113,99 €
Mehr erfahren.
- Herausgeber: John Wiley & Sons
- Kategorie: Wissenschaft und neue Technologien
- Sprache: Englisch
The authoritative guide to the NEC4 Engineering and Construction Contract The New Engineering Contract (NEC) is one of the leading standard forms of contract for major construction and infrastructure projects. The latest edition of the contract (NEC4) is now a suite of contracts widely used in the UK, Australia, Hong Kong, South Africa, Ireland, and New Zealand. This timely and important book provides a detailed commentary on the latest edition of the main NEC4 Engineering and Construction Contract (NEC4 ECC) form. It explains how the contract is intended to operate and examines each clause to consider its application and legal interpretation. It also draws upon the author's highly successful third edition of the book covering the previous contract. It identifies and comments on the changes between the current and previous version of the form. After a brief introduction to the new edition of the form, The NEC4 Engineering and Construction Contract offers in-depth chapters covering everything from main options and secondary option clauses to risk assurances and NEC 4 family contracts. In between, readers will learn about general core clauses, the obligations and responsibilities of the contractor, testing and defects, payments, compensation events, and much more. * Covers the latest version of the NEC Engineering and Construction Contract, the leading standard form contract for major construction projects * Examines the new contract clause by clause and compares it with the previous edition * Previous editions were widely acknowledged as detailed and fair analyses of the NEC contracts * Written by a highly regarded contracts commentator, experienced arbitrator, and adjudicator The NEC4 Engineering and Construction Contract: A Commentary is an excellent book for construction industry professionals working for clients, employers, main contractors, project managers, subcontractors, and specialist contractors.
Sie lesen das E-Book in den Legimi-Apps auf:
Seitenzahl: 768
Veröffentlichungsjahr: 2019
Ähnliche
The NEC4 Engineering andConstruction Contract
A Commentary
Third Edition
Brian Eggleston‡
CEng, FICE, FIStructE, FCIArb
This edition first published 2019© 2019 John Wiley & Sons Ltd
Edition HistoryFirst published in 1996 by Blackwell Science as The New Engineering Contract: A CommentarySecond edition published in 2006 by Blackwell Science retitled as The NEC3 Engineering and Construction Contract: A CommentaryThird retitled edition published in 2019 by John Wiley & Sons Ltd
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law. Advice on how to obtain permission to reuse material from this title is available at http://www.wiley.com/go/permissions.
The right of Brian Eggleston to be identified as the author of this work has been asserted in accordance with law.
Registered Office(s)John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, USAJohn Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, UK
Editorial Office9600 Garsington Road, Oxford, OX4 2DQ, UK
For details of our global editorial offices, customer services, and more information about Wiley products visit us at www.wiley.com.
Wiley also publishes its books in a variety of electronic formats and by print-on-demand. Some content that appears in standard print versions of this book may not be available in other formats.
Limit of Liability/Disclaimer of WarrantyWhile the publisher and authors have used their best efforts in preparing this work, they make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives, written sales materials or promotional statements for this work. The fact that an organization, website, or product is referred to in this work as a citation and/or potential source of further information does not mean that the publisher and authors endorse the information or services the organization, website, or product may provide or recommendations it may make. This work is sold with the understanding that the publisher is not engaged in rendering professional services. The advice and strategies contained herein may not be suitable for your situation. You should consult with a specialist where appropriate. Further, readers should be aware that websites listed in this work may have changed or disappeared between when this work was written and when it is read. Neither the publisher nor authors shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
Library of Congress Cataloging-in-Publication Data applied for.Hardback: 9781119478751
Cover Design: WileyCover Image: © ivanastar/iStock/Getty Images Plus
Set in 10/12pt PalatinoLTStd by Aptara Inc., New Delhi, India
CONTENTS
Cover
Preface
Author's note
Chapter 1 Introduction
1.1 Overview
1.2 Background
1.3 Objectives
1.4 Impacts of change
1.5 The NEC4 suite of contracts
1.6 Characteristics of NEC contracts
1.7 Structure of the NEC4 Engineering and Construction Contract (ECC4)
1.8 Changes ECC3 to ECC4
1.9 Review of points of interest
1.10 Entire agreement
1.11 Exclusion of common law rights
1.12 Conditions precedent to compensation event claims
1.13 Role and powers of the Project Manager
1.14 Changes to Scope (previously Works Information)
1.15 Prevention
1.16 Quotations for compensation events
1.17 Assessments of compensation events
1.18 Dispute avoidance and dispute resolution
Chapter 2 Changes from ECC3
2.1 Evolution
2.2 Features and enhancements
2.3 Terminological changes
2.4 Changes to core clauses
2.5 Changes to dispute resolution procedures
2.6 Changes to Secondary Option clauses
2.7 Data sheet changes
Chapter 3 Main options
3.1 Introduction
3.2 Contract strategy
3.3 Responsibility for design
3.4 Certainty of price
3.5 Allocation of risk
3.6 The Client's requirements
3.7 Operating restrictions
3.8 Early start and/or rapid finish
3.9 Flexibility in contractual arrangements
3.10 Aversion to disputes
3.11 Single point responsibility
3.12 Option A – priced contract with Activity Schedule
3.13 Option B – priced contract with bill of quantities
3.14 Target contracts generally
3.15 Options C and D – target contracts
3.16 Option E – cost reimbursable contract
3.17 Option F – management contract
3.18 Options W1, W2, W3 – resolving and avoiding disputes
Chapter 4 Secondary options
4.1 Introduction
4.2 Choice of Secondary Option clauses
