The JBCC agreements have overwhelmed the South African construction industry, becoming required for contracts with the state and fast becoming the preferred contract suite for major and minor works throughout the country. One of the key, and somewhat unique, role players in the JBCC suite is the Principal Agent. This brief article will explore the position of a Principal Agent under Edition 6.2 of the JBCC suite of contract agreements.
The powers of the principal agent
The first unique feature of the JBCC Principal Agent is that “Agent” is somewhat of a misnomer. Rather than acting under a mandate and authority, as is usually required for a relationship of agency, the Principal Agent is granted, in terms of clause 1.1, “full authority to act in terms of the agreement”. This entails full decision-making power, subject only to the requirement that he/she (often as employee of the Principal Agent firm) must act with the reasonable care and skill as required from persons in the industry. This implies a professional duty to the Employer, and an associated level of liability.
The second unique feature, often misunderstood, is that the Employer is prohibited from interfering with the duties of the Principal Agent, again subject to the requirement that reasonable care and skill is being practiced by the Principal Agent. The Employer cannot, and should not, attempt to influence decisions of the Principal Agent toward a position that favours the Employer. This is difficult for Employers to understand, given that they pay the Principal Agent. However, independence of this nature has proven a key check and balance on the unilateral exercise of power by the Employer and has been a significant contributor to the success of the JBCC agreements and the structures it regulates. The courts see the Principal Agent as an “independent professional role player with extensive authority to bind the Employer”.
In short, the Principal Agent has the responsibility of administering the contract in a professional, expeditious manner. This includes the continuous assessment of the progress of the works, as well as the financial, technical, and legal conduct of the site and the project. From a legal perspective, a key responsibility is the evaluation and determination of claims for payment by the subcontractors, including claims for extension of time and for delay damages. In doing so, the Principal Agent must demonstrate a mind that is independent, open to persuasion, aware of commercial realities, and holds parties to a professional and workmanlike standard.
The certification of Practical Completion is a core responsibility and illustrates his oversight of the entire project. This duty is required, and unless the Principal Agent is able to provide a comprehensive and conclusive list of defects, the Contractor may put him to terms and, should he fail to produce the list, Practical Completion will be deemed certified. Not only is he obliged to provide a comprehensive and conclusive list, but the list may no longer, as was the case in previous editions of the JBCC, be amended. This avoids the possibility of the Principal Agent delaying or prejudicing the Contractor or a Subcontractor by repeatedly amending the list.
The Principal Agent holds unique powers and duties in terms of the JBCC suite. It is important that all stakeholders understand the scheme of duties in order to ensure an efficient and collaborative environment on site and in administration. As an independent, impartial role player, the Principal Agent must carry out his duties to a professional standard or face the serious consequences for failure.
 Aveng Grinaker v MEC Department of Human Settlements 3 All SA 466 (ECLD)
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).