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How does JCT clause 2.38 work?

Clause 2.38 is how JCT deals with defects after practical completion, and the Certificate of Making Good that closes it often releases the rest of your retention.

Updated: . By Jack Butler-Kettle, Construction Claims Consultant.

The answer

Clause 2.38 of SBC/Q 2016, the JCT Standard Building Contract, deals with the Rectification Period, JCT's name for the defects period. It covers defects, shrinkages and other faults that appear in that period because materials, goods or workmanship do not meet the contract. The period starts on the practical completion date in the Practical Completion Certificate under clause 2.30. It runs for the length stated in the Contract Particulars. During the period, the Architect/Contract Administrator may instruct the Contractor, your main contractor, to make good individual defects. At the end, it sends the Contractor a schedule of defects within the time the clause gives. After that, no further instructions to make good can be given. The Contractor makes the scheduled defects good within a reasonable time, at no cost to the Employer. With the Employer's consent, the Architect/Contract Administrator can instead instruct that some defects are not to be made good. An appropriate deduction is then made from the Contract Sum. Once the required defects are made good, the Architect/Contract Administrator issues the Certificate of Making Good under clause 2.39. This matters to you because many subcontracts release the second half of your retention on that certificate. Under the main contract, the second half of the retention is released in the Interim Certificate that follows it. The Final Certificate cannot be issued until that certificate, the end of the Rectification Period and the statement of adjustments have all happened. So a late or withheld certificate holds up both the retention and the final account. Four things commonly go wrong. The schedule includes damage or wear, which are not defects. A snagging list keeps growing after the period has ended. Retention is held against defects that were never on the schedule. And the Contractor does not press for the Certificate of Making Good, so the clock on its own final payment never starts. Check the release trigger in your subcontract. As the end of the Rectification Period approaches, ask your main contractor when the certificate is expected and which outstanding items, if any, are yours.

Example

Illustrative example. The scenario and figures are invented.

The facts

Practical completion is certified with £45,000 of retention still held after the first release. The Rectification Period, of the length stated in the Contract Particulars, runs from that date.

What happens

  1. After 4 weeks, the Architect/Contract Administrator instructs the Contractor to fix a leaking rooflight, which is made good within the week.
  2. At the end of the period, the schedule of defects lists nine items: cracked plaster, two doors that bind, faulty sanitaryware and five paint failures.
  3. The Contractor makes eight good within 3 weeks.
  4. The ninth is a cosmetic paint mismatch in a plant room. The Employer agrees it need not be made good, and £600 is deducted from the Contract Sum instead.

The outcome

The Certificate of Making Good is issued, the next Interim Certificate releases the £45,000, and the Final Certificate can follow.

A scratched worktop caused by the Employer's furniture installers would be damage, not a defect, and would come off the schedule.

To have the end of every defects period, and the certificate each release waits for, tracked in one register, see our Retention Loss Prevention service.