4.3 Status of Secondary Option clauses
4.4 Option X1 – price adjustment for inflation
4.5 Option X2 – changes in the law
4.6 Option X3 – multiple currencies
4.7 Option X4 – ultimate holding company guarantee
4.8 Option X5 – sectional completion
4.9 Option X6 – bonus for early completion
4.10 Option X7 – delay damages
4.11 Option X8 – undertakings to the Client or Others
4.12 Option X9 – transfer of rights
4.13 Option X10 – information modelling
4.14 Option X11 – termination by the Client
4.15 Option X12 – MultiParty Collaboration
4.16 Option X13 – performance bond
4.17 Option X14 – advanced payment to the Contractor
4.18 Option X15 – the Contractor's design
4.19 Option X16 – retention
4.20 Option X17 – low performance damages
4.21 Option X18 – limitation of liability
4.22 Option X20 – key performance indicators
4.23 Option X21 – whole life cost
4.24 Option X22 – early Contractor involvement
4.25 Option Y(UK)1 – project bank account
4.26 Option Y(UK)2 – Housing Grants, Construction and Regeneration Act 1996
4.27 Option Y(UK)3 – Contracts (Rights of Third Parties) Act 1999
4.28 Option Z – additional conditions of contract
Chapter 5 Contract documents
5.1 Introduction
5.2 Entire agreements
5.3 Clause 12.4 of ECC4
5.4 Construction of contracts generally
5.5 ECC4 documentation
5.6 Essential contract documents
5.7 Identified and defined terms
5.8 The Contract Date
5.9 Scope
5.10 Site Information
5.11 Contract Data
5.12 Schedules of cost components
5.13 Ambiguities and inconsistencies in the contract documents
5.14 Schedule of clauses referring to the Scope
Chapter 6 Key players
6.1 Introduction
6.2 Others
6.3 Actions
6.4 Mutual trust and co-operation
6.5 The Client
6.6 Express obligations of the Client
6.7 The Project Manager
6.8 Express duties of the Project Manager
6.9 The Supervisor
6.10 Express duties of the Supervisor
6.11 Communications
6.12 The Project Manager and the Supervisor
Chapter 7 General core clauses
7.1 Introduction
7.2 Mutual trust and co-operation
7.3 Actions
7.4 Identified and defined terms
7.5 Interpretation and the law
7.6 Communications
7.7 The Project Manager and the Supervisor
7.8 Instructions
7.9 Early warning
7.10 Contractor's proposals
7.11 Requirements for instructions
7.12 Illegal and impossible requirements
7.13 Corrupt Acts
7.14 Prevention
Chapter 8 Obligations and responsibilities of the Contractor
8.1 Introduction
8.2 Design obligations, responsibilities and liabilities
8.3 Providing the works
8.4 The Contractor's design
8.5 Using the Contractor's design
8.6 Design of equipment
8.7 People
8.8 Working with the Client and Others
8.9 Subcontracting
8.10 Other responsibilities
8.11 Assignment
8.12 Disclosure
8.13 Express obligations of the Contractor
8.14 Express prohibitions on the Contractor
Chapter 9 Time (and related matters)
9.1 Introduction
9.2 Starting and completion
9.3 Programmes
9.4 Revision of programmes
9.5 Shortened programmes
9.6 Access to and use of the site
9.7 Instructions to stop or not to start work
9.8 Take over
9.9 Acceleration
Chapter 10 Quality management
10.1 Introduction on quality management
10.2 Contractual provisions of ECC4 on quality management
10.3 Understanding the contractual provisions on quality management
10.4 Introduction on testing and defects
10.5 Definitions and certificates
10.6 Tests and inspections
10.7 Testing and inspection before delivery
10.8 Searching for and notifying defects
10.9 Correcting defects
10.10 Accepting defects
10.11 Uncorrected defects
Chapter 11 Payments
11.1 Introduction
11.2 Assessing the amount due
11.3 Payments
11.4 Defined cost
11.5 Payments – Main Option A
11.6 Payments – Main Option B
11.7 Payments – Main Option C
11.8 Payments – Main Option D
11.9 Payments – Main Option E
11.10 Payments – Main Option F
11.11 Final assessment
11.12 Status of and disputes on final assessments
Chapter 12 ECC4 compensation event schemes
12.1 Introduction
12.2 Structure of ECC4 compensation events schemes
12.3 Amendments and additions
12.4 Outline of procedures
12.5 Defining a compensation event
12.6 Compensation events as exclusive remedies
12.7 Fairness of the compensation event procedures
12.8 Unusual features of the compensation event procedures
Chapter 13 Listed compensation events
13.1 Introduction
13.2 Omissions from the listed events
13.3 Scope-related events
13.4 Client's default events
13.5 Client's liability events
13.6 Project Manager/Supervisor-related events
13.7 Physical conditions
13.8 Adverse weather
13.9 Prevention
13.10 Measurement-related events
13.11 Secondary Option clause events
Chapter 14 Notifying compensation events
14.1 Introduction
14.2 Notifications by the Project Manager
14.3 Notifications by the Contractor
14.4 Project Manager's response to notifications
14.5 Last date for notification of compensation events
Chapter 15 Quotations for compensation events
15.1 Introduction
15.2 Instructions to submit quotations
15.3 Failure to give early warning
15.4 Assumptions for assessment of quotations
15.5 Primary clauses on quotations
15.6 Submissions of quotations
15.7 Revised quotations
15.8 Failure to reply to quotations
15.9 General comment on ECC4’s assessment and quotation systems
Chapter 16 Assessment of compensation events
16.1 Introduction
16.2 Changes from ECC3
16.3 General assessment rules
16.4 Particular assessment rules
16.5 The Project Manager's assessments
16.6 Implementing compensation events
16.7 Other financial remedies
Chapter 17 Title
17.1 Introduction
17.2 Client's title to equipment, plant and materials
17.3 Marking equipment, plant and materials
17.4 Removing equipment
17.5 Objects and materials within the site
Chapter 18 Liabilities and insurance
18.1 Introduction
18.2 Liabilities and insurance under ECC4
18.3 Client's liabilities
18.4 Contractor's liabilities
18.5 Recovery of costs
18.6 Insurances
18.7 The Insurance Table
18.8 Insurance policies
18.9 Contractor's failure to insure
18.10 Insurance by the Client
Chapter 19 Termination
19.1 Introduction
19.2 Termination under ECC4
19.3 Reasons for termination under ECC4
19.4 The Termination Table and the Termination Certificate
19.5 Comment on reasons
19.6 Procedures on termination
19.7 Amounts due on termination
Chapter 20 Dispute avoidance and dispute resolution
20.1 Introduction
20.2 Overall structure of ECC4 dispute avoidance and dispute resolution provisions
20.3 Option W3 – the Dispute Avoidance Board
