NEC

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Advice Notes

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NEC ADVICE NOTES

A brief understanding “force majeure” in the NEC3 contract:

It is well-known that the NEC3 does contain the term “force majeure” nor is it defined in the contract, however, there are instances where certain events constitute a “force majeure” event. A force majeure event for example would be an unforeseeable strike. So, what would happen if a strike prevented a contractor from completing the works? There are two clauses which the contractor should be aware of in the event of an unforeseeable strike stops the contractor from completing the works, this being Clause 19.1, which deals with prevention of a force majeure event, and clause 60.1(19), which deals with compensating the contractor for a force majeure event. In order for Clauses 19.1 and 60.1(19) to be triggered, the following factors needs to occur: 1a) the event stops the contractor from completing the works or 1b) the event stops the contractor from achieving the completion date and 2) the event could not be prevented by either party and 3) the contractor had not foreseen such an event to affect the completion date.

NEC Related – A Contractor is required to keep the following records when involved in a NEC contract:

· Accounts of payments of Defined Cost;

· Proof that payments have been made;

· Communications about and assessments of Compensation Events for Subcontractors; and

· Other records as stated in the Works Information.

NEC Related, On the question of whether the Contractor is entitled to a compensation event (effects of weather/delay damages) for poor weather experienced after the Completion Date. The answer is no, the weather measurement is recorded “before the Completion Date for whole of the works” in terms of Clause 60.1(13). Noteworthy, the effects of weather must be incurred at the place stated in the Contract Data. It is advised that the Site and Working Areas are well defined for the purpose of operation of this clause.

NEC Related – On the question as to at which point does the actual Defined Cost no longer play a role in the assessment of a compensation event. The answer lies in the “dividing date”. At the point of the dividing date (Cl. 63.1), the balance of the assessment of the compensation event is based on a forecasted future Defined Cost.

On the question of whether the NEC Clause 60.1(19) provision, being the equivalent of force majeure cover the events such as war and sanctions (e.g. Ukraine – Russian). The answer is yes, on the condition that these events commenced AFTER the Contract Date.

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