in
terms of the Agreement and failing such payment within seven (7) calendar days, the Contractor intends to
call upon the Guarantor to make payment in terms of 4.2

4.2 A first written demand notice issued by the Contractor to the Guarantor at the Guarantor’s physical address
with a copy to the Subcontractor stating that a period of seven (7) calendar days has elapsed since the

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
issue of the first written demand notice in terms of 4.1 and that the sum certified has not been paid to date.
The Contractor herewith calls up this Security for Construction and demands payment of the sum certified
from the Guarantor

4.3 A copy of the applicable payment advice which entitles the Contractor to receive payment in terms of the
Agreement of the sum certified in 4.0
5.0 Subject to the Guarantor’s maximum liability referred to in 1.0 or 2.0 , the Guarantor undertakes to pay the
Contractor the Guaranteed Sum or the full outstanding balance upon receipt of a first written demand notice from the
Contractor to the Guarantor at the Guarantor’s physical address calling up this NSSA Security for Construction
stating that:-

5.1 The Agreement has been terminated due to the Subcontractor’s default and that the NSSA Security for
Construction is called up in terms of 5.0. The demand notice shall enclose a copy of the notice of
termination; or

5.2 A provisional sequestration or liquidation court order has been granted against the Subcontractor and that
the NSSA Security for Construction is called up in terms of 5.0. The demand notice shall enclose a copy of
the court order
6.0 The aggregate amount of payments to be made by the Guarantor in terms of 4.0 and 5.0 shall not exceed the
Guarantor’s maximum liability in terms of 1.0 or 2.0
7.0 Where the Guarantor is a registered insurer the Contractor shall within one hundred and twenty (120) calendar days
of receipt of payment submit an expense account to the Guarantor showing how all monies received in terms of the
NSSA Security for Construction have been expended, or will be expended, and shall refund to the Guarantor any
surplus amount. All monies refunded to the Guarantor in terms of this NSSA Security for Construction shall bear
interest at the prime overdraft rate of the Contractor’s bank compounded monthly and calculated from the date
payment at the prime overdraft rate of the Contractor’s bank compounded monthly and calculated from the date of
payment by the Guarantor to the Contractor until the date of refund
8.0 Payment by the Guarantor in terms of 4.0 or 5.0 shall be made within seven (7) calendar days upon receipt of the
first written demand notice to the Guarantor
9.0 The Contractor shall have the absolute right to arrange his affairs with the Subcontractor in any manner which the
Contractor deems fit and the Guarantor shall not have the right to claim his release from this NSSA Security for
Construction on account of any conduct alleged to be prejudicial to the Guarantor
10.0 The Guarantor chooses the physical address stated above for all transactions in connection with this Security
11.0 This NSSA Security for Construction is neither negotiable nor transferable and shall expire in terms of either 1.1.4 or
2.1, or payment in full of the Guaranteed Sum or on the Security expiry date, whichever is the earlier, whereafter no
claims will be considered by the Guarantor. The original NSSA Security for Construction form shall be returned to the
Guarantor after it has expired
Copyright © 2019. Juta & Company, Limited. All rights reserved.

12.0 This NSSA Security for Construction, with the required demand notices in terms of 4.0 or 5.0, shall be regarded as a
liquid document for the purpose of obtaining a court order
13.0 Where this NSSA Security for Payment is issued in the Republic of South Africa the Guarantor hereby consents to
the jurisdiction of a court in the area where the project is located

Signed at Date

Guarantor’s Signatory 1 Guarantor’s Signatory 2

Witness Witness

Guarantor’s seal or stamp

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

NSSA Security for Payment

For use with the JBCC® NSSA Subcontract state
Agreement edition/date

GUARANTOR DETAILS

Guarantor

Physical address

Guarantor’s signatory 1 Capacity

Guarantor’s signatory 2 Capacity

Employer

Contractor

Subcontractor

Principal Agent

Copyright © 2019. Juta & Company, Limited. All rights reserved.

N/S Works

Site

Subcontract Sum Accepted amount Currency
inclusive of tax

… amount in words

Guaranteed Sum Currency

… amount in words

Security expiry date

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

AGREEMENT DETAILS

Contractor issues JBCC® format Payment Advice and a Final Payment Advice

1.0 The Guarantor acknowledges that:-

1.1 Any reference in this NSSA Security for Payment to the Agreement is made for the purpose of convenience
and shall not be construed as any intention to create an accessory obligation or any intention to create a
suretyship

1.2 Its obligation under this NSSA Security for Payment is restricted to the payment of money

1.3 Reference to a Payment Advice or a final Payment Advice shall mean such advice issued by the Contractor
2.0 Subject to the Guarantor’s maximum liability in terms of the Guaranteed Sum, the Guarantor undertakes to pay the
Subcontractor the sum certified upon receipt of the documents identified in 2.1 to 2.3:-

2.1 A copy of a first written demand notice issued by the Subcontractor to the Contractor stating that payment
of a sum certified in the payment advice statement has not been made in terms of the Agreement and that:-

2.1.1 The Contractor has failed to notify the Subcontractor of payment default by the Employer and
has failed to make payment to the Subcontractor within seven (7) calendar days after due date
for payment to the Contractor by the Employer; or

2.1.2 The Contractor has received timeous payment from the Employer and has failed to make
payment to the Subcontractor within seven (7) calendar days after due date for payment to the
Contractor by the Employer; or

2.1.3 The Contractor has received late payment from the Employer and has failed to make payment to
the Subcontractor within seven (7) calendar days of the Contractor receiving payment from the
Employer; or

2.1.4 The Contractor has failed to pay to the Subcontractor within thirty (30) calendar days after the
due date for payment to the Contractor by the Employer and failing payment of the sum certified
by the Contractor in the payment advice statement within seven (7) calendar days, the
Subcontractor intends to call upon the Guarantor to make payment in terms of 2.2

2.2 A first written demand notice issued by the Subcontractor to the Guarantor at the Guarantor’s physical
address with a copy to the Contractor stating that a period of seven (7) calendar days has elapsed since
date of issue of the the first written demand notice in terms of 2.1 and that the sum certified has not been
paid to date. The Subcontractor herewith calls up this NSSA Security for Payment and demands payment
of the sum certified from the Guarantor

2.3 A copy of the payment advice statement issued by the Contractor and which entitles the Subcontractor to
receive payment of the sum certified in 2.0
3.0 Subject to the Guarantor’s maximum liability in terms of the Guaranteed Sum, the Guarantor hereby undertakes to
pay the Subcontractor the demanded sum upon the receipt of the documents identified in 3.1 and 3.2:-

3.1 A copy of a first written demand notice issued by the Subcontractor to the Contractor stating that the
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Subcontractor demands the issue of a payment advice statement and failing such issue within seven (7)
calendar days, the Subcontractor intends to call upon the Guarantor to make payment in terms of 3.2 of the
sum as set out in the demand

3.2 A written demand notice issued by the Subcontractor to the Guarantor at the Guarantor’s physical address
with a copy to the Contractor stating that a period of seven (7) calendar days has elapsed since the issue of
a first written demand notice in terms of 3.1 and that a payment advice statement has not been issued. The
Subcontractor herewith calls up this N/S Security for Payment and demands payment of the sum as set out
in the demand from the Guarantor
4.0 The aggregate amount of payments to be made by the Guarantor in terms of 2.0 and 3.0 shall not exceed the
Guaranteed Sum
5.0 Where the Guarantor is a registered insurer the Subcontractor shall within one hundred and twenty (120) calendar
days of receipt of payment submit an expense account to the Guarantor showing how all monies received in terms of
the NSSA Security for Payment have been expended, or will be expended, and shall refund to the Guarantor any
surplus amount. All monies refunded to the Guarantor in terms of this NSSA Security for Payment shall bear interest
at the prime overdraft rate of the Subcontractor’s bank compounded monthly and calculated from the date of

6.0 Payment by the Guarantor in terms of 2.0 or 3.0 shall be made within seven (7) calendar days upon receipt of the
first written demand notice to the Guarantor

7.0 The Subcontractor shall have the absolute right to arrange his affairs with the Contractor in any manner which he
deems fit and the Guarantor shall not have the right to claim his release on account of any conduct alleged to be
prejudicial to the Guarantor
8.0 The Guarantor chooses the physical address stated above for all transactions in connection with this Security
9.0 This NSSA Security for Payment is neither negotiable nor transferable and shall expire upon payment of the final
payment advice in terms of the Agreement or on payment in full of the Guaranteed Sum or on the Security expiry
date, whichever is the earlier, whereafter no claims will be considered by the Guarantor. The original NSSA Security
for Payment form shall be returned to the Guarantor after it has expired
10.0 This NSSA Security for Payment, with the required demand notices in terms of 2.0 or 3.0, shall be regarded as a
liquid document for the purpose of obtaining a court order
11.0 Where this NSSA Security for Payment is issued in the Republic of South Africa the Guarantor hereby consents to
the jurisdiction of a court in the area where the project is located

Signed at Date

Guarantor’s Signatory 1 Guarantor’s Signatory 2

Witness Witness

Guarantor’s seal or stamp

MWA Security for Construction

For use with the JBCC® Minor Works Agreement state edition/date

GUARANTOR DETAILS

Guarantor:

Physical address:

Guarantor’s signatory 2: Capacity

Employer:

Contractor:

Principal Agent:

Works:

Site:

Name of Signatory:

Contract Sum: Accepted amount inclusive of tax Currency

. . . amount in words:

Gauranteede Sum: The maximum aggregate amount Currency

Security expiry date:

AGREEMENT DETAILS
Principal Agent issues JBCC® format Payment Certificates, Final Payment Certificate, Certificate of Practical
Completion and Certificate of Final Completion

1.0 The Guarantor’s liability shall be limited to the diminishing amounts of the Guaranteed Sum as follows:

GUARANTOR’S LIABILITY PERIOD OF LIABILITY

1.1.1 Maximum Guaranteed Sum (not exceeding 6.0% of From and including the date of issue of this MWA

Amount in words:

