UK Update: Creating Construction Contracts Electronically – saving the planet, one contract at a time

After two years of hybrid working, how has technology changed the way I create construction contracts? A lot! Electronic platforms and execution mean we are well on the way to paperless construction contracts becoming a reality.

Building Contract Platforms

Pre-pandemic, I used to spend a lot of time filling in a hard copy SBCC/JCT building contract in manuscript. Now, online platforms allow me to input data directly, share drafts with clients and make any amendments easily – all without reaching for my rubber.

A key point to note is that there are several compiling platforms of varying sophistication – and cost! I use both SBCC online and JCT Construct.

Personally, I really like JCT Construct. It is hugely reliable, practical, and designed for purpose. You can edit the contract and it automatically prepares a comparison showing all changes which is really helpful. It can also automatically upload the document to DocuSign to be executed electronically.

The SBCC platform is less sophisticated than JCT Construct as it does not allow you to edit the contract beyond specified fields, albeit its limited functionality is reflected in the minimal subscription cost.

There are still limitations even when using these platforms as you can’t amend a finalised contract without either using further editing software such as Adobe pro or reverting to printing out the document and amending by manuscript – making it even more important you get it right before finalising.

There are other platforms that can be used to compile standard form appointments but in truth, most appointments are still bespoke and drafted by lawyers. Looking forward, I think the next big change for appointments will be document automation for clients who use standard appointments across their developments and we are seeing enthusiasm from clients to pilot automation software.

Electronic Execution

The biggest change I’ve seen from the pandemic is the rise of electronic execution of documents. Before, all construction contracts tended to be signed traditionally in wet ink. Now, a large percentage are signed electronically.

Execution requirements differ in England and Scotland. That is one thing that remains unchanged by the pandemic. This has had a practical impact on the take up of electronic execution, particularly in Scotland.

Given that deeds can be validly signed electronically, almost all English governed construction contracts I deal with are signed electronically.

In Scotland contracts can also be signed electronically. However, the nuances of Scots Law execution mean that it is only the most advanced types of electronic signature (qualified electronic signatures) which are “self-proving” (being the traditional approach adopted for signing of construction documents in the Scottish market). Changing that well established market practice is taking slightly longer.

Some clients jumped headfirst into using electronic signatures. They recognised the many benefits, in particular saving time (and money!).

Other clients have been apprehensive especially where third party funding is required due to the cautious approach taken by institutional funders to non self-proving electronic signatures. For attitudes to change, I think acceptance of simple electronic signatures will need to come from institutional funders and the rest of the market will follow suit.

Practical issues – room for improvement?

Electronic execution platforms have risen to the challenge of the pandemic. Huge improvements have been made in that time, but there are still some practical issues, particularly for large scale documents. They are very effective for signature of appointments and collateral warranties, but the file size limits can mean that building contracts don’t lend themselves well to these platforms. Most platforms also don’t support certain file types that can be found in building contracts e.g. CAD drawings.

Notwithstanding the challenges, I have no doubt that electronic execution is here to stay in both jurisdictions.

My message to anyone reading this is clear; embrace third party platforms and don’t forget your username or passwords!

By Demi Renucci, Burness Paull LLP, Scotland, a Transatlantic Law International Affiliated Firm.  

For further information or for any assistance please contact ukscotland@transatlanticlaw.com

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