20.4 Choice of Options
20.5 Involvement of Senior Representatives
20.6 Meaning of dispute
20.7 Adjudication under Option W1
20.8 Adjudication under Option W2
20.9 Review by the tribunal
20.10 The Adjudicator's contract
Chapter 21 NEC4 Engineering and Construction Subcontract
21.1 Introduction
21.2 Structure of the ECC4 subcontract
21.3 Common core clause grouping
21.4 Core clauses – general
21.5 Core clauses – the Subcontractor's main responsibilities
21.6 Core clauses – time
21.7 Core clauses – quality management
21.8 Core clauses – payment
21.9 Core clauses – compensation events
21.10 Core clauses – title
21.11 Core clauses – liabilities and insurances
21.12 Core clauses – termination
21.13 Resolving and avoiding disputes
Chapter 22 Legal decisions on NEC-based contracts
22.1 Introduction
22.2 ABB Limited v. Bam Nuttall Ltd [2013] EWHC 1983 (TCC)
22.3 Amey LG Ltd v. Cumbria County Council [2016] EWHC 2856 (TCC)
22.4 Amey Wye Valley Ltd v. The County of Herefordshire District Council (Rev1) [2016] EWHC 2368 (TCC)
22.5 Anglian Water Services Ltd v. Laing O'Rourke Utilities Ltd [2010] EWHC 1529 (TCC)
22.6 Arbitration Application No 2 of 2016 & [2017] Scot CS CSOH 23 (P1039/16)
22.7 Arcadis UK Ltd v. May and Baker Ltd (t/a Sanofi) [2013] EWHC 87
22.8 AMEC Group Ltd v. Secretary of State for Defence [2013] EWHC 110 (TCC)
22.9 Aecom Design Build Ltd v. Staptina Engineering Services Ltd [2017] EWHC 723 (TCC)
22.10 Atkins Ltd v. Secretary of State for Transport [2013] EWHC 139 (TCC)
22.11 Balfour Beatty Ltd v. Gilcomston North Ltd and O Turner Insulation Ltd [2006] Scot CS CSOH 81
22.12 Cleveland Bridge UK Ltd v. Sarens (UK) Ltd [2018] EWHC 751 (TCC)
22.13 Beumer Group UK Ltd v. Vinci Construction UK Ltd [2016] EWHC 2283 (TCC)
22.14 Costain Ltd v. Tarmac Holdings Ltd [2017] EWHC 319 (TCC)
22.15 Dynniq UK Ltd v. Lancashire County Council [2017] EWHC 3173 (TCC)
22.16 Costain Ltd & O'Rourke Civil Engineering Ltd & Bachy Soletance Ltd & Emcor Drake and Scull Group PLC v. Bechtel Ltd & Mr Fady Bassily [2005] EWHC 1018 (TCC)
22.17 Ecovision Systems Ltd v. Vinci Construction UK Ltd (Rev1) [2015] EWHC 587 (TCC)
22.18 Farelly (M&E) Building Services Limited v. Byrne Brothers (Formwork) Ltd [2013] EWHC 1186 (TCC)
22.19 Fermanagh District Council v. Gibson (Banbridge) Ltd [2014] NICA 46
22.20 Ground Developments Ltd v. FCC Construction SA & Ors [2016] EWHC 1946 (TCC)
22.21 Henry Brothers (Magherafelt) Ltd & Ors v. Department of Education for Northern Ireland [2007] NIQB 116, [2008] NIQB 105
22.22 Imtech Inviron Ltd v. Loppingdale Plant Ltd [2014] EWHC 4006 (TCC)
22.23 Imperial Chemical Industries Ltd v. Merit Merrell Technology Ltd [2018] EWHC 1577 (TCC)
22.24 Imperial Chemical Industries Ltd v. Merit Merrell Technology Ltd [2016] EWHC B30 (TCC) [2017] EWHC 1763 (TCC)
22.25 Imperial Chemical Industries Ltd v. Merit Merrell Technology Ltd [2015] EWHC 2915 (TCC)
22.26 Liberty Mercian Ltd v. Cuddy Civil Engineering Ltd & Anor [2013] EWHC 2688 (TCC), [2013] EWHC 4110 (TCC), [2014] EWHC 3584 (TCC)
22.27 McAlpine PPS Pipeline Systems Joint Venture v. Transco PLC [2004] EWHC 2030 (TCC)
22.28 FP McCann Ltd v. The Department for Regional Development [2016] NICh 12
22.29 McConnell Dowell Constructors (Aust) Pty Ltd v. National Grid Gas PLC [2006] EWHC 2551 (TCC)
22.30 Mears Ltd v. Shoreline Housing Partnership Ltd [2013] EWHC 27, [2015] EWHC 1396
22.31 Maersk Oil UK Ltd (formerly Kerr-McGee Oil (UK) PLC) v. Dresser-Rand (UK) Ltd [2007] EWHC 752 (TCC)
22.32 J Murphy & Sons Ltd v. W. Maher and Sons Ltd [2016] EWHC 1148 (TCC)
22.33 Northern Ireland Housing Executive v. Combined Facilities Management [2014] NIQB 75 [2015]
22.34 Northern Ireland Housing Executive v. Healthy Buildings Ltd [2013] NIQB 124/[2017] NIQB 43
22.35 ROK Building Limited v. Celtic Composting Systems Ltd [2009] EWHC 2664 (TCC), [2010] EWHC 66
22.36 RWE Npower Renewables Ltd v. JN Bentley Ltd [2013] EWHC 978 (TCC)
22.37 RWE Npower Renewables Ltd v. JN Bentley Ltd [2014] EWCA Civ 150
22.38 Secretary of State for Defence v. Turner Estate Solutions Limited [2015] EWHC 1150 (TCC)
22.39 SGL Carbon Fibres Ltd v. RBG Ltd [2012] Scot CS CSOH 19, [2010] CSOH 77
22.40 Stork Technical Services (RBG) Ltd v. Ros [2015] CSOH 10A
22.41 Shepherd Construction Ltd v. Pinsent Masons LLP [2012] EWHC 43 (TCC) BLR 213, 141 Con LR 232
22.42 Seele Austria GmbH & Co Kg v. Tokio Marine Europe Insurance Ltd [2009] EWHC 2066 (TCC)
22.43 SSE General Ltd v. Hochtief Solutions AG & Anor [2015] Scot CS CSOH 92
22.44 Vinci Construction UK Ltd v. Beumer Group UK Ltd [2017] EWHC 2196 (TCC)
22.45 Volker Stevin Limited v. Holystone Contracts Limited [2010] EWHC 2344 (TCC)
22.46 Wales and West Utilities Limited v. PPS Pipeline Systems GmbH [2014] EWHC 54 (TCC)
22.47 Walker Construction (UK) Ltd v. Quayside Homes Ltd and Peter Brett Associates LLP [2014] EWCA Civ 93
22.48 (1) Walter Llewellyn & Sons Limited (2) ROK Building Limited v. Excel Brickwork Limited [2010] EWHC 3415 (TCC)
22.49 AE Yates Trenchless Solutions Ltd v. Black & Veatch Ltd [2008] EWHC 3183 (TCC)
22.50 Weatherford Global Products Ltd v. Hydropath Holdings Ltd & Ors [2014] EWHC 2725 (TCC)
22.51 WSP Cel Ltd v. Dalkia Utilities Services PLC [2012] EWHC 2428 (TCC)
Table of cases
Table of clause references
Core clauses
Main Option clauses
WILEY END USER LICENSE AGREEMENT
Guide
Cover
Table of Contents
Preface
Pages
C1
iii
iv
xv
xvii
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
247
248
249
250
251
252
253
254
255
256
257
258
259
260
261
262
263
264
265
266
267
268
269
270
271
272
273
274
275
276
277
278
279
280
281
282
283
284
285
286
287
288
289
290
291
292
293
294
295
296
297
298
299
300
301
302
303
304
305
306
307
308
309
310
311
312
313
314
315
316
317
318
319
320
321
322
323
324
325
326
327
328
329
330
331
332
333
334
335
336
337
338
339
340
341
342
343
344
345
346
347
348
349
350
351
352
353
355
356
357
358
359
360
361
362
363
364
365
366
367
368
369
370
371
372
373
374
375
376
377
378
379
380
381
E1
Preface
Throughout the fifty year period from 1945 to 1995, the ICE Conditions of Contract provided the standard form for most civil engineering contracts in the UK. But by 1999 when the Seventh Edition of those Conditions was produced it was becoming clear that the New Engineering Contract, first published in consultative form in 1991, was establishing itself as the market leader.
