In today’s webinar it was mentioned that if no position is included in the contract particulars with regard to fluctuations then option B becomes the default position. In this case if a tax or levy was reduced by the government would the contractor have to pass on the saving to the employer?
I think that under the JCT 2016 DB Contract the default position is that JCT Fluctuations Option A applies. That is when the entry for these in the Contract Particulars has not been completed. Option A is set out at Schedule 7 and whilst not in the Contract Options B and C are published by the JCT and in theory could be used.
Schedule 7/Option A makes it clear that there can be additions to and deductions from the Contract Sum as a result of operating Paragraphs A.1.2; A.1.6; A.2.2 and A.3.2 and that in theory could lead to a reduction in the Contract Sum. Thus is a tax or levy was reduced the Employer could look to make savings.