1.1.2 Reducing to the Guaranteed Sum (not exceeding From and including the day after the date of the
4.0% of the contract sum) in the amount of: Certificate of Practical Completion and up to and
including the date of the Certificate of Final
Completion

Amount in words:

1.1.2 Reducing to the Guaranteed Sum (not exceeding From and including the day after the date of the
2.0% of the contract sum) in the amount of: Certificate of Final Completion and up to and
including the date of issue of the Final Payment
Certificate where payment is due to the Contractor,
whereupon this MWA Security for Construction shall
expire. Where the Final Payment Certificate reflects
payment due to the Employer, this MWA Security for
Construction shall expire on payment of the full
amount certified

2.0 The Guarantor’s liability limits set out in clauses 1.1 to 1.3 shall apply in respect of any claim received by the
Guarantor during the security validity period
3.0 The Guarantor hereby acknowledges that:
3.1 Any reference in this MWA Security to the Agreement is made for the purpose of convenience and shall not be
construed as any intention whatsoever to create an accessory obligation or any intention whatsoever to create a
suretyship
3.2 Its obligation under this Security is restricted to the payment of money
3.3 Reference to a Certificate of Practical Completion or to a Certificate of Final Completion shall mean such certificate as
issued by the Agent
4.0 Subject to the Guarantor’s maximum liability referred to in 1.0, the Guarantor hereby undertakes to pay the Employer
the sum certified upon receipt of the documents identified in 4.1 to 4.3:
4.1 A copy of a first written demand notice issued by the Employer to the Contractor stating that payment of a sum certified

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
by the Principal Agent has not been made in terms of the Agreement and failing such payment within seven (7)
calendar days, the Employer intends to call upon the Guarantor to make payment in terms of 4.2
4.2 A first written demand notice issued by the Employer to the Guarantor at the Guarantor’s physical address with a copy
to the Contractor stating that a period of seven (7) calendar days has elapsed since the date of issue of the first written
demand notice in terms of 4.1 and that the sum certified has still not been paid to date. The Employer herewith calls up
this MWA Security for Construction and demands payment of the sum certified from the Guarantor

4.3 A copy of the applicable payment certificate which entitles the Employer to receive payment in terms of the Agreement
of the sum certified
5.0 Subject to the Guarantor’s maximum liability referred to in 1.0, the Guarantor undertakes to pay the Employer the
Guaranteed Sum or the full outstanding balance upon receipt of a first written demand from the Employer to the
Guarantor at the Guarantor’s physical address calling up this MWA Security for Construction stating that:
5.1 The Agreement has been terminated due to the Contractor’s default and that the MWA Security for Construction is
called up in terms of 5.0. The demand notice shall enclose a copy of the notice of termination; or called up in terms of
5.0. The demand notice shall enclose a copy of the notice of termination; or
5.2 A provisional sequestration or liquidation court order has been granted against the Contractor and that the MWA
Security for Construction is called up in terms of 5.0. The demand notice shall enclose a copy of the court order
6.0 It is recorded that the aggregate amount of payments required to be made by the Guarantor in terms of 4.0 and 5.0
shall not exceed the Guarantor’s maximum liability in terms of 1.0
7.0 Where the Guarantor is a registered insurer and has made payment in terms of 5.0, the Employer shall within one
hundred and twenty (120) calendar days of receipt of payment submit an expense account to the Guarantor showing
how all monies received in terms of this MWA Security for Construction have been expended or will be expended, and
shall refund to the Guarantor any resulting surplus. All monies refunded to the Guarantor in terms of this MWA Security
for Construction shall bear interest at the prime overdraft rate of the Employer’s bank compounded monthly and
calculated from the date payment at the prime overdraft rate of the Employer’s bank compounded monthly and
calculated from the date of payment by the Guarantor to the Employer until the date of refund

8.0 Payment by the Guarantor in terms of 4.0 or 5.0 shall be made within seven (7) calendar days upon receipt of the first
written demand notice to the Guarantor
9.0 The Employer shall have the absolute right to arrange his affairs with the Contractor in any manner which the
Employer deems fit and the Guarantor shall not have the right to claim his release from this MWA Security for
Construction on account of any conduct alleged to be prejudicial to the Guarantor
10.0 The Guarantor chooses the physical address as stated above for all purposes in connection herewith
11.0 This MWA Security for Construction is neither negotiable nor transferable and shall expire in terms of either 1.3, or
payment in full of the Guaranteed Sum or on the Guarantee expiry date, whichever is the earlier, where after no claims
will be considered by the Guarantor. The original of this MWA Security for Construction form shall be returned to the
Guarantor after it has expired
12.0 This MWA Security for Construction, with the required demand notices in terms of 4.0 or 5.0, shall be regarded as a
liquid document for the purpose of obtaining a court order
13.0 Where this MWA Security for Construction is issued in the Republic of South Africa the Guarantor hereby consents to
the jurisdiction of a court in the area where the project is located

Signed at Date

Guarantor’s Signatory 1 Guarantor’s Signatory 2

Witness Witness

MWA Security for Deposit

For use with the JBCC® Minor Works Agreement state
edition/date

GUARANTOR DETAILS

Recipient

Contractor / Subcontractor

Principal Agent

Works

Site

Guaranteed deposit amount Currency

Security expiry date

AGREEMENT DETAILS

Principal Agent issues JBCC® format Payment Certificate, Recovery Statement

1.0 SECURITY for DEPOSIT

1.1 The particulars of the recoupment of the guaranteed deposit amount are set out in the following schedule:

Recoupment period (no. of months)

Recoupment period commencement (start month)

Monthly recoupment (amount)

Note: Where the recoupment amounts and/or periods
are irregular a schedule of recoupment amounts and
dates is to be attached

1.2 The Guarantor’s liability shall be limited to the outstanding diminishing amounts of the guaranteed deposit
amount as follows:

1.2.1 The guaranteed deposit amount on receipt thereof by the Recipient

1.2.2 Its obligation under this MWA Security for Deposit is restricted to the payment of money

1.2.3 After the deduction of the last scheduled recoupment payment or on settlement of the full
outstanding balance this MWA Security for Deposit shall expire
2.0 The Guarantor acknowledges that

2.1 Any reference in this Security for Deposit to the Agreement is made for the purpose of convenience and
shall not be construed as any intention to create an accessory obligation or any intention to create a
suretyship

2.2 Its obligation under this MWA Security for Deposit is restricted to the payment of money

2.3 Reference to a recovery statement or a Payment Certificate shall mean such certificate issued by the
Principal Agent
Copyright © 2019. Juta & Company, Limited. All rights reserved.

3.0 Subject to the Guarantor’s maximum liability referred to in 1.0 the Guarantor hereby undertakes to pay the Employer
the sum certified upon receipt of the documents identified in 3.1 to 3.3:-

3.1 A copy of a first written demand notice issued by the Employer to the Recipient stating that payment of a
sum certified by the Principal Agent has not been made in terms of the Agreement and failing such
payment within seven (7) calendar days, the Employer intends to call upon the Guarantor to make payment
in terms of 3.2

3.2 A first written demand notice issued by the Employer to the Guarantor at the Guarantor’s physical address
with a copy to the Recipient stating that a period of seven (7) calendar days has elapsed since the issue of
the first written demand notice in terms of 3.1 and that the sum certified has still not been paid to date. The
Employer herewith calls up this Security for Deposit and demands payment of the sum certified from the
Guarantor

3.3 A copy of the recovery statement and payment certificate which entitles the Employer to receive payment in
terms of the Agreement of the sum certified in 3.0

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
4.0 Subject to the Guarantor’s maximum liability referred to in 1.0 the Guarantor undertakes to pay the Employer the
guaranteed deposit sum or the full outstanding balance upon receipt of a first written demand notice from the
Employer to the Guarantor at the Guarantor’s physical address calling up this MWA Security for Deposit stating that:-

4.1 The Agreement has been terminated due to the Recipient’s default and that the MWA Security for Deposit
is called up in terms of 4.0. The demand shall enclose a copy of the notice of termination; or

4.2 A provisional sequestration or liquidation court order has been granted against the Recipient and that the
MWA Security for Deposit is called up in terms of 4.0. The demand shall enclose a copy of the court order
5.0 The aggregate amount of payments to be made by the Guarantor in terms of 3.0 and 4.0 shall not exceed the
Guarantor’s maximum liability in terms of 1.0

6.0 Payment by the Guarantor in terms of 3.0 or 4.0 shall be made within seven (7) calendar days upon receipt of the
first written demand notice to the Guarantor
7.0 The Employer shall have the absolute right to arrange his affairs with the Recipient in any manner which the
Employer deems fit and the Guarantor shall not have the right to claim his release from this MWA Security for
Deposit on account of any conduct alleged to be prejudicial to the Guarantor
8.0 The Guarantor chooses the physical address stated above for all transactions in connection with this Security
9.0 This MWA Security for Deposit is neither negotiable nor transferable and shall expire upon payment of the final
payment certificate in terms of the Agreement or on payment in full of the guaranteed deposit amount or on the
expiry date of the Security, whichever is the earlier, whereafter no claims will be considered by the Guarantor. The
original MWA Security for Deposit form shall be returned to the Guarantor after it has expired
10.0 This MWA Security for Deposit, with the required demand notices in terms of 3.0 or 4.0, shall be regarded as a liquid
document for the purpose of obtaining a court order

Signed at Date

Guarantor’s Signatory 1 Guarantor’s Signatory 2

Witness Witness

Guarantor’s seal or stamp

[1] Calculated in accordance with either Alternative A or Alternative B as selected in the CD.
[2] Percentage applicable in accordance with clause 25.3.4.
[3] With the proviso that, where the valuation exceeds the contract sum there should be no payment
reduction on the portion that exceeds the contract sum.
[4] Damages arising from a default by the employer that has led to the termination of the agreement by the
contractor in terms of clause 29.14.
[5] This affects the security provided in terms of clause 11.0. If a variable construction guarantee has been