The initial driving force for this change was not so much dissatisfaction with the ICE Conditions; indeed they had served the construction industry well and were respected as being fair, workable and straightforward in their presentation. Disputes which arose between the Parties were mostly settled by decisions of the Engineer, and few progressed to arbitration or the Courts. However, linked to some extent by changes in the 1980s such as privatisation and the growth of project management as a specialised career, and a perception by some that ICE Conditions focused more on the obligations and responsibilities of the Parties than on good management, the Institution of Civil Engineers took the bold step of producing an alternative standard form (the NEC), designed for major works and justifying the appointment of a full-time Project Manager.
When the NEC was first released it was said by the Institution of Civil Engineers that the NEC would provide an alternative to, not a replacement for, the ICE Conditions of Contract. But that promise, if it was such, did not last for long once it became clear that the NEC, after a shaky start, had the support of government ministries, impressed by the recommendations in Sir Michael Latham’s 1994 government sponsored report Constructing the Team. Thereafter, it was simply a matter of time before publication of the ICE Conditions of Contract ceased and the field was left clear for the NEC to prosper. And there can be little doubt that the NEC has made remarkable progress.
Credit for the momentum of that progress must go principally to the promoters of NEC. No effort has been spared in putting across the message that NEC has special qualities which bring benefits to all users, not the least of those qualities being the NEC’s opening requirements of mutual trust and co-operation. Those expressly stated contractual requirements, whether achievable or not, set the NEC forms on a different plane from other standard forms. And although much is made of improved management procedures in the packages covering the new suite of NEC4 contracts, the principal driving force for their ongoing use is likely to be hope or expectation that the projects they apply to will end in cheers rather than in tears.
Author's note
Content
It is not my intention in writing this book to attempt to examine and comment on the full set of sixteen contracts which comprises the NEC4 suite of contracts. I intend, in this book, to do no more than provide a commentary confined to the main contract of the suite, the NEC4 Engineering and Construction Contract (ECC4).
In doing so I will undertake a clause by clause study of the provisions of ECC4. Additionally, I will draw attention to significant changes from the preceding ECC3, and I will consider the implications of such changes. However, as ECC4 has adopted various terminology changes affecting the precise wording of most of its clauses, it would possibly be a distraction to readers for me to include comment on, or to catalogue, all of these. The full detail of these terminological changes, and other changes, can be found in the useful NEC publication NEC3 and NEC4 Compared by Robert Gerrard.
In my books on earlier NEC contracts I included, occasionally by reference to potentially applicable case law, comments of a general nature on the provisions of those contracts. Where appropriate, I have repeated those comments, sometimes verbatim, in this book.
Style
NEC4 retains the characteristic of earlier NEC contracts that ‘defined terms’ have capital initials, and ‘identified terms’ are in italics.
Text
Very little of the text of ECC4 is quoted in this book. I have assumed that readers will have to hand a copy of NEC4 and other contracts of the suite as appropriate.
Indexing
The published version of the ECC4 Engineering and Construction Contract contains a comprehensive index of subjects referenced to clause numbers. In this book a full table of clause numbers with descriptions is referenced to chapter sections. Accordingly, readers of this book who wish to have the benefit of a subject index will find it a straightforward matter to move from the subjects in the ECC4 contract to the chapter sections in this book.
Chapter 1Introduction
1.1 Overview
NEC4 is a generic name for a suite of contracts developed by the Institution of Civil Engineers, and published by its wholly owned subsidiary Thomas Telford Ltd. NEC stands for New Engineering Contract, a name originating from the publication in January 1991 of a consultative version of what was then a new approach to the drafting of construction contracts.
1.2 Background
The background to the development of the New Engineering Contract (NEC) does much to explain its style and content. In the 1980s there was ongoing debate within the Institution of Civil Engineers (ICE), the lead body for the production of the ICE Conditions of Contract – at that time the standard form used for most civil engineering works in the UK – as to the direction of future contract strategies. At issue were questions as to whether the then existing standard forms adequately served the best interests of the Parties by focusing on the obligations and responsibilities of the Parties rather than on good management, and whether an entirely new approach was needed to promote co-operation and to reduce confrontation. The prevailing view was that something new was needed, particularly for sizeable contracts where attention to good project management was the key to successful completion.
1.3 Objectives
The drafting team for the first version of the NEC was charged with three specific objectives for the new contract:
that it should be more flexible in its scope than existing standard forms
that it should provide greater stimulus to good project management than existing standard forms
that it should be expressed more simply and clearly than existing forms.
Maintenance of those ambitions has been the bedrock of the 1993, 1995, 2005, 2013 and now 2017 editions of the NEC contracts.
For the 2017 edition, those ambitions have been expanded:
to provide even greater stimulus to good management
to support new approaches to procurement which improve contract management
to inspire increased use of NEC in new markets and sectors.
1.4 Impacts of change
As evident from the above, it was a matter of policy from the outset that NEC contracts should be different in form and content from other standard forms of construction contracts. And they certainly are.
The early editions of the NEC were greeted with mixed reviews varying from effusive praise to shock and horror. But such a range of reactions was inevitable given the extent to which the NEC differed from traditional standard forms of construction contracts in its procedural and terminological changes, and the extent to which it required changes in attitudes and long-standing practices. Moreover, there were those who recognised that change, however well intended, can bring with it unintended consequences, and that effecting change in the construction industry has never been easy to achieve. For, as Rudyard Kipling wrote a century or so ago in his bricklayer's tale:
I tell this tale, which is strictly true,
Just by way of convincing you
How very little since things were made
Things have altered in the building trade.
Not surprisingly, therefore, ambitious expectations that improved contract management and reduction of conflict could be achieved with a contract that was deliberately different from previously used construction contracts have not all been achieved. In particular, moving the focus of the conditions of contract from detailing the obligations and liabilities of the Parties to detailing the particulars of project management seems to have overlooked some of the more obvious consequences of such a change.
