JCT Contracts: The Rules, Risks & Rewards for Property Investors with Tony Power
Last updated: 28 Feb 2025
Meet Tony Power
Legal contracts in property investment can be a minefield, and getting them wrong can cost investors thousands. That’s why understanding JCT contracts (Joint Contracts Tribunal) - the most commonly used construction contracts in the UK - is crucial for property investors and developers.
To shed light on this complex subject, we invited Tony Power, an academic lawyer, property investor, and contract specialist, to share his expertise. Tony is a lecturer at Canterbury Christ Church University with deep knowledge of contract, employment, and property law. He has worked as a police officer, legal trainer, and advocate in county courts, helping property entrepreneurs navigate legal challenges.
In this session, Tony breaks down JCT contracts, explaining their purpose, the different types, and how to avoid common legal pitfalls.
“The more precise you are, the more protected you are.”
What are JCT contracts?
JCT (Joint Contracts Tribunal) contracts are standardised construction contracts used in England and Wales. They define the legal relationship between parties involved in a construction project, including obligations, payment structures, risk allocation, dispute resolution mechanisms, and project timelines.
Historically, property and construction disputes were rampant due to unclear agreements. JCT contracts were introduced in 1931 by the Royal Institute of British Architects and the National Federation of Building Trade Employers to standardise agreements and reduce costly litigation. Today, they provide clarity and accountability in property developments.
Key elements of JCT contracts
A JCT contract outlines:
Obligations – Clearly defining the roles of investors, developers, and contractors.
Payment structures – Stipulating stage payments and retention clauses.
Risk allocation – Determining who is responsible for delays, defects, and overruns.
Dispute resolution – Establishing processes for resolving conflicts outside of court.
Timelines – Setting project deadlines and penalties for delays.
Without a JCT contract, property investors risk unclear agreements, financial losses, and legal disputes.
Additionally, leveraging property software can help investors manage contracts more efficiently, track project milestones, and ensure compliance with JCT regulations. Tools like Property Filter streamline the sourcing and assessment of deals, ensuring investors make informed decisions.
“A vague contract can cost you thousands. Be specific about materials, timelines, and responsibilities.”
Types of JCT contracts and how to choose the right one
JCT contracts vary depending on the size and complexity of the project. The five main types include:
Minor works building contract – Ideal for small refurbishments and extensions.
JCT intermediate contract – Best suited for medium-sized projects with some complexity.
JCT standard building contract – Used in large-scale developments requiring detailed administration.
JCT design and build contract – A single contract where the contractor handles both design and construction.
JCT measured term contract – Used for long-term maintenance agreements across multiple projects.
Choosing the right JCT contract depends on the size, risk, and complexity of the project. Consulting a quantity surveyor, legal professional, or experienced project manager can help ensure you pick the right one.
Common pitfalls & how to avoid costly mistakes
Many investors make critical mistakes when signing contracts, leading to legal disputes and financial loss. Here are some key pitfalls to avoid:
One common mistake is undefined payment terms. Without clear terms, cash flow issues and unexpected delays can arise. It’s crucial to negotiate stage payments that align with your financing and project timeline.
Another issue is the inadequate scope of work definitions. Vague contracts can lead to extra costs and disputes. A detailed schedule of works should outline every material, finish, and workmanship standard.
Delay protection is often overlooked. JCT contracts don’t automatically include penalties for missed deadlines. Adding a liquidated damages clause can protect you from financial losses due to delays.
Risk allocation must be clearly defined. Many investors fail to specify who is responsible for unforeseen issues like asbestos, foundation problems, or structural defects. A well-drafted force majeure clause helps mitigate unexpected liabilities.
Lastly, many contracts have weak termination clauses, locking investors into agreements even if a contractor underperforms. A strong termination clause ensures you can exit the contract without financial penalties.
“Don’t assume the contract is perfect—read it thoroughly and amend it to fit your project.”
How to use JCT contracts effectively in Property Investment
To maximise the benefits of JCT contracts, property investors should focus on a few essential strategies.
First, customise payment terms to match project milestones rather than arbitrary timeframes. Holding back 5–10% of each payment as retention ensures work is completed to a high standard before final payments are made.
Second, strengthen delay protection. Adding penalties for missed deadlines and limiting contractors’ ability to claim extra time for minor issues helps maintain efficiency.
Next, be precise about quality standards. Using a detailed schedule of works, specifying acceptable substitutes for unavailable materials, and defining workmanship expectations prevent misunderstandings.
Additionally, clarify risk allocation early on. Defining responsibility for unexpected issues like asbestos removal ensures investors aren’t hit with surprise costs.
Finally, contractor warranties are essential. At least a 12-month warranty should cover defects after project completion, protecting investors from additional expenses.
Final thoughts: Protect your investment with the right legal framework
JCT contracts provide a structured legal framework for property investors and developers, helping to mitigate risks, avoid disputes, and streamline construction projects. However, they are not fool proof—understanding and customising these contracts is essential.
By following the guidance shared by Tony Power, investors can ensure their contracts are legally sound, financially secure, and fit for purpose. Seeking professional advice can save you thousands in the long run.
Ready to take action? Here’s what to do next:
Want to Find Motivated Sellers Fast? Property Filter is a property software that helps investors secure off-market deals efficiently.
Need Legal Guidance on JCT Contracts? Reach out to Tony Power at Tpower@empowermenttraining.co.uk or connect with him on LinkedIn.
Watch the Full Episode on YouTube: How to Understand JCT Contracts with Tony Power.
Protect your property investments and stay ahead of costly legal mistakes—get your contracts right from the start!