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
provided, then when practical completion has been certified, the amount of the guarantee decreases from 10%
of the contract sum to 6%.
[6] A tick in the first box with crosses in the remainder would indicate that all forms of security should be at
their maximum value. A tick in the first two box with crosses in the remainder would indicate that a variable
construction guarantee should be reduced to 6% of the contract sum, while other forms of security would
remain at maximum value. Ticks in the first three boxes and a cross in the last one would indicate that a
variable construction guarantee should be reduced to 4% of the contract sum, a fixed construction guarantee
would lapse and the payment withheld should decrease to 2.5% of the amount of the valuation. Ticks in all four
boxes would indicate that a variable construction guarantee should be reduced to 2% of the contract sum,
payment withheld in a fixed construction guarantee should decrease to 2.5% of the amount of the valuation to
be paid in full under the final payment certificate.
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Table of Cases

A
Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration 1974 (3) SA
506 (A)
— 154

B
Barker v Townsend (1903) 24 NLR 145
— 183
Bhikhagee v Southern Aviation (Pty) Ltd 1949 (4) SA 105 (E)
— 8
Bird v Sumerville and Another 1960 (4) SA 395 (N)
— 6
B K Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk 1979 (1) SA 391
(A)
— 14, 16, 204
Blew v Snoxell 1931 TPD 226
— 6
Broodryk v Smuts NO 1942 TPD 51
— 3

Cone Textiles v Mather & Platt (SA) (Pty) Ltd 1981 (3) SA 565 (A)
— 177
Conress (Pty) Ltd and Another v Gallic Construction (Pty) Ltd 1981 (3) SA 73 (W)
— 125
Coppenhagen v Van Coppenhagen 1947 (1) SA 576 (T)
— 211
Cowley v Loumeau’s Estate 1925 AD 394
— 13
Crawley v Rex 1909 TS 1105

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
— 5

D
De Klerk v Old Mutual Insurance Co Ltd 1990 (3) SA 34 (E)
— 8
Dickinson & Brown v Fisher’s Executors 1915 AD 166
— 261
Dietrichsen v Dietrichsen 1911 TPD 486
— 5, 6
Dodd v Churton [1897] 1 QB 562
— 183
Du Plessis v Nel 1952 (1) SA 513 (A)
— 8
Du Plessis v Strydom 1985 (2) 142 (T)
— 33

E
Edward L Bateman Ltd v C A Brand Projects (Pty) Ltd 1995 (4) SA 128 (T)
— 191
Estate Schikkerling v Schikkerling 1936 CPD 269
— 3

F
Fassler Kamstra & Holmes v Stallion Group of Companies (Pty) Ltd 1992 (3) SA 825
(W)
— 260, 267
Fritsch v Eckrats (Pty) Ltd t/a Wally Pools 1990 (3) SA 242 (N)
— 127, 138

— 6
Goldblatt v Fremantle 1920 AD 123
— 7
Goldschmidt v Folb 1974 (1) SA 576 (T)
— 260
Graham NO v Williams Hunt (Pty) Ltd 1995 (1) SA 371 (D)
— 112
Group Five Building Ltd v Minister of Community Development 1993 (3) SA 629 (A)
— 191

H
Hauman v Nortje 1914 AD 293
— 16
Hoffman v Meyer 1956 (2) SA 752 (C)
— 33, 88, 176, 210
Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd 1977 (3) SA 670 (A)
— 134, 199, 460

Page xx

Hydro Holdings (Edms) Bpk v Minister of Public Works and Another 1977 (2) SA 778
(T)
— 144, 161, 212, 434

I
Inter-Union Finance Ltd v Frankraalstrand (Edms) Bpk and Others 1965 (4) SA 180
(W)
— 211

J
Jajbhay v Cassim 1939 AD 537
— 3
Johannesburg Municipal Council v Rand Townships Registrar 1910 TPD 1314
— 124
John Sisk & Son (Pty) Ltd v Urban Foundation 1987 (3) SA 190 (N)
— 265
Joubert v Enslin 1910 AD 1910 AD 6
Copyright © 2019. Juta & Company, Limited. All rights reserved.

— 10

K
Kathmer Investments (Pty) Ltd v Woolworths (Pty) Ltd 1970 (2) SA 498 (A)
— 250
Kelly and Hingle’s Trustees v Union Government (Minister of Public Works) 1928
TPD 272
— 183, 190, 194

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
Landless v Wilson (1880) 8R (Ct of Sess) 289
— 6
Levin v Dieprok Properties (Pty) Ltd 1975 (2) SA 397 (A)
— 6
LTA Natal v Terblanche NO and Others 1 CLD 329 (DCLD)
— 211

M
MM Fernandes (Pty) Ltd v Mahomed 1986 (4) SA 383 (W)
— 87

N
Naude v Kennedy 1909 TS 799
— 2
Nicolaides v Skordis 1973 (2) SA 730 (N)
— 33
Novick v Comair Holdings Ltd 1979 (2) SA 116 (W)
— 8

O
Ocean Diners (Pty) Ltd v Golden Hill Construction CC 1993 (3) SA 331 (A)
— 177
Ovcon (Pty) Ltd v Administrator, Natal 1991 (4) SA 71 (D)
— 131, 195

P
Peters, Flamman and Co v Kokstad Municipality 1919 AD 427
— 182, 484
Pieters and Co v Salomon 1911 AD 137
— 1
Ploughall (Edms) Bpk v Rae 1971 (1) SA 887 (W)
Copyright © 2019. Juta & Company, Limited. All rights reserved.

— 125

R
Radiotronics (Pty) Ltd v Scott, Lindberg and Co Ltd 1951 (1) SA 324 (C)
— 12
Randaree and Others NNO v W H Dixon and Associates and Another 1983 (2) SA 1
(A)
— 34
Royal British Bank v Turquand (1856) 6 E & B

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
— 4

S
S M Goldstein & Co (Pty) Ltd v Cathkin Park Hotel (Pty) Ltd and Another 2000 (4)
SA 1019 (SCA)
— 91
Saflec Security Systems (Pty) Ltd v Group Five Building (East Cape) (Pty) Ltd 1990
(4) SA 626 (E)
— 209
Schierhout v Union Government 1926 AD 286
— 212
Smith v Mouton 1977 (3) SA 9 (W)
— 176
Spring Forest Trading 599 CC v Wilberry (Pty) Ltd t/a Ecowash and Another (725/13)
[2014] ZASCA 178; 2015 (2) SA 118 (SCA) (21 November 2014)
— 9
Steeledale Cladding (Pty) Ltd v Parsons NO and Another 2001 (2) SA 663 (D)
— 265
Street v Dublin 1961 (2) SA 4 (W)
— 15
Strijdom Park Extension 6 (Pty) Ltd v Abcon (Pty) Ltd 1998 (4) SA 844 (SCA)
— 34, 169
Stroebel v Stroebel 1973 (2) SA 137 (T)
— 211
Sutcliffe v Thackrah [1974] AC 727; 4 BLR 16
— 33, 86, 210
Swart v Cape Fabrix (Pty) Ltd 1979 (1) SA 195 (A)
— 10

Telecall (Pty) Ltd v Logan 2000 (2) 782 (SCA)

— 250
Thomas Construction (Pty) Ltd (in liquidation) v Grafton Furniture Manufacurers (Pty)
Ltd 1988 (2) SA 546 (A)
— 2, 112, 204
Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa
Ltd and Another 2015 (5) SA 245 (CC)
— 56
Tweedie and Another v Park Travel Agency (Pty) Ltd t/A Park Tours 1998 (4) SA 802

U
Universiteit van Stellenbosch v J A Louw (Edms) Bpk 1983 (4) SA 321 (A)
— 252

V
Van Immerzeel and Pohl and Cocciante Construction v Samancor Ltd 2001 (2) SA
90 (SCA); [2001] 2 All SA 235 (A)
— 34

Page xxi

Van Staden v Central South African Lands and Mines 1969 (4) SA 349 (W)
— 198
Van Wyk v Lewis 1924 AD 438
— 34
Victoria Falls and Tvl. Power Co. Ltd. v Consolidated Langlaagte Mines Ltd 1915 AD
1
— 13, 199, 460

W
Watermeyer v Murray 1911 AD 61
— 4
Wayland v Everite Group Ltd 1993 (3) SA 946 (W)
— 250
Wells v Army and Navy Co-operative Society [1902] HBC 4 ed vol II 346, 86 LT 764
— 183
Westminster Corporation v Jarvis [1970] 1 WLR 637 (HL)
— 143, 433
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Wilkens Nel Argitekte v Stephenson 1987 (2) SA 628 (O)

— 33
William Lacey (Hounslow) v Davis (1957) 2 All ER 712
— 6
Withinshaw Properties (Pty) Ltd v Dura Construction Co (SA) (Pty) Ltd 1989 (4) SA
1073 (A)
— 250

Y
Young and Marten Ltd v McManus Childs Ltd (1968) 2 All ER 1169

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
— 134

Table of Statutes

Alienation of Land Act 68 of 1981

— 7
Arbitration Act 42 of 1965
— 51, 253, 259, 260, 262, 263, 264, 267
s 1 — 262
s 4(1) — 260
s 5(1) — 260
s 6 — 252
s 6(1) — 260
s 12 — 260, 261
s 12(2) — 364
s 13(2) — 261
s 20 — 260
s 23(a) — 253
s 28 — 260, 265
s 31 — 364
s 31(1) — 260, 265
s 32 — 261, 265
s 33 — 261, 265, 364
s 35 — 265
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Architects’ Act 35 of 1970

— 31, 87
Architects and Quantity Surveyors (Private) Act 18 of 1927
— 31
Architectural Profession Act 44 of 2000
— 31, 34, 87
s 18(2) — 31