It used to be said that a good contract was never taken out of the drawer until it was needed. That axiom, however, has no application to NEC contracts. Such contracts are not simply sets of conditions of contract, they are also manuals of project management and, as such, they should never be taken off the desk, less still put in a drawer.
And one clearly unintended impact of the NEC changes to project management is that the scope for disputes has been greatly increased. Thus, it is now commonplace for pleadings/submissions in respect of formalised disputes arising under NEC contracts to cover differences not only on substantive matters but also administrative/procedural matters. And, not infrequently, the latter types of disputes seem to be the ones that generate most animosity, conflict and lack of trust between the Parties. Some of this arises where the Parties are not equally matched in relation to dealing with the procedural burdens of their NEC contract, and that imbalance, of itself, generates not only hostility but also more disputes.
There is additionally another unintended factor which surfaces in many NEC adjudications. It can be summarised as disappointment, at various levels within the Parties’ management structures, that the NEC requirements for mutual trust and co-operation have not produced the financial and time-related outcomes that were expected. And then the blame games commence.
1.5 The NEC4 suite of contracts
Within the NEC4 Engineering and Construction Contract, hereafter in this book ECC4, there are six Primary Options, which include priced contracts, target cost contracts, a cost reimbursable contract, and a management contract. However, these simply reflect the flexibility of scope of ECC4 itself. They do not count separately as part of the ever-growing suite (or family as it was previously called) of NEC contracts. That suite, with the introduction of NEC4, numbers sixteen separate contracts:
Engineering and Construction Contract (ECC)
Engineering and Construction Subcontract (ECS)
Engineering and Construction Short Contract (ECSC)
Engineering and Construction Short Subcontract (ECSS)
Professional Service Contract (PSC)
Professional Service Subcontract (PSS)
Professional Service Short Subcontract (PSSC)
Term Service Contract (TSC)
Term Service Subcontract (TSS)
Term Service Short Contract (TSSC)
Supply Contract (SC)
Supply Short Contract (SSC)
Design Build and Operate Contract (DBO)
Alliance Contract (ALC)
Framework Contract (FC)
Dispute Resolution Service Contract (DRSC).
1.6 Characteristics of NEC contracts
As noted above, NEC contracts are drafted with the objectives of achieving flexibility, stimulus to good project management, clarity and simplicity.
Flexibility is pursued partly by drafting which avoids terminology specific to the practices of particular industries, but principally by providing primary and Secondary Option clauses which allow contracts to be built up by the selection of pricing mechanisms and contractual provisions deemed appropriate for any particular project.
Stimulus to good project management is pursued by the emphasis that NEC contracts place on communications, co-operation, programming and risk management.
Clarity and simplicity objectives are pursued by drafting which is intentionally and conspicuously different from that of other standard forms in style and structure. Short sentences are used, cross-referencing is avoided and so too is technical and legal jargon. And, to assist in understanding and application of the provisions of NEC contracts, User Guides and Flow Charts are available from the publishers. However, the differences of opinion which surfaced when NEC contracts were first published as to whether their drafting achieved clarity and simplicity remain. The charge made by an eminent lawyer of the time that the draftsmen had used ‘ladybird language’ may have been a little unfair in the light of the NEC's subsequent progress. But, more recently, the comment by His Honour Mr Justice Edwards-Stuart in the case of Anglian Water Services Ltd v. Laing O'Rourke Utilities Ltd (2010) that the drafting of an NEC2 contract seemed to represent ‘a triumph of form over substance’ will probably be recognised by many involved in the use or interpretation of NEC contracts as fair comment.
1.7 Structure of the NEC4 Engineering and Construction Contract (ECC4)
Option and clause structure
In order to create a set of ECC4 conditions for a particular contract, the Client (previously the Employer):
makes a selection from the six Main Options as to which type of pricing mechanism is to apply
includes in the contract the nine sections of common Core Clauses, and the Main Option clauses applicable to the selected Main Option (the pricing option)
specifies which of the three options for resolving and avoiding disputes applies
selects and includes within the contract which, if any, of the twenty-two Secondary Option clauses are to apply, and
includes in the contract, under Secondary Option Z, any Additional Conditions of Contract.
The six Main Options of ECC4 are:
Option A – Priced contract with activity schedule
Option B – Priced contract with bill of quantities
Option C – Target contract with activity schedule
Option D – Target contract with bill of quantities
Option E – Cost reimbursable contract
Option F – Management contract.
Each of the Main Options is published in a separate volume which includes the relevant Core Clauses for the particular option. Additionally there is a single volume covering all six options.
The clauses for any particular ECC4 contract are assembled by incorporation of:
Core Clauses
Main Option clauses
Secondary Option clauses.
The Core Clauses are standardised terms, grouped into sections, under nine headings
General
The Contractor's main responsibilities
Time
Quality management
Payment
Compensation events
Title
Liabilities and insurance
Termination.
The Main Option clauses are, in effect, Core Clauses particular to each of the Main Options, A to F. They are not optional in themselves.
The Secondary Option clauses, which, in ECC4, are prefaced X1–X22, Y (UK) 1–3, and Z, are optional in the sense that to be incorporated into the contract they have to be listed in the Contract Data. However, some of the Secondary Option clauses such as X7 for delay damages and X16 for retention, would be regarded in most construction contracts as essential rather than optional, so care needs to be taken in their selection, and/or omission.
Care also needs to be taken in respect of Options W1, W2, and W3, which relate to resolving and avoiding disputes. These appear in ECC4 between the Core Clauses and the Secondary Option clauses and it is mandatory to select one of these options for inclusion in the contract.
The full list of Secondary Option clauses in ECC4 is:
Option X1
–
Price adjustment for inflation
Option X2
–
Changes in the law
Option X3
–
Multiple currencies
Option X4
–
Ultimate holding company guarantee
Option X5
–
Sectional completion
Option X6
–
Bonus for early completion
Option X7
–
Delay damages
Option X8
–
Undertakings to the Client or Others
Option X9
–
Transfer of rights
Option X10
–
Information modelling
Option X11
–
Termination by the Client
Option X12
–
Multiparty collaboration
Option X13
–
Performance bond
Option X14
–
Advanced payment to the Contractor
Option X15
–
The Contractor's design
Option X16
–
Retention
Option X17
–
Low performance damages
Option X18
–
Limitation of liability
Option X19
–
Not used
Option X20
–
Key Performance Indicators
Option X21
–
Whole life cost
Option X22
–
Early Contractor involvement
Option Y (UK) 1
–
Project Bank Account
Option Y (UK) 2
–
The Housing Grants, Construction and Regeneration Act 1996
Option Y (UK) 3
–
The Contracts (Rights of Third Parties) Act 1999
Option Z
–
Additional conditions of contract.
