The New CCDC 2 - Stipulated Price Contract Part II: Supplementary Conditions
The Canadian Construction Documents Committee (the “CCDC”) recently replaced its 2008 version of the CCDC 2 – Stipulated Price Contract with a new 2020 release. Copyright seals ceased to be available for the 2008 version of the contract on January 1, 2022.
This post forms part two of a two part series addressing the new CCDC 2. The first post dealt with the key changes to the contract in the 2020 version and can be read here. This post addresses supplementary conditions.
Much of the time when companies use the CCDC standard contract documents, they will use supplementary conditions to add to, remove, or modify the standard contract to better fit the circumstances and desires of the parties.
For those who prepared a standard set of supplementary conditions for their own use with the 2008 version of the Stipulated Price Contract, those conditions will now need to be reviewed and updated. Some conditions will likely now be obsolete while others may continue to fit with the new version of the contract. Entirely new supplementary conditions may also be desired based on the changes to the CCDC 2.
In this article, having regard to the key changes to the 2020 version of the CCDC 2, we set out some items that you may want to consider addressing in supplementary conditions accompanying the CCDC 2.
Division 01 – General Requirements
Contemporaneously with the release of CCDC 2 – 2020, the CCDC introduced a new Division 01 General Requirements. Certain of the provisions of the 2008 version of the CCDC 2 were migrated to Division 01 (including various definitions).
The use of Division 01, however, is not required or assumed when the parties use CCDC 2. Thus, if the parties are not going to incorporate Division 01, they will want to consider adding definitions and matters back into the contract through the use of supplementary conditions. By contrast, if Division 01 is going to be incorporated, it should be reviewed against the supplementary conditions to ensure that matters are not dealt with in both.
Notification of Subcontractors
GC 5.3, which addresses payments, sets out the timing and procedure for obtaining a certificate for payment. Interestingly, there is no obligation placed on the contractor to notify subcontractors when they submit an application for payment. Similarly, the contractor is not required to notify subcontractors when and if the consultant and owner reject a payment application or certify a different amount than requested.
Parties may want to consider expressly placing such a notification obligation on the contractor.
In the 2008 version of the CCDC 2, GC 11.2 addressed contract security. It stated that the contractor would provide the owner with any contract security specified in the contract documents and contained some rules around surety bonds.
In the new version, GC 11.2 has been removed. In fact, there is now no mention of contract security anywhere in the CCDC 2. If the parties intend to require contract security, this should be addressed in supplementary conditions.
GC 12.2 dealing with early occupancy provides that the contractor ceases to be liable for, and the warranty period will begin to run for, the part of the work taken over by the owner as of the date of occupancy. While this seems quite simple, there are a number of interpretive issues which arise with this new concept. For example:
- If mechanical systems are turned on based on the owner’s occupancy, does the warranty period for those systems begin to run?
- What happens if the contractor needs to continue to use the portion of the work now occupied by the owner to complete the remaining work?
- In what circumstances will it be considered reasonable or unreasonable for the contractor to withhold consent to early occupancy?
All of these questions can be addressed through appropriate supplementary conditions.
In October of 2020, the Alberta government announced changes to the Builders’ Lien Act (to be renamed the Prompt Payment and Construction Lien Act) contained in Bill 37, which have not yet come into effect. However, once Bill 37 comes into effect and the associated regulations are published, the parties may also want to address certain matters pertaining to adjudication. While the adjudication procedures in the legislation will override any contrary adjudication procedures in a construction contract, there will likely still be some room to supplement the procedures in the legislation.
For example, while the parties are likely unable to reduce the scope of matters that can be referred to adjudication, they could instead expand the scope. If done, this could allow all matters to be addressed together by an adjudicator instead of requiring different dispute resolution procedures for different subject areas of disagreement.
Similarly, supplementary conditions could allow for a consolidation of disputes so that matters between the contractor and owner, and issues with third parties (such as subcontractors) could be dealt with together.
Once the new regulations accompanying Bill 37 are released, we will have a better idea of how exactly the adjudication process will work in Alberta and what else the parties may wish to include in their supplementary conditions.
Finally, the CCDC 2 does not address any non-statutory holdbacks (such as a deficiency holdback) or the early release of holdbacks to subcontractors. If the parties intend for these to apply, that will need to be addressed in supplementary conditions.
If you have any questions regarding the new CCDC 2 – 2020 Stipulated Price Contract, or require assistance with drafting appropriate supplementary conditions, our construction team would be happy to assist.
This post is part two of a two part series entitled "The New CCDC 2 – Stipulated Price Contract". Our first post, found here, addressed key changes to the contract.
 As of yet, it is unclear what disputes will be referable to adjudication. This is expected to be addressed in the regulations.