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
s 26(3) — 31
Compensation for Occupational Injuries and Diseases Act 130 of 1993
— 25, 108, 321, 417
Construction Industry Development Board Act 38 of 2000
— 30
Consumer Protection Act 68 of 2008
— 61
Conventional Penalties Act 15 of 1962
— 15, 51, 198
s 2 — 15
s 2(1) — 198
s 3 — 15, 198
Electronic Communications and Transactions Act 25 of 2002
— 9, 10, 77, 399
Engineering Profession Act 46 of 2000
— 37
Housing Consumers Protection Measures Act 95 of 1998
— 30, 37, 76, 310
Insolvency Act 24 of 1936
— 4
Limitation and Disclosure of Finance Charges Act 76 of 1970
— 211

National Building Regulations and Building Standards Act 103 of 1977

s 7 — 171
s 14 — 170–171
National Building Regulations and Building Standards Amendment Act 62 of 1989
s 7(a) — 171
Occupational Health and Safety Act 85 of 1993
— 37, 38, 39, 61

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
s 24 — 40
Prescription Act 68 of 1969
— 135, 179
Project and Construction Management Professions Act 48 of 2000
— 38
Public Finance Management Act 1 of 1999
— 50, 51
Quantity Surveying Profession Act 49 of 2000
— 36
Sectional Titles Act 95 of 1986
— 258
Value-Added Tax Act 89 of 1991
— 211
Foreign Legislation
Housing Grants, Construction and Regeneration Act (United Kingdom) 1996
— 253, 254
Rules and Regulations
Construction Regulations 2014
— 39
Reg 3 — 39
Reg 4 — 39
Reg 5 — 39
Reg 6 — 39
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Reg 7(1) — 39
Reg 7(1)(g) — 39
Reg 9(1), (3) — 39
Sectional Titles Act 95 of 1986
Management Rule 71
— 258
National Building Regulations

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
— 32–33
Code of Professional Conduct promulgated in terms of the Architectural Profession
Act 44 of 2000 BN 154 of 2009
Rule 4.1.7 — 34
UNCITRAL Arbitration Rules 2010
— 261
Uniform Rules of the High Court
— 263
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Bibliography

Christie R H & Bradfield, G B Christie’s law of contract in South Africa 7th ed

(LexisNexis 2016)
Clay, R & Dennys, N Hudson’s Building and Engineering Contracts 13th ed (Sweet &
Maxwell 2017)
Finsen, E Quail on the Building Contract (Q.C. Publications 1989)
Finsen, E The Building Contract 2nd ed (Juta 2005)
Gibson J T R South African Mercantile and Company Law 8th ed (Juta 2004)
Hutchison et al Wille’s Principles of South African Law 9th ed (Juta 2007)
Malherbe G & Lipshitz M Malherbe & Lipshitz on Building Contracts (BIFSA 1979)
Ramsden, P McKenzie’s Law of Building and Engineering Contracts and Arbitration
7th ed (Juta 2014)
Ramsey, V & Furst, S Keating on Construction Contracts 10th ed (Sweet & Maxwell
2018)
Roberts A A Wessels The Law of Contract in South Africa 2nd ed (1951)
Turner H Architectural Practice and Procedure (Batsford, London 1929)
Voet J (translated by P Gane) Commentarius ad Pandectas (Butterworths 1955)
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Index

A
adjudication
appointment of adjudicator — 257–258, 363, 551–552
concept of — 253–254
conduct of — 255–257, 363
continued performance of obligations — 268
disputes between contractor and subcontractor — 490
enforcement of determination — 254, 363
rules — 255, 551–556
agent
definition of — 68, 302, 390
of employer — 84–89
agreement
damages for breach of — 241, 243
definition of — 68, 302
signing — 57, 81–83
termination of — 243–245, 357
breach of material term — 243, 358, 360
consequences of — 241–242, 243
by contractor — 242–243, 359–360
by employer — 241–242, 358–359
Copyright © 2019. Juta & Company, Limited. All rights reserved.

grounds for — 241, 242, 358

impossibility of performance — 243, 360, 484
negotiation of — 244
procedure by contractor — 244
procedure by principal agent — 244
on serious breach — 240, 358
substantial destruction of works — 484–485
without prejudice of rights — 242, 243, 359, 360
annual contractor’s holiday — 45
arbitration

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
advantages of — 258
agreement — 259–261
audi alteram partem rule — 262
award of costs of — 265, 364
conduct of — 262–264
continued performance of obligations — 268
elders of tribe — 259
legal representation — 263, 364
nature of — 258
referring dispute to — 261–262, 490
rules for conduct of — 261, 263, 364
arbitration agreement
enforcement of — 260
survival of — 260
termination of — 260
in writing — 263
arbitrator
appointment of — 259, 260, 262, 364
duty to act judicially — 264
nomination of — 262, 364
qualifications of — 259
arbitrator’s award — 264–265, 364
enforcement of — 260, 265, 364
final and binding — 260, 364
power of court to remit or set aside — 265
remittal of — 260–261
setting aside of — 261, 364
architect — 31–35
Copyright © 2019. Juta & Company, Limited. All rights reserved.

agent of employer — 32, 33, 85

code of professional conduct — 34
definition of — 31
design responsibility — 91
insolvency — 87
principal agent — 85
professional indemnity insurance — 32, 34
professional liability — 34
registered — 31, 87

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
submission of building plans — 32
assignment
prohibition against — 79–80, 311
rights or obligations under NSSA — 403
Association of Arbitrators (Southern Africa) — 51, 255–256, 259
Association of South African Quantity Surveyors (ASAQS) — 36, 42, 43, 48

Page 566

B
beneficial occupation — 94
bills of quantities — 20–21
advantages of — 21
checking by principal agent — 128
contingency sum — 223
definition of — 68, 302
monetary allowances in contract sum — 223, 230
provisional — 22–23, 249
provisional items in — 21
subcontract, definition of — 395
tendering on — 53–54
budgetary allowance, definition of — 68, 390
building contract see contract; building contract
Building Industries Federation South Africa (BIFSA) — 30, 42, 43
building plans, submission of by architect — 32

Cape Institute of Architects — 42

caveat subscriptor rule — 8
certificate see also final payment certificate; interim payment certificate
of final completion — 133, 175–176, 341, 447, 550
definition of — 68, 302
minor works — 532
no withdrawal or amendment — 177
significance of — 176

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
of final payment — 482, 534
of interim completion — 447, 536
of occupation — 170–171
of practical completion — 170, 337, 338, 449, 548
definition of — 68, 302
of site possession — 528
certification of compliance by local authority — 76
cession
prohibition against — 79–80, 311
rights or obligations under NSSA — 403
of rights to employer — 341, 408
Chapter of South African Quantity Surveyors — 42
civil commotion, as cause for delay in completion — 186
clerk of works — 89
common-law rules — 2, 17
completion
delays in achieving
act or omission by nominated subcontractor or direct contractor — 189
adverse weather conditions — 183–184
circumstances entitling contractor to additional time with contract value
adjustment — 186–190
circumstances entitling contractor to additional time without contract value
adjustment — 183–186
contract instructions — 186–187
delayed possession of the site — 186
execution of additional work — 190
exercise of statutory power — 185
force majeure, civil commotion, riot, strike or lockout — 186
Copyright © 2019. Juta & Company, Limited. All rights reserved.

inability to obtain materials and goods — 184–185

late acceptance by principal agent in accepting design from selected
subcontractor — 188
late appointment of subcontractor — 188
late or incorrect issue of construction information — 187–188
late supply of free issue, materials and goods — 188
late supply of prime cost amount item — 185
making good loss and damage — 185, 186
opening up and testing of work and materials and goods — 187
other causes — 190–191

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
reduction of time where work is omitted — 194
supervening circumstances — 182–183
suspension of works — 190
suspension or termination by subcontractor due to default by employer or
principal agent — 189
final
certificate of — 68, 175–176, 302, 390, 550
definition of — 70, 303, 391
list for — 71, 305, 340–341, 392–393, 446, 449, 453
time-bar for list by principal agent — 176
interim — 165, 446–447, 536
certificate of — 390
definition of — 392, 447
list for — 393
revision of date for — 457–458

Page 567

late
breach of contract — 343
penalty stipulation — 197–198
list for — 71, 195, 305, 392, 446
practical
certificate of — 68, 168–169, 302, 337, 338, 390, 449, 548
consequences of — 170
contractor’s duty — 168–169, 448
date for inspection — 168, 337
definition of — 72, 167, 195, 306, 393
delays to — 182–183
guideline description — 558–560
list for — 71, 168–169, 305, 337, 338, 340, 393, 446, 448, 449
Copyright © 2019. Juta & Company, Limited. All rights reserved.

principal agent’s duty — 169–170, 448

revision of date for — 182, 191–192, 343–344
subcontractor’s duty — 408
within reasonable time (time ‘at large’) — 183
sectional — 107, 172, 224, 225, 450, 548
significance of — 176
construction equipment, definition of — 69, 302
construction guarantee see security; construction guarantee
Construction Industry Development Board (CIDB) — 44

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
construction information — 127–128, 131
definition of — 69, 302
construction period, definition of — 69, 124, 302, 390
construction programme — 128, 130–131
contract
agreement — 1
on behalf of third party — 1
breach of — 12–15
damages — 12, 13–15, 16, 459–460
late completion — 14–15
notice of — 13
penalties — 15
remedies for — 12
security for — 110–111
building, history of — 41–44
cancellation of — 250, 365
capacity to contract — 4
consecutive — 154
consensus — 1, 2–3
contra proferentem rule — 11
cost-plus — 23–24
counter-offer — 5
data — 69, 303
definition of — 1
delegation — 12
design and build — 26, 53, 90
drawings — 69, 303, 391
eiusdem generis rule — 11
electronic communications — 9–10
Copyright © 2019. Juta & Company, Limited. All rights reserved.

enforceability of — 3, 7
entire — 16–17, 18, 24
implied terms — 17
intention of parties — 10
interpretation of — 10–11
labour only — 24–25
locatio conductio operis — 16, 17, 160, 204
lump sum — 18–20, 42, 48