1.8 Changes ECC3 to ECC4
Because the full extent of the changes from ECC3 to ECC4 is extensive and complex, they are identified and considered in Chapter 2 and other parts of this book. But, in summary, the obvious and the important core clause changes are:
ECC4 retitles and expands the ECC3 section 4 clauses on ‘Testing and Defects’. In ECC4 the new title of section 4 is ‘Quality Management’ and within that expanded section there are requirements for operation by the Contractor of a quality management system, which incidentally are also passed down to Subcontractors and sub-Subcontractors.
ECC4 has new dispute and avoidance procedures which include the involvement of Senior Representatives and the use of Dispute Avoidance Boards.
ECC4 requires the Contractor to submit applications for interim payments.
ECC4 introduces a set of new provisions on assessment and payment of the final amount due.
ECC4 uses a new term ‘the dividing date’ for determining when actual Defined Cost changes to forecast Defined Cost for the purposes of assessments of compensation events.
ECC4 renames the ECC3 provisions on risk reduction meetings and risk registers as early warning meetings and early warning registers.
ECC4 replaces the ECC3 term ‘risks’ with ‘liabilities’ and retitles section 8 ‘Liabilities and Insurance’.
ECC4 defines ‘a Corrupt Act’ and has provisions relating thereto.
ECC4 lists two additional compensation events, the first covering the Contractor's costs when a requested quotation for a proposed instruction is not accepted, the second covering, as a matter of formality, additional compensation events stated in the Contract Data.
ECC4 permits the Contractor, as well as the Project Manager, to propose acceleration to achieve earlier Completion Dates and changes to Key Dates.
However, it should not be taken from the above list that all other changes are insignificant, even if at first sight they may appear so. Thus, the terminological change from ‘Works Information’ in ECC3 to ‘Scope’ in ECC4, which runs through the entirety of ECC4, will generally be of no contractual consequence. But in the context of clause 14.3, which in ECC3 empowers the Project Manager to change the ‘Works Information’ and where the corresponding clause in ECC4 empowers the Project Manager to change the ‘Scope’, there is evidently room for debate on how far it is wise to depart from the legal principle that words should be given their ordinary meaning. No Contractor of right mind would enter into a contract where the scope of the works (in its ordinary meaning) could be changed at the will of the Client or the Project Manager.
1.9 Review of points of interest
In Chapter 1 (Introduction) of my book on NEC3, I identified under the following headings nine ‘points of interest’ arising from studies of NEC3 and earlier editions of NEC contracts:
Entire Agreement
Exclusion of common law rights
Conditions precedent to compensation event entitlements
Role and powers of the Project Manager
Changes to Works Information (now Scope)
Prevention
Quotations for compensation events
Assessment of compensation events
Dispute resolution.
All of these will be reviewed in detail in later chapters of this book, but by way of summary, and in the light of the provisions of ECC4, judicial comments on ECC3, and personal experience in ECC3 arbitrations and adjudications, the observations set out in the following sections can be made.
1.10 Entire agreement
ECC4 retains, with a very minor change of wording, the provision introduced in ECC3 at clause 12.4 that the contract is the ‘entire agreement between the Parties’. Nothing of note has changed in the meantime, and it remains the case that it is still open to debate as to what is intended by the provision. It may be that it is intended to exclude common law remedies for breach, or it may be that its purpose is to emphasise that the obligations and liabilities of the Parties are confined strictly to the four corners of the signed contract.
Further comment on this is provided in Chapter 5, but it is worth noting here that arguments about the application of clause 12.4 have surfaced in numerous adjudications under ECC3 contracts where disputes have arisen as to whether certain agreements between the Parties are of contractual effect, and as to the extent to which a distinction is intended between the terms ‘entire agreement’ as found in clause 12.4 and ‘complete contract’ as found in the Contract Data Sheet, Part one.
The Parties to ECC4 contracts should, therefore, exercise great caution in reaching what are sometimes called ‘supplementary agreements’ and would be wise to enter into such agreements only after taking legal advice.
1.11 Exclusion of common law rights
The debate as to whether NEC contracts exclude the Parties’ rights to sue for damages for breaches of contract remains unsettled. There is a good case for saying that in main contracts, the intention is that the Contractor's rights are so curtailed by the contractual rights provided in the compensation event procedures of the contract, particularly as one such event is expressed as breach of contract by the Client. That, however, does not dispose of the Client's rights. And when stepped down into the ECC4 subcontract, that same point applies to the Contractor's rights.
1.12 Conditions precedent to compensation event claims
The question as to whether or not, or when, claims, valid on their facts, can be invalidated by failure to comply with time-bars, goes well beyond examination of the time-bars in respect of the compensation events stated in ECC4. It is a question applicable to all types of commercial contracts. More is said on this in Chapter 14.
For all NEC contracts, time-bars in respect of claims have, from the outset, been treated as an integral part of maintaining good project management. However, achieving incorporation into the contracts of workable and legally acceptable provisions has proved a difficult task, as is evident from each new version of the ECC.
ECC4 retains, subject to a minor wording change, the ECC3 requirement for compensation events to be notified within eight weeks (clause 61.3). But, for a possible exception to this rule, see the comments in Chapter 22 on the decision of the Northern Ireland Court of Appeal in the case of Northern Ireland Housing Executive v. Healthy Buildings (Ireland) Limited.
1.13 Role and powers of the Project Manager
There was some doubt in the early years of ECC contracts as to whether the Project Manager was to act more as the Employer's agent than as an independent contract administrator. That point was considered in the 2005 case of Costain Ltd (Corber), where Mr Justice Jackson reasserted the long-standing legal rule that certifiers, including Project Managers, have a duty to act fairly and honestly as between the Parties. The second point was clarified by the inclusion in ECC3 of a new clause 12.3 requiring changes to the contract to be signed by the Parties. That clause remains unchanged in ECC4.
1.14 Changes to Scope (previously Works Information)
ECC4 retains, in clause 14.3, the curiously simplistic statement that the Project Manager may give an instruction which changes the Scope (previously Works Information). Further comment on this is provided in Chapter 6.
1.15 Prevention
Concerns were expressed in many quarters when a set of provisions was introduced in clause 19 of ECC3 defining ‘Prevention’ in a manner which could be taken as going well beyond ‘force majeure’ or ‘beyond the control of the Parties’, and which potentially placed responsibility for all such matters on the Employer. The corresponding ECC4 clause 19 contains some minor changes, but they are unlikely to be sufficient to halt the practice of some Clients of deleting the clause in its entirety. For further comment see Chapter 7.
