Professional Documents
Culture Documents
Page 1 of 2
2. Collateral Warranties
Most construction projects involve the provision of numerous collateral warranties, including warranties from the
Contractor to third party funders and warranties from Subcontractors to the Employer.
The NEC3 Professional Services Contract is the only NEC3 contract which contains a clause requiring the provision of
collateral warranties. It is therefore very common for the requirement to provide warranties to be added into the
Engineering & Construction Contract and Subcontract by way of a Z clause.
3. Prevention
Clause 19 states that any event which prevents the Contractor from completing the Works, which neither party could
prevent and which an experienced contractor would have judged that there was such a small chance of it occurring that
it would have been unreasonable to allow for it, is essentially at the Employers risk. This wording is regarded as much
wider than a typical force majeure clause which would cover specific events such as fire, flood and terrorism;
therefore, it is frequently deleted or amended by the Employer.
4. Workmanship
Under NEC3 clause 20.1, the Contractor Provides the Works in accordance with the Works Information. By
implication, this means the works must comply with any purposes specified in the Works Information i.e. the works
must be fit for purpose. For Contractors, this can be seen as an onerous and risky clause, particularly in relation to
designs. In situations where the Contractor is responsible for design, other types of standard form contract provide that
the Contractor is obliged to use reasonable skill, care and diligence in carrying out design work. An obligation to use
reasonable skill and care will fall within the scope of a professional indemnity insurance policy, whereas a fitness for
purpose obligation will typically not. The fitness for purpose obligation in relation to designs can be excluded by
selecting Option X15, which imposes a reasonable skill and care obligation; as such, Contractors often insist on this.
Employers often consider that clause 20.1 is too brief, particularly in situations where the Works Information does not
go into sufficient detail in terms of the quality and standards of the works. Therefore, clause 20.1 is often amended and
http://www.hklegal.co.uk/2013/09/03/nec3-5-common-amendments/
30-Apr-16
Page 2 of 2
widened by way of a Z clause. For example, the Employer might amend clause 20.1 by stating that the Contractor has
to provide the Works in a consistent and diligent manner, ensuring that the works are of good quality and that
materials which are known to be hazardous to health and safety are not used.
5. Subcontracting
Clause 26 imposes rules and restrictions in relation to subcontracting and obliges the Contractor to submit the name of
any proposed Subcontractor together with any proposed conditions of contract (unless an NEC3 contract is proposed
or the Project Manager agrees that no submission is required). Under the un-amended NEC3 wording, the Project
Manager can only refuse to accept a Subcontractor in very limited circumstances; therefore, a common Z clause which
Employers insert involves expanding the reasons they have to refuse Subcontractors. For example, an Employer may
introduce a Z clause amending clause 26.3 so that the Project Manager can refuse to accept a Subcontractor who is
known by the Employer to have breached health and safety legislation whilst acting as a Subcontractor for the
Employer on a previous project. Indeed, it is common for the amendments to clause 26.3 to go even further than this so
that the Project Manager can refuse a proposed Subcontractor for any reason at all.
This article contains information of general interest about current legal issues, but does not provide legal advice. It is
prepared for the general information of our clients and other interested parties. This article should not be relied upon
in any specific situation without appropriate legal advice. If you require legal advice on any of the issues raised in this
article, please contact one of our specialist construction lawyers.
http://www.hklegal.co.uk/2013/09/03/nec3-5-common-amendments/
30-Apr-16