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
lump sum with bills of quantities — 20–23
lump sum without bills of quantities — 205–206
advantages and disadvantages of — 129
‘management’ — 25–26
minutes — 303, 316, 326, 334, 335, 344
misrepresentation — 8
mistake — 3
non-variation clause — 9, 83
obligations — 1
offer and acceptance — 4–7, 18, 78
oral — 7
party to — 72
penalties — 72
personal rights — 1
presumption of existence from parties’ conduct — 7
price reduction — 14
provisional bills of quantities — 22, 127, 131, 142, 153, 160, 187
public private partnership (PPP) — 26–27
purpose of — 3
repudiation — 15–16
signature to — 7
State see organs of State (OoS) contracts
subcontracting — 12, 30, 141
tender — 9
tender documents — 6, 53–55
termination of — 11, 12–13
time of the essence — 13, 197
turnkey — 26, 53, 90
value — 69, 154
Copyright © 2019. Juta & Company, Limited. All rights reserved.

variation of terms — 9–10

voidability of — 3
written — 7
contract instructions — 76, 88, 127–128, 334–335
alteration to design, quality or quantity of works — 154–155, 218–219, 229, 334
definition of — 69, 303

Page 568

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
financial consequences of — 162–163
time-bar for notification of compensation — 163
limitation on power to issue — 160–161
monetary allowances — 230
obligation to carry out — 161–162, 219
recording of in minutes of site meetings — 335
rectification of construction information — 153–154, 334
rectification of defects — 157, 334
regarding access by contractors to remedy defective work — 159, 335
regarding additional work — 219, 229
regarding appointment of subcontractor — 158
regarding expenditure — 158, 334
regarding legal compliance — 155, 334
regarding list for practical completion — 157, 334
regarding making good loss and damage — 157, 334
regarding measures on termination of contract — 160
regarding omission of work — 219, 229
regarding opening up of work — 156, 230, 334
regarding protection of works — 157, 334, 335
regarding removal from site of any person employed on works — 159, 335
regarding removal from site of any person not engaged on or connected with
works — 160, 335
regarding removal of construction equipment — 335
regarding removal of surplus materials and goods — 335
regarding removal or re-execution of work — 156, 334
regarding removal or substitution of materials and goods — 156–157, 219, 334
regarding samples — 155–156, 334
regarding site — 155, 334
regarding suspension or termination of works — 335
Copyright © 2019. Juta & Company, Limited. All rights reserved.

regarding termination of nominated n/s subcontract agreement — 158–159

regarding work by direct contractor — 159, 334
in writing — 161
contractor — 29–30
additional time for completion — 128, 157, 158, 182–192
contractual limitation of risk element — 95–96
covering up of work — 156
damages payable by subcontractor — 199–200, 391, 459–460, 481

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
definition of — 69, 303
direct — 69, 149–150, 189, 222, 303, 320, 331–332, 334, 353, 391
entitlement to contract value adjustment — 193
‘front end loading’ — 128
independent — 16–17, 24–25
insolvency of — 111, 114, 117
instructions — 163–164, 443–444
definition of — 391
regarding construction — 127–128
regarding nominated and selected subcontractors — 128
liability for latent defects — 96
liability to third parties — 125, 319–320
loss or damage to existing structure — 97, 320
no liability for some actions by employer or agents — 96
no liability for uninsurable risks — 96
obligations of
to appoint site representative — 129–130
to carry out and complete works free of defects — 93–94, 131–132
to carry out contract instructions — 161–162, 335
to comply with statutory requirements — 75–77, 101, 326, 329
to furnish security — 129
to furnish waiver of lien — 129, 324
to give indemnities — 101
to maintain works in good repair — 93–94
to make good loss and damage — 94–95, 185, 186
to prepare construction programme — 130–131
to provide satisfactory materials and workmanship — 133–134
to rectify latent defects — 134–135
to submit lump-sum document — 128–129
to submit priced bills of quantities — 128–129
Copyright © 2019. Juta & Company, Limited. All rights reserved.

obligations to subcontractors — 135–136, 427, 428–429

occupational injuries and diseases claims — 108, 320, 417
penalties for non-completion — 131

Page 569

period of responsibility for works — 94

prohibition against cession and assignment — 79–80
recovery of expense and loss — 216–218, 230, 472
recoverable items — 216

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
statement — 217–218
reduction of time where work is omitted — 194
security provision to employer — 322–324
standard of work — 132
suspension of works — 135, 189, 190, 211, 212, 234–235, 357
written notice of default — 241
contract price adjustment provisions (CPAP)
adjustment of — 54–55
adjustments to contract value — 225–226
contract sum — 69, 218, 229, 303
employer allowances — 230, 352
contract value
adjustment of — 162–163, 193, 209, 229–231, 343
from contract instructions — 218–226, 351
charges for items not included in contract — 220, 352
contract price adjustment provisions (CPAP) — 225–226
definition of — 303
expense or loss arising from contract instruction — 220–226
adjustments in respect of monetary allowances — 223–224
adjustments in respect of preliminaries — 224–225, 230
default by employer or his agents — 222, 353
default or insolvency of nominated subcontractor — 223
expense or loss caused by direct contractors — 222, 353
instruction must be issued — 220–221
non-disclosure of changes to JBCC standard documentation — 221–222
suspension or termination of subcontract due to default by employer or his
agents — 222–223
unreasonable delay or failure to issue — 221, 352
fair market-related price — 229
Copyright © 2019. Juta & Company, Limited. All rights reserved.

mark-up — 229, 230, 352

statement of current value of works — 231, 353
cost fluctuations see contract price adjustment provisions (CPAP)
CPAP see contract price adjustment provisions (CPAP)

D
defects
definition of — 69, 175, 303, 391
latent

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
definition of — 71, 133, 305, 392
due to defective design — 179
liability for — 17, 96, 133–134, 177, 341
liability period — 178–179, 242, 243, 326, 340, 341, 359, 453, 454, 482, 483,
484, 486, 550
prescription period — 179
liability period — 95, 175–176, 447, 548
list — 175
patent, liability for — 96
delays, assessment of — 193–194
Department of Public Works — 43, 44, 49
design
contractor’s liability for — 90–91, 188, 317
liability for latent defects — 179
by subcontractor — 188, 408
disagreement
final account — 251, 353
nature of — 250
notice of by contractor — 192, 251
notice of by employer — 251
when deemed a dispute — 251, 490
discounts offered by suppliers, benefit of employer — 224
disputes — 363–365
between bodies corporate and owners — 258
damages claim by subcontractor — 484
declaration of — 251–252
between employer and principal agent — 88, 251, 363
final account — 231
Copyright © 2019. Juta & Company, Limited. All rights reserved.

litigation of — 252–253
reasons for — 182, 249–250
resolution of — 133, 249–253, 490
clause survives termination of contract — 268–269, 365
scope of clause — 250–251

E
electronic communications
contracts — 9–10

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
notices — 77, 399
employee, differentiated from independent contractor — 25
employer — 28–29
allowances in contract sum — 230, 303, 352
beneficial occupation of works — 94–95

Page 570

definition of — 69, 303, 391

discounts offered by suppliers — 224
dispute with principal agent — 88
indemnification against contractor’s failure to comply with statutory
requirements — 101
indemnification against loss — 76, 100, 101
insolvency of — 116
insurance for employee accidents — 25, 319–320
making good loss or damage — 319–320
obligations of
to appoint agents — 84, 85, 86, 124, 313–314
to hand over site — 84, 124–127, 326–327
to make payment — 85, 127
to provide drawings and instructions — 84, 127–128
to provide payment guarantee — 85, 127, 324
payment to direct contractor — 332
payment to subcontractor — 215
power and water supply to works — 326
recovery of expense and loss — 230
recoverable items — 216–217
types of — 28–29
Copyright © 2019. Juta & Company, Limited. All rights reserved.

unilateral right to vary scope of work — 152

vicarious liability — 242
engineering consultants — 36–37
‘responsible person’ — 37
Engineering Council of South Africa (ECSA) — 37
exceptio non adimpleti contractus — 16
expense and loss — 216–218
extension of time

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
discretion of principal agent — 86
grounds for
act or omission by subcontractor — 189
additional work — 190
contract instructions — 186–187
default by employer or agent — 189
default by nominated subcontractor — 189
delay by principal agent — 188
delayed possession of site — 186
exercise of statutory power — 185
force majeure, civil commotion, riot, strike, lockout — 186
inability to obtain material and goods — 184–185
inclement weather — 183–184
insolvency of nominated subcontractor — 189
late appointment of subcontractor — 187
late or incorrect issue of construction information — 187
late supply of free issue, materials and goods — 187
late supply of prime cost item — 185
making good loss or damage — 185, 186
opening up and testing of work and materials and goods — 187
other circumstances — 190–191
suspension of works — 190

F
final account — 231, 353, 469–470, 480, 483, 486
definition of — 70, 303
final payment certificate — 231, 486, 544
consequences of — 208–210
definition of — 70, 304, 391
fitness for purpose, warranty of — 90, 134
Copyright © 2019. Juta & Company, Limited. All rights reserved.

force majeure
as cause for delay in completion — 186
definition of — 70, 304, 391–392
foreman — 130
free issue
definition of — 70, 304
late supply of — 188

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
General Preliminaries document — 48, 62
guarantee for advance payment — 118–119, 205, 324, 420, 426
definition of — 70, 304, 392
expiry of — 243
guarantee for construction — 111–116, 323
definition of — 70, 115, 304, 392
expiry of — 117, 243
fixed — 115–116, 206, 213, 420
form — 48
payable at call — 113–115
recovery of amounts by employer — 212–213, 323
subcontract — 419
variable — 113–115, 420
guarantee for payment — 119–120, 211, 465
definition of — 70, 304, 392
expiry of — 243
form — 48
obligation to provide — 127, 324, 420, 426
subcontract — 465

