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Reference: NEC/ECC/Y(UK)2/April 1998
G:\NEC\Main\2 pages 2 and 3 April 1998
In the NEC family of contracts periods of time are usually measured in
weeks thus avoiding complications of rest days and statutory holidays in
different countries in which these contracts are used. The Act, however,
defines most periods as a number of days. S.116(3) of the Act states that
Christmas Day, Good Friday and bank holidays are excluded from any period
specified in the Act. Where the time period associated with the Act is
referred to, that period has been stated in days in Option Y(UK)2.
These additional clauses in Y(UK)2 are drafted to accommodate Sections 109
to 111 of the Act. The
is now required to give notice to the
Contractor of the payment to be made, and the basis on which the calculation
is made. This is achieved by stating that the Project Manager specifically
carries out this function on behalf of the Employer The Employer’s
certificates may need to be changed to cover this point.
The Act uses very specific language about what and when “payments
become due”, when particular notices are issued and defining the “final date
for payment”. The latter applies to each certified payment and not just to
the final payment “after Completion of the whole of the
has been made for a different payment period to be stated in the Contract Data.
Clause 56.1 sets out time periods and circumstances to meet the requirements
of S. 110 (1) and 110(2) of the Act. S. 110(1)(a) requires an “adequate
mechanism for determining what payments become due under the contract and
when”. This mechanism is provided by the Project Manager’s certificate
which is required to be issued by the date due which is 7 days after the
assessment date. S. 110(1)(b) requires that there should be “a final date for
payment in relation to any sum which becomes due”. This is 28 days, or the
period stated in the Contract Data, after the assessment date. The significance
of the final date for payment is that if the
intends to withhold part of
the amount due, he must give notice not later than a “prescribed period” ie 7
days before the final date for payment as indicated in S. 111 of the Act.
Under S.112 of the Act, where a sum due is not paid by the final date for
payment and no effective notice to withhold payment has been given, the
has a right to suspend performance. This right can only be
exercised if the
gives 7 days’ notice of his intention. The right to
suspend ceases when payment is made in full. Under S. 112(4) of the Act, the
Completion Date is, in effect, delayed by the period of suspension. The effect
of the additional clause 60.7 is to treat such suspension as a compensation
event. Thus, in addition to the extra time, the Contractor is entitled to
additional costs resulting from the suspension.
Like nearly all other forms of contract before the 1996 Act, the provisions in
the NEC family of contracts for settling disputes do not comply with the Act.
The purpose of Section 9 has always been to overcome where possible the
causes of disputes and, in those cases where disputes may still arise, to
facilitate their clear definition and early resolution. Hence this amendment
replaces core clause 90 with new clauses which should comply with the Act.
The intention of the new clauses is to retain the principles of the adjudication
provisions in the ECC in managing disputes, and at the same time comply with
the Act so that the fall-back “Scheme for Construction Contracts” does not
The new clauses require a meeting to be held to discuss any matter of
dissatisfaction, with a view to resolving the matter. If this procedure fails to
resolve the matter, a dispute arises after which either Party can give notice of
his intention to refer it to adjudication. The remaining procedure in the clause
is similar to that in core clause 90.
Y(UK)2 clause 90 supersedes core clause 91.1 which is now deleted. The new
clause 91.1 extends the procedure for a meeting to resolve a matter of
dissatisfaction, to include a subcontractor, where the relevant matter is one
which involves the subcontractor.