1.16 Quotations for compensation events
ECC4 retains, with some minor drafting changes, the provisions in clause 62.6 of ECC3 whereby unless the Project Manager responds to the Contractor's quotation for a compensation event within three weeks, it is deemed to be accepted by the Project Manager. The oddity that such quotations can be disputed by the Client and altered by an Adjudicator apparently remains.
1.17 Assessments of compensation events
The basics of the ECC3 clause 63 provisions on assessments of compensation events, including those for division between forecast cost and actual cost are retained in ECC4, albeit with various drafting changes. However, see Chapter 22 for comment on the Northern Ireland High Court judgment in a second Northern Ireland Housing Executive v. Healthy Buildings Limited case. Put simply, the Judge held in favour of actual cost assessment over forecast cost assessment in circumstances where actual cost was available at the time the assessment was made, quoting from an earlier case: ‘why should I shut my eyes and grope in the dark when the material is available to show what work they actually did and how much it cost them’.
1.18 Dispute avoidance and dispute resolution
For contracts which expressly required the Parties to act in a spirit of mutual trust and co-operation, ECC3 and preceding ECC contracts had surprisingly little to offer by way of non-adversarial dispute avoidance and dispute resolution procedures. ECC4, however, rectifies that with its new, structured approach to such matters.
If properly applied, the new approach should:
Reduce the number of disputes going to adjudication
Improve on-site and off-site relationships between the Parties
Ensure that senior management becomes aware of developing problems – factual, contractual and financial – before they get out of hand.
Should these improvements be achieved, that alone would make production of ECC4 well worthwhile.
Chapter 2Changes from ECC3
2.1 Evolution
ECC4 uses as a marketing slogan the catchy phrase ‘evolution not revolution’. And, as will be seen from the detail which follows in this chapter, that is generally a fair statement of what was intended and what has been achieved.
The underlying principles, the drafting style, and the option structure format of ECC4 remain as in previous editions of ECC. However, ECC4 has an increased range of Secondary Option clauses and a completely new approach to avoiding and resolving disputes. Apart from this, there are few great surprises. However, there are a good number of minor improvements drafted to clarify clauses which, in previous editions, have been sources of concern. And, strikingly, there are a great many textual changes between ECC4 and its predecessors, which may prove troublesome if users of ECC4 do not adjust rapidly to the new order.
2.2 Features and enhancements
The preface to ECC4 lists as ‘features’ and ‘enhancements’:
a new design, build and operate contract
a new multiparty alliance contract
new forms of subcontract
finalisation of cost elements during the contract
party-led dispute avoidance
increased standardisation between contracts
enhanced guidance to users.
These are, however, high-level changes applicable to the suite of NEC4 contracts, and although some items in the list may impact indirectly on ECC4, only two items in the above list impact directly on ECC4. These items are: finalisation of cost elements and party-led dispute avoidance.
Important as these two items are, it would be imprudent to assume that they are indicative of the full amount of change between ECC3 and ECC4. The reality is that the majority of clauses in ECC4 differ, albeit in the main slightly, from the wording of the corresponding clauses in ECC3.
2.3 Terminological changes
The majority of the textual changes are no more than terminological, thus:
‘the Employer’ is changed to ‘the Client’
‘Works Information’ is changed to ‘Scope’
‘risk reduction meeting’ is changed to ‘early warning meeting’
‘Risk Register’ is changed to ‘early warning register’
‘notifies’ is changed to ‘informs’.
Additionally, all gender-specific terms in ECC3, such as ‘he’ and ‘his’ are replaced in ECC4 with gender-neutral wording.
Few, if any, of these terminological text changes are likely to have significant impact on the Parties’ contractual obligations and liabilities but, given the importance that NEC contracts place on written notices and communications, it is essential that the new terminology is adopted and put into use from the outset. And similarly it needs to be recognised from the outset that a certain amount of clause renumbering and rearrangement has taken place.
The ECC4 changes which do have the capacity to create contractual change are to be found in the Core clauses, the Dispute Resolution clauses, and the Secondary Option clauses of the contract.
2.4 Changes to core clauses
The grouping of the nine sets of core clauses in ECC4 (the Sections, as hereafter referred to) is the same as the grouping in ECC3. But, two of the Sections are retitled in ECC4. Thus, in ECC4, section 4 is titled ‘Quality Management’ and section 8 is titled ‘Liabilities and Insurance’. In ECC3 those titles were ‘Testing and Defects’ and ‘Risks and Insurance’.
In ECC4, the Sections and the clauses therein are numbered and listed as follows:
General: clauses 10.1–19.1
The Contractor's Main Responsibilities: clauses 20.1–29.2
Time: clauses 30.1–36.3
Quality Management: clauses 40.1–46.2
Payment: clauses 50.1–53.4
Compensation Events: clauses 60.1–66.3
Title: clauses 70.1–74.1
Liabilities and Insurance: clauses 80.1–86.3
Termination: clauses 90.1–93.2.
The significant changes in the core clauses from ECC3 to ECC4, taking them section by section, and without at this stage any commentary, are as follows.
General
Clause 10.1 of ECC3 stated, in a single sentence, that the Employer, the Contractor, the Project Manager and the Supervisor ‘shall act’ as stated in the contract, and in a spirit of mutual trust and co-operation. In ECC4 those obligations, if they are such, are redrafted and split between clauses 10.1 and 10.2. Clause 10.1 states that the Parties, the Project Manager and the Supervisor ‘shall act’ as stated in the contract. Clause 10.2 states that the Parties, the Project Manager and the Supervisor shall ‘act’ in a spirit of mutual trust and co-operation. More is said on this interesting change in Chapter 6.
Clause 11.2, listing ‘Identified and defined terms’ has, in ECC4, a new subclause defining ‘a Corrupt Act’. Additionally, ECC4 clauses 15.1 and 15.2 replace the ECC3 references to ‘the Risk Register’ and ‘risk reduction meetings’ with references to ‘the Early Warning Register’ and ‘early warning meetings’. Further changes appear in the definitions of ‘The fee’ and of ‘A Subcontractor’.
Clause 14.2 of ECC4, relating to delegation, has considerably more points of detail than the corresponding clause of ECC3.
Clauses 15, 16, 17, 18 and 19 of ECC3 deal in turn with ‘Adding to the Working Areas’, ‘Early warning’, ‘Ambiguities and inconsistencies’, ‘Illegal and impossible requirements’, and ‘Prevention’. ECC4 rearranges and changes clauses 15–19 such that they deal in turn with: Early warning, Contractor's proposals, Requirements for instructions, Corrupt Acts, and Prevention. Each of these clauses relates to matters of potential importance.