Page 571

H
Haylett Formula — 225
health and safety consultant — 38–40

independent contractor — 16–17, 24–25

differentiated from employee — 25
insolvency
of architect — 87
of contractor — 111, 114, 117
contractual capacity — 4
of employer — 116
of subcontractor — 144, 158, 189, 196, 223, 434, 481
Institute of South African Architects — 42

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
insurance — 417
alterations and additions to existing building — 107, 319–320
of contract works — 105–106, 205, 230, 319–320, 353
cover amount — 106–107
deductible — 105
lateral support — 101, 107, 125, 320, 417
professional indemnity — 32, 34
proof of — 108
public indemnity — 107–108, 320, 417
sectional completion — 107, 172
subcontract works — 106, 417
on termination of agreement — 244
third party risks — 320
interest
compensatory — 209
definition of — 68, 304, 390
for subcontractors — 210, 472
default — 209, 211, 464, 466, 472
definition of — 69, 303, 391
definition of — 71, 392
no VAT payable — 211
‘repo rate’ — 209
interim payment certificate — 204–208, 208–210, 348–349, 486, 542, 544
advice on value of — 35
consequences of — 208–210
contractor not paid full amount — 115–116
CPAP allowance — 226
determination of amounts — 87
Copyright © 2019. Juta & Company, Limited. All rights reserved.

failure by employer to pay contractor — 120

inclusion of value of unfixed materials and undelivered goods — 118
not evidence of approval of work or materials — 133
payment by contractor to employer — 207–208, 212–213
payment by contractor to subcontractor — 213–215, 465
payment by employer to contractor — 210–212
late payment — 211
payment by subcontractor to contractor — 215–216, 466
retention fund — 111, 113

J
JBCC forms — 48–49
JBCC Series 2000 documents — 43, 44–49
errata — 51
internationalisation of — 51
Joint Building Contracts Committee (JBCC) — 43, 62, 71, 304, 392
constituent members of — 43
juristic persons, as party to contract — 4

L
lateral support
insurance — 101, 107, 125, 220, 417
risk — 100–101
law, definition of — 71, 305, 392
letter of intent — 56–57
lien — 125–126, 338
waiver of — 126, 127, 324, 530
litigation of building disputes — 252
disadvantages of — 253
in State contracts — 259, 365
locatio conductio operis — 16, 160, 204
conductor — 16–17
Copyright © 2019. Juta & Company, Limited. All rights reserved.

locator — 16–17
lockout, as cause for delay in completion — 186
lump-sum contract see contract: lump sum

M
master builder, definition of — 29
Master Builders South Africa (MBSA) — 30, 42
materials and goods — 208
definition of — 71, 305, 393

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
late supply of — 188
ownership of — 208–209
specified by trade name — 134, 135
storage off site — 205
substitution of — 185
unfixed — 157
mediation
advantages of — 267

Page 572

concept of — 266
conduct of — 266
confidentiality of — 266
continued performance of obligations — 268
cost of — 268
differs from arbitration — 267
disputes between contractor and subcontractor — 490
nature of — 267
settlement
enforcement of — 267
in writing — 267, 268
termination of — 267–268
mediator
appointment of — 266
function of — 266
opinion of — 267
Minor Works Agreement (MWA) — 46
administration of contract — 313–314
Copyright © 2019. Juta & Company, Limited. All rights reserved.

assignment — 311
cash advance — 296
certificate for payment — 534
certificate of completion — 532
construction guarantee — 295
contract instructions — 334–335
criteria for use of — 294–295
definitions — 307
design responsibility — 317

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
dispute resolution — 363–365
documents — 312
effective date — 296, 311
forms — 296
guarantee for construction — 323–324
interpretation — 308
obligations
of contractor — 326, 329
of employer — 326
of principle agent — 326
obligation to comply with statutory requirements — 309–310
offer and acceptance — 311
payment guarantee — 296
payment reduction — 305, 323
practical completion — 337–338
pricing document — 296–297
principal agent — 313–314
retention option — 295, 323
signature to — 296, 297
simplified form of agreement — 293
structure of — 295
tender documents — 296
termination of agreement — 357–360
waiver of contractor’s lien — 296

N
National Home Builders Registration Council — 30, 76, 310
natural justice, rules of — 261
neighbouring property, risk of loss of lateral support — 100–101, 125
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Nominated/Selected Subcontract Agreement (NSSA) see subcontract agreement

non-completion
damages for — 345
subcontract, damages for — 199–200
notice, definition of — 71, 305, 393
notify, definition of — 162

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
occupational health and safety consultant see health and safety consultant
offer see also tenders
acceptance of — 1, 4, 6
counter-offer — 5
final — 5
option — 5
time for acceptance — 5
what constitutes — 5
withdrawal of — 6
organs of State (OoS) contracts — 23, 44, 49–51, 97
dispute resolution — 50, 259, 365
insurance of buildings — 50, 97
litigation of disputes under — 259, 365
period of contractor’s liability — 97
use of JBCC Agreement in — 49–51

P
pacta sunt servanda — 8
parol evidence rule — 8–9
party
definition of — 72, 305, 393
time periods for actions by — 64–66
payment advice
definition of — 207
liquid document — 207, 210, 211
payment by contractor — 207, 464–466, 472, 483, 538
payment by subcontractor — 466, 472
payment certificate see also final payment certificate; interim payment certificate
Copyright © 2019. Juta & Company, Limited. All rights reserved.

consequences of — 208–210
correction of errors — 210
definition of — 72, 305, 393
guidelines for completion — 560–564
liquid document — 207, 210, 211
not a VAT invoice — 211
payment guarantee see guarantee for payment

Page 573

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
penalties
contractual provisions for — 198
definition of — 72, 306, 393
determination of — 198
for late completion — 197–198
in lieu of damages — 198
for non-completion — 199, 345
recovery statement — 199
reduction of amount — 198, 199
works in sections — 199
preliminaries — 47–48, 153
adjustments to contract value — 224–225, 230, 351
definition of — 72, 230, 306, 394
sectional completion — 224, 225
priced document, definition of — 72, 83, 129, 306
prime cost amount, definition of — 72, 306, 394
principal agent — 31–35, 81–83, 85–89
acceptance of offer — 6
adjustments to contract value — 218, 351
agent of employer — 33, 85
approval of work — 132–133
authority of — 33, 49, 85, 124, 157, 179
certification of payments — 85
claim for revision of date for practical completion — 191–192
custodian of contract documents — 82
definition of — 72, 306, 394
delegation of duties — 87
disclosure of capacity in which he acts — 6
Copyright © 2019. Juta & Company, Limited. All rights reserved.

disclosure of interest in or involvement with employer — 133

duty to act fairly — 86
functions of — 87, 315–316
independent judgement of, interference with — 33, 86, 313–314
inspection of works — 169–170, 176
no prescribed qualification — 35
professional indemnity insurance — 34
professional negligence of — 177, 208, 210
reasonable skill and care — 85

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
reduction of time where work is omitted — 194
and subcontract agreements — 88, 145, 407, 480–482
termination of employment — 88
time periods for actions by — 64–66
Principal Building Agreement (PBA) — 44–46, 61
definition of — 394
definitions — 73–74
interpretation — 74
prohibition against cession and assignment — 79–80
signing of agreement — 81–83
structure — 62
table of contents — 67
time periods for actions by parties/principal agent — 64–66
Professional Consultants Services Agreement Committee (PROCSA) — 32, 38, 39
programme, definition of — 72, 306, 394
project manager — 37–38
provisional sentence — 207, 210, 211, 251
provisional sum, definition of — 72, 394
public private partnership (PPP) — 26–27, 90
public sector works see organs of State (OoS) contracts

Q
quantity surveyor — 21, 22, 23
agent of employer — 35, 36, 85
compilation of bills of quantities — 35

recovery statement
components of — 217–218, 472, 483, 542
definition of — 72
interest — 209, 210
interim payment certificate — 206
penalties — 199
subcontractor — 217–218, 472, 540
retention fund — 111–113
riot, as cause for delay in completion — 186

S
SASRIA see South African Special Risks Insurance Association (SASRIA)
schedule of rates — 19, 83, 219, 297, 311
section
adjustments to contract value — 224
definition of — 72, 394
penalties applicable to — 199
security
cash deposit — 117
claiming from — 116
comparison between forms of — 116–117
construction guarantee — 113–116
at call — 114
failure to provide — 117–118, 129
fixed — 115–116
variable — 113–115, 323
default provision — 117–118
definition of — 73, 306, 394
payment reduction — 305, 323
subcontractors, to be provided by — 119

Page 574

foreman — 130
handing over formalities — 126–127, 326–327, 528
maintenance of — 125
meetings, recording of minutes — 316, 326, 334, 335, 528
natural features, relics or articles of value — 155, 329
ownership of — 124
pegs and reference points — 126, 137–138, 326, 329, 428–429
possession of — 124–125
reasonable access to — 125

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
undocumented services — 155, 329
South African Association of Consulting Engineers (SAACE) — 37, 43
South African Council for the Architectural Profession (SACAP) — 31
South African Council for the Project and Construction Management Professions
(SACPCMP) — 38
South African Council for the Quantity Surveying Profession (SACQSP) — 36
South African Institute of Architects (SAIA) — 31–32, 42, 43
South African Insurance Association Exceptions — 96
South African Property Owners’ Association (SAPOA) — 29, 43
South African Special Risks Insurance Association (SASRIA) — 96, 105
Specialist Engineering Contractors Committee — 43
specifications, definition of — 5–6, 132
State contracts see organs of State (OoS) contracts
status report, definition of — 73, 306, 394
strike, as cause for delay in completion — 186
subcontract
bills of quantities — 395
construction equipment — 395
construction information — 395
construction period — 395
data — 395
direct — 25–26
domestic — 26, 49, 61, 73, 255
drawings — 395
final account — 395, 469–470, 480, 483
interim completion of — 446–447
Copyright © 2019. Juta & Company, Limited. All rights reserved.

nominated
advantages and disadvantages of — 142–144, 432–434
definition of — 144
guarantee for advance payment — 118
procedure — 144–145, 434–436
payment advice — 395
practical completion of — 448–449
priced document — 395
programme — 395–396

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
prohibition against cession and assignment — 79–80
recovery statement — 396
selected
adjustment of amount — 223–224, 562
advantages and disadvantages of — 142–144
guarantee for advance payment — 118
procedure — 148
sum — 396
termination of — 12
value — 396
adjustment — 226, 469, 481, 482
works — 396
subcontract agreement — 46–47, 62, 386, 396
appointment of employer’s agents — 407
definition of — 71, 395
definitions — 396–397
documents — 404–405
indemnities — 413–414
insurance — 417
interpretation — 398
obligations of parties — 426–427
offer and acceptance — 400–402
and principal agent — 88
securities — 419–420
termination of
default by contractor or employer — 482–484
default by subcontractor — 479–482
parties by mutual agreement — 484–486
subcontractor — 30, 464–466
Copyright © 2019. Juta & Company, Limited. All rights reserved.

appointment of — 158, 401

compensatory interest — 210
completion
final — 453
interim — 446–447, 457
practical — 448–449
cooperation with other contractors — 440–441
damages payable by contractor — 200, 460, 484
defects liability period — 453

definition of — 73, 394

domestic / non-nominated — 49
failure to achieve interim completion of subcontract works — 199
guarantee for payment — 120
insolvency of — 144, 158, 189, 196, 223, 434, 481
late appointment of — 188
latent defects liability period — 454, 482, 483, 484, 486
liability for damages to contractor for non-completion — 199
liability for third party claims — 100
nominated — 141–145, 386, 432–436
act or omission by — 189
advance payment for goods and materials — 119, 420, 426
cession or assignment of rights or obligations — 79–80
contractor’s instructions regarding nomination — 128
contractor’s obligations to — 135–136
default of — 223
design undertaken by — 91, 188
insolvency of — 158, 189, 196, 223
making good loss or damage — 95
no recognition by State — 50
termination of agreement — 158–159, 481–482
objection by contractor to appointment — 145, 436
obligations of
to comply with statutory requirements — 399
to furnish subcontract guarantee for construction — 419
to give indemnities — 102
to make good loss and damage — 95, 410–411
to set out accurately subcontract works — 429
Copyright © 2019. Juta & Company, Limited. All rights reserved.

to submit priced bills of quantities / document — 129, 420

to submit subcontract program — 426
occupational injuries and diseases claims — 108, 417
payment by employer — 215
payment certificate notification — 546
payments due by contractor — 213–214, 464, 538
payments due to contractor — 208, 215–216, 466
period of responsibility — 95
professional indemnity insurance — 417

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
prohibition against cession and assignment — 79–80
provision of security — 119
public liability insurance — 107, 417
recovery of expense and loss — 217–218, 472, 540
right to revision of date for interim completion by contractor — 196
selected — 141–144, 147–148, 386, 438–439
advance payment for goods and materials — 119, 420, 426
cession or assignment of rights or obligations — 79–80
contractor’s instructions regarding nomination — 128
contractor’s obligations to — 135–136
definition of — 148, 438–439
design undertaken by — 91
making good loss or damage — 95
no recognition by State — 50
termination of agreement — 480–481
suspension of works by — 135, 189, 214, 482
subcontract works
design of — 408
execution of — 135, 428, 454, 482, 486
risk — 410
surety — 111, 112–113
suspension, definition of — 73, 306

tender document — 53–55

tenders — 52–53
acceptance of — 55–56
conditional acceptance — 56–57
inviting — 53
letter of intent — 56–57
period of validity — 55
pre-qualification of tenderers — 53

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
qualification of — 55
subcontracts, invited by principal agent — 401, 434–435, 439
withdrawal of — 55, 401
third party claims
damage to neighbouring properties — 100–101
liability for — 99–100, 320
limitation of liability for — 100

Page 576

time as essence of contract — 13, 197

time for completion see also extension of time
float time — 195–196
reduction of — 194

V
valuation — 87, 204–206, 210, 216, 348, 561
value-added tax
interim payment certificate — 205, 206, 207
invoice — 210, 464

W
working days, definition of — 73, 306, 396
works
definition of — 73, 105, 306, 396
power supply to — 326, 329
protection of — 335
setting out of — 137–138, 329, 428–429
subcontract — 396
Copyright © 2019. Juta & Company, Limited. All rights reserved.

suspension of — 135, 190, 212, 234–235, 329

definition of — 73, 396
failure by principal agent to issue payment certificate — 189, 235
late payment by employer to contractor — 211
notice of intention — 357, 358, 359
by subcontractor — 214, 234–235, 465
suspension or termination of — 335, 357
water supply to — 326, 329
works risk — 93–97

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.
insurance — 105, 205, 319–320, 353
limitation of — 95–96
subcontract — 410
Copyright © 2019. Juta & Company, Limited. All rights reserved.

Segal, S 2019, Finsen's the Building Contract, Juta & Company, Limited, Cape Town. Available from: ProQuest Ebook Central. [10 August 2022].
Created from ujlink-ebooks on 2022-08-10 08:10:28.