The Contractor's Main Responsibilities
For the most part, clauses 20.1–29.2 of ECC4 match the corresponding section clauses of ECC3. However, clauses 28 and 29 of ECC4, dealing respectively with Assignment and Disclosure have no ECC3 equivalents. And, although both concern legalistic matters rather than day-to-day construction matters, these clauses also relate to matters of potential importance.
Time
Clauses 30–36 of ECC4 cover, under the section heading ‘Time’, such matters as starting, completion, programmes, access, suspensions, take over and acceleration. There are a few textual changes from ECC3 but none are of any great significance. There are, however, some important new provisions within the ECC4 batch of clauses. Thus, clause 31.3 of ECC4 now provides for deemed acceptance of a programme if the Project Manager does not notify acceptance or non-acceptance within a stipulated time-limit. Clause 34.1 requires that if the Project Manager has given instructions to stop or not to start work, instructions must subsequently be given to restart or remove the work. And clause 36.1 of ECC4 now permits the Contractor as well as the Project Manager to propose acceleration to achieve completion before the completion date.
Quality Management
In ECC3, section 4 clauses 40.1–45.2 came under the heading ‘Testing and Defects’. In ECC4, the section is retitled ‘Quality Management’. The ECC3 clauses are retained in ECC4 without any significant change as clauses 41.1–46.2. However, in ECC4, section 4 commences with three new clauses (40.1–40.3) subtitled ‘Quality Management System’. These clauses contain contractual provisions, new to ECC contracts, that the Contractor should operate such a system, and should do so in compliance with stipulated requirements.
Payment
The ten clauses 50.1–52.1 in the ‘Payment’ section of ECC3 principally concerned the mechanism and rules for interim payments. The sixteen clauses in the ‘Payment’ section of ECC4 cover both interim payments and rules for making assessments of the final amount due. Most of the ECC3 clauses which are retained in ECC4 are modified in some respect, but these changes are points of detail rather than substantive change. The big change between ECC3 and ECC4 comes in the new group of clauses, 53.1–53.4, which provide in ECC4 a comprehensive and extensive set of provisions for making, and dealing with, the assessment and payment of the final amount due to the Contractor.
Compensation Events
Section 6 of ECC3 contained thirty-one numbered clauses, excluding the nineteen numbered compensation events. It was, by far, the largest group of clauses in the contract. That remains the case in ECC4, which has thirty-seven numbered clauses, excluding twenty-one numbered compensation events.
The two additional compensation events in ECC4 concern quotations for proposed instructions which are not instructed, and additional compensation events stated in the Contract Data.
However, there has also been a considerable amount of redrafting throughout the ECC4 compensation event clauses, most of which is inconsequential, but some of which, in certain circumstances, could be important.
Title
The ECC3 clauses 70.1–73.2 covering matters relating to plant, materials, and objects on the site are replicated in ECC4 with terminological changes and only two changes worthy of note. The first of those changes is that whereas by clause 73.2 of ECC3 the Contractor has title to materials from excavation and demolition only as stated in the Works Information, under clause 73.2 of ECC4 the Contractor has title unless the Scope states otherwise. The second change is that ECC4 has an additional clause, 74.1, which states that the Contractor has the right to use material provided by the Client only to provide the Works, and that this right may be made available to a Subcontractor.
Liabilities and Insurance
The fifteen clauses of ECC3 covering ‘Risks and Insurance’ have been rearranged, renumbered and reworded in the corresponding fifteen clauses of ECC4. Apart from that, there are few changes of substance. The only change which stands out is that in ECC4 a fault in the design contained in an instruction from the Project Manager changing the Scope expressly becomes a Client's liability.
Termination
Similarly there are only a few changes of substance between EEC3 and ECC4 in the fifteen numbered clauses relating to termination. The most striking change is that in ECC3, whilst the Contractor could only terminate for a reason in the Termination Table and the Employer could terminate for any reason (clause 90.2), in ECC4 the phrase ‘the Employer may terminate for any reason’ is omitted, with clause 90.2 now stating ‘A Party may terminate for a reason identified in the Termination Table.’ Three other changes are worthy of note. Firstly, the provisions in clause 90.4 of ECC3 regarding certification and payment after termination are changed in ECC4 such that for most of the listed reasons the Client is not obliged to pay after the termination date. Secondly, there is a new clause 91.8 in ECC4 concerning termination on the grounds of corruption, and thirdly, the default period activating the Contractor's right to terminate on the grounds of non-payment (clause 91.4) is extended in ECC4 to thirteen weeks, from the eleven weeks allowed in ECC3.
2.5 Changes to dispute resolution procedures
The dispute resolution procedures of ECC3 were contained in Options W1 and W2, one of which had to be included in the contract as a Main Option. In ECC4 there are three such Main Options: W1, W2 and W3.
The use of any one of these three options provides an entirely new approach to dispute avoidance and resolution. For whereas both ECC3 Options W1 and W2 went no further than providing rules and procedures for adjudication and tribunal review, within Options W1, W2 and W3 of ECC4 there are provisions not only for adjudication but also for involvement of Senior Representatives, and the formation of Dispute Avoidance Boards.
So revolutionary and extensive are the changes that there is little point in attempting to identify, in this chapter, point-by-point changes between ECC3 and ECC4.
2.6 Changes to Secondary Option clauses
As noted in Chapter 1, ECC4 has twenty-one ‘X’-labelled Secondary Option clauses, excluding the unused X19. It also has three ’Y’-labelled clauses and one ‘Z’-labelled clause, in total twenty-five clauses. In total, ECC3 had nineteen Secondary Option clauses. The changes accounting for this difference are that there has been a certain amount of renumbering and relabelling, but, more importantly, there are six additional Secondary Option clauses in ECC4:
Option X8 – Undertakings to the Client or Others
Option X9 – Transfer of Rights Option
Option X10 – Information Modelling
Option X11 – Termination by the Client
Option X21 – Whole Life Cost
Option X22 – Early Contractor Involvement.
There are some drafting changes in ECC4 in those Secondary Option ‘X’ clauses which have matching ECC3 Secondary Option ‘X’ clauses, but these are mainly points of detail.
2.7 Data sheet changes
Finally, as regards changes, it should be noted that the ECC4 Contract Data sheets (Part one – Data provided by the Client) and (Part two – Data provided by the Contractor) differ slightly from the ECC3 Contract Data sheets. Most of the changes simply reflect Primary and Secondary Option changes, but since both data sheets commence with a warning that completion in full is essential to create a ‘complete contract’ every required entry is of potential importance. Moreover, some of the entries go beyond simply listing ‘data’ by stating, in terms, contractual obligations. See, for example, the entry required at Part X15 of the Client's data sheet, which refers to insurance cover for claims made against the Contractor for failing to use the skill and care ‘normally used by professionals’ designing works of a similar nature, and the comment thereon in Chapter 8.