Torts Cases, Legislation and Commentary (Harold Luntz, David Hambly)
100% (4)
Torts Cases, Legislation and Commentary (Harold Luntz, David Hambly)
2,757 pages
Drafting and Negotiating Commercial Contracts
No ratings yet
Drafting and Negotiating Commercial Contracts
511 pages
Goode Roy Kronke Herbert Mckendrick Ewan PDF
100% (1)
Goode Roy Kronke Herbert Mckendrick Ewan PDF
775 pages
Coulson On Adjudication (Second Edition) PDF
No ratings yet
Coulson On Adjudication (Second Edition) PDF
530 pages
InternatIonal ArbItratIon Cases and Materials ThIrd EdItIon Gary B. Born 2022
100% (2)
InternatIonal ArbItratIon Cases and Materials ThIrd EdItIon Gary B. Born 2022
1,608 pages
Contemporary Company Law
100% (1)
Contemporary Company Law
1,204 pages
Understanding Construction Law (Jeremy Coggins, Tom Davie, Phil Evans Etc.) (Z-Library)
No ratings yet
Understanding Construction Law (Jeremy Coggins, Tom Davie, Phil Evans Etc.) (Z-Library)
684 pages
Law of Costs (Gino Evan Dal Pont) (Z-Library)
100% (1)
Law of Costs (Gino Evan Dal Pont) (Z-Library)
2,497 pages
Competition Enforcement and Litigation in Canada Di Domenico
No ratings yet
Competition Enforcement and Litigation in Canada Di Domenico
1,178 pages
Construction Arbitration and Alternative Dispute Resolution Theory and Practice Around The World (Renato Nazzini) (Z-Library)
No ratings yet
Construction Arbitration and Alternative Dispute Resolution Theory and Practice Around The World (Renato Nazzini) (Z-Library)
457 pages
Handbook of ICC Arbitration_ Commentary, Precedents, -- Thomas H_ Webster and Michael W_ Bühler -- Third Edition_, London, England, 2014 -- Sweet & -- 9780414032699 -- 0cc09691aa062f80c10d98833cce899d -- Anna’s Arc
100% (2)
Handbook of ICC Arbitration_ Commentary, Precedents, -- Thomas H_ Webster and Michael W_ Bühler -- Third Edition_, London, England, 2014 -- Sweet & -- 9780414032699 -- 0cc09691aa062f80c10d98833cce899d -- Anna’s Arc
1,032 pages
Finsen's The Building Contract
No ratings yet
Finsen's The Building Contract
2 pages
Remedies For Torts, Breach of Contract, and Equitable Wrongs (Andrew Burrows) (Z-Library)
No ratings yet
Remedies For Torts, Breach of Contract, and Equitable Wrongs (Andrew Burrows) (Z-Library)
625 pages
Melvin Aron Eisenberg - Foundational Principles of Contract Law-Oxford University Press, USA (2018) PDF
91% (11)
Melvin Aron Eisenberg - Foundational Principles of Contract Law-Oxford University Press, USA (2018) PDF
903 pages
The Law of Contract in South Africa: Fifth Edition
0% (2)
The Law of Contract in South Africa: Fifth Edition
9 pages
Module 1 Law Practice and Procedure International Arbitration - Workbook
No ratings yet
Module 1 Law Practice and Procedure International Arbitration - Workbook
296 pages
Volume II, Sweet - Maxwell - S Chitty On Contracts Sweet (2017)
100% (1)
Volume II, Sweet - Maxwell - S Chitty On Contracts Sweet (2017)
2,851 pages
National Building Code of India 2016
100% (4)
National Building Code of India 2016
4 pages
Remedies in Construction Law (Construction Practice Series)
100% (1)
Remedies in Construction Law (Construction Practice Series)
485 pages
(Stephen Bainbridge) The New Corporate Governance
No ratings yet
(Stephen Bainbridge) The New Corporate Governance
260 pages
Contract in Commercial Law - Russell Hinchy - 2016 - Lawbook Co. - 9780455237688 - Anna's Archive
No ratings yet
Contract in Commercial Law - Russell Hinchy - 2016 - Lawbook Co. - 9780455237688 - Anna's Archive
560 pages
Modern Intellectual Property Law
100% (1)
Modern Intellectual Property Law
892 pages
International Commercial Law
100% (2)
International Commercial Law
1,695 pages
Core Text by Giliker
No ratings yet
Core Text by Giliker
1,326 pages
Charlson Ong The Execution Thematic Analysis
67% (3)
Charlson Ong The Execution Thematic Analysis
2 pages
286 Froom and Others V Butcher
No ratings yet
286 Froom and Others V Butcher
11 pages
TLI Pleadings Pack 2010
No ratings yet
TLI Pleadings Pack 2010
224 pages
(Palgrave Law Masters) Raymond N Emson - Evidence - Palgrave (2004) PDF
100% (2)
(Palgrave Law Masters) Raymond N Emson - Evidence - Palgrave (2004) PDF
601 pages
The Law of Contract in South Africa Part 1
No ratings yet
The Law of Contract in South Africa Part 1
306 pages
Jurisdiction and Arbitration Agreements and Their Enforcement
No ratings yet
Jurisdiction and Arbitration Agreements and Their Enforcement
1,032 pages
ICC Guide To Effective Management of Arbitration
No ratings yet
ICC Guide To Effective Management of Arbitration
65 pages
(Hart Studies in Private Law) Paul S Davies - Simon Douglas - James Goudkamp (Editors) - Defences in Equity (2018, Hart Publishing) (10.5040 - 9781509995110) - Libgen - Li
No ratings yet
(Hart Studies in Private Law) Paul S Davies - Simon Douglas - James Goudkamp (Editors) - Defences in Equity (2018, Hart Publishing) (10.5040 - 9781509995110) - Libgen - Li
391 pages
(Routledge Research in International Commercial Law) Zheng Sophia Tang - Jurisdiction and Arbitration Agreements in International Commercial Law-Routledge (2014)
No ratings yet
(Routledge Research in International Commercial Law) Zheng Sophia Tang - Jurisdiction and Arbitration Agreements in International Commercial Law-Routledge (2014)
312 pages
Arbitration Clauses and Third Parties (Asli Arda) (Z-Library)
100% (1)
Arbitration Clauses and Third Parties (Asli Arda) (Z-Library)
317 pages
The IBA Rules On The Taking of Evidence in International Arbitration - A Guide (Z-Lib - Io)
No ratings yet
The IBA Rules On The Taking of Evidence in International Arbitration - A Guide (Z-Lib - Io)
194 pages
Commercial Law - Samantha J. Traves - Fourth Edition., 2016 - Lexis Nexis - 9780409343045 - Anna's Archive
100% (3)
Commercial Law - Samantha J. Traves - Fourth Edition., 2016 - Lexis Nexis - 9780409343045 - Anna's Archive
930 pages
Untitled
No ratings yet
Untitled
800 pages
Contract Law by Mindy Chen Wishart
100% (4)
Contract Law by Mindy Chen Wishart
633 pages
(Charles E. F. Rickett) Justifying Private Law Rem
No ratings yet
(Charles E. F. Rickett) Justifying Private Law Rem
423 pages
Lectures On Comparative Law of Contracts
100% (1)
Lectures On Comparative Law of Contracts
194 pages
Foreign Investment, International Law and Common Concerns-Routledge PDF
No ratings yet
Foreign Investment, International Law and Common Concerns-Routledge PDF
397 pages
Surya P Subedi International Investment
No ratings yet
Surya P Subedi International Investment
253 pages
Teaching Evidence Law Contemporary Trends and Innovations (Yvonne Daly (Editor), Jeremy Gans (Editor) Etc.) (Z-Library)
No ratings yet
Teaching Evidence Law Contemporary Trends and Innovations (Yvonne Daly (Editor), Jeremy Gans (Editor) Etc.) (Z-Library)
201 pages
Judicial Enforcement of Arbitral Awards PDF
No ratings yet
Judicial Enforcement of Arbitral Awards PDF
228 pages
GAR Guide The Guide To M&A Arbitration - Third Edition
No ratings yet
GAR Guide The Guide To M&A Arbitration - Third Edition
257 pages
Commercial Contracts - Drafting Techniques and Precedents
No ratings yet
Commercial Contracts - Drafting Techniques and Precedents
110 pages
Introduction To The Law of Contract PDF
100% (1)
Introduction To The Law of Contract PDF
100 pages
Ecom Paul Todd
No ratings yet
Ecom Paul Todd
46 pages
The Law of Estoppel in South Africa (Sonnekus) (Z-Library)
No ratings yet
The Law of Estoppel in South Africa (Sonnekus) (Z-Library)
607 pages
R V Milat - A Case Study in Cross-Examination - Dan Howard - 1, 2014 - LexisNexis Butterworths - 9780409336856 - Anna's Archive
100% (1)
R V Milat - A Case Study in Cross-Examination - Dan Howard - 1, 2014 - LexisNexis Butterworths - 9780409336856 - Anna's Archive
651 pages
ICC Multiparty Arbitration
0% (2)
ICC Multiparty Arbitration
10 pages
Law of Obligations and Legal Remedies
88% (8)
Law of Obligations and Legal Remedies
644 pages
[Cambridge Studies in International and Comparative Law] James Crawford - State Responsibility_ the General Part (2013, Cambridge University Press) [10.1017_CBO9781139033060] - Libgen.li
No ratings yet
[Cambridge Studies in International and Comparative Law] James Crawford - State Responsibility_ the General Part (2013, Cambridge University Press) [10.1017_CBO9781139033060] - Libgen.li
906 pages
The Politics of Regulation in The UK Between Tradition, Contingency and Crisis - Daniel Fitzpatrick
100% (1)
The Politics of Regulation in The UK Between Tradition, Contingency and Crisis - Daniel Fitzpatrick
239 pages
Environmental Regulation Law, Science, and Policy. (Robert V. Percival)
100% (2)
Environmental Regulation Law, Science, and Policy. (Robert V. Percival)
2,061 pages
Chitty On Contracts (Brian Gilchrist, Duncan Abate)
100% (1)
Chitty On Contracts (Brian Gilchrist, Duncan Abate)
2,384 pages
Singapore Arbitratio by Robert Merkin Johan
No ratings yet
Singapore Arbitratio by Robert Merkin Johan
376 pages
Life of a Lawyer
From Everand
Life of a Lawyer
Jerry Zaslow
No ratings yet
C1.2 Contract Data PBA JBCC 6.2 SANSA
No ratings yet
C1.2 Contract Data PBA JBCC 6.2 SANSA
16 pages
JBCC Contract Data - Bulk Earthworks_ PT2023_29
No ratings yet
JBCC Contract Data - Bulk Earthworks_ PT2023_29
17 pages
MacRoberts on Scottish Building Contracts 2nd Edition Macroberts download
100% (1)
MacRoberts on Scottish Building Contracts 2nd Edition Macroberts download
48 pages
Popular
No ratings yet
Popular
29 pages
Kinta Case
No ratings yet
Kinta Case
5 pages
S11 CLC 2022 - Medical Negligence
No ratings yet
S11 CLC 2022 - Medical Negligence
3 pages
subjects of IL
No ratings yet
subjects of IL
22 pages
Assault and Battery As A Tort and Its Remedies
No ratings yet
Assault and Battery As A Tort and Its Remedies
6 pages
Pages From Barbri-Conviser-Conflict-Laws
No ratings yet
Pages From Barbri-Conviser-Conflict-Laws
5 pages
Peru - Chagual - Alert - 12-11-2019 - INC-49689
No ratings yet
Peru - Chagual - Alert - 12-11-2019 - INC-49689
4 pages
Axis Bank Limited v. Madhav Prasad Aggarwal, 2018 SCC OnLine Bom 3891
No ratings yet
Axis Bank Limited v. Madhav Prasad Aggarwal, 2018 SCC OnLine Bom 3891
100 pages
Introduction To Chemical Risk Assessment and Chemical Security - Bassam Al-Hayek
No ratings yet
Introduction To Chemical Risk Assessment and Chemical Security - Bassam Al-Hayek
14 pages
# 51 N. Bacalso Ave., Sambag 1, Cebu City: Rizwoods Colleges
No ratings yet
# 51 N. Bacalso Ave., Sambag 1, Cebu City: Rizwoods Colleges
10 pages
CINDISECON
No ratings yet
CINDISECON
8 pages
Alarilla vs. Sandiganbayan 338 SCRA 485
No ratings yet
Alarilla vs. Sandiganbayan 338 SCRA 485
6 pages
Anti-Sexual Harassment ACT OF 1995: Ra No. 7877
No ratings yet
Anti-Sexual Harassment ACT OF 1995: Ra No. 7877
24 pages
Review of Related Literature 1
No ratings yet
Review of Related Literature 1
2 pages
bernadetha Cv 2025 2
No ratings yet
bernadetha Cv 2025 2
6 pages
2022 Criminal Law Course Manual
No ratings yet
2022 Criminal Law Course Manual
14 pages
Examination of Accused and Framing of Charges
No ratings yet
Examination of Accused and Framing of Charges
7 pages
CRIM 6 Dispute Incident
No ratings yet
CRIM 6 Dispute Incident
12 pages
Workplace Hazards PDF
No ratings yet
Workplace Hazards PDF
41 pages
GS Handout
No ratings yet
GS Handout
12 pages
The Role of Recreational Sports in Federal Prison System: Amie Capkm (Honours), Acadia University
No ratings yet
The Role of Recreational Sports in Federal Prison System: Amie Capkm (Honours), Acadia University
166 pages
in Re - Suspension From Practice of Law in The Territory of Guam of Atty. Leon G. Maquera (Bar Matter No. 793, July 30, 2004)
No ratings yet
in Re - Suspension From Practice of Law in The Territory of Guam of Atty. Leon G. Maquera (Bar Matter No. 793, July 30, 2004)
2 pages
Arroyo V People
100% (1)
Arroyo V People
4 pages
Nashon Final
No ratings yet
Nashon Final
54 pages
20240426205946PM 1267843866 12900200 849078978 - CLT319821
No ratings yet
20240426205946PM 1267843866 12900200 849078978 - CLT319821
5 pages
Bar Review Institute University of The Philippines College of Law Last Minute Tips in Political Law BAR 2020/2021
No ratings yet
Bar Review Institute University of The Philippines College of Law Last Minute Tips in Political Law BAR 2020/2021
8 pages
definition,nature and scope of administrative law
No ratings yet
definition,nature and scope of administrative law
6 pages
Women and Law Project by Mansi Bhardwaj
No ratings yet
Women and Law Project by Mansi Bhardwaj
10 pages
Memorial On Behalf of The Respondent
100% (1)
Memorial On Behalf of The Respondent
25 pages