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April 02, 2020

Clause 61 - Notifying Compensation Events

Clause 61 - Notifying Compensation Events

Clause 61 represents the start of the compensation event processes. The obligation to notify a compensation event and to do it on time are frequently the subject of arguments within adjudications, particularly when the Client says that the Contractor has fallen foul of the time bar in 61.3, seeking to avoid liability. The contract seeks to avoid such arguments by its prescriptive approach to communications, and specifically notifications, in clause 13.1, 13.2 and 13.7. Despite these provisions we often see parties in adjudication relying upon early warnings or badly worded meeting minutes as a way of demonstrating compliance. Neither is likely to be shown to comply.

Notifications should be made in accordance with the contract separately from other communications.  That way the recipient of the notification will know the purpose of the incoming email or message. Where notifications have been made timeously and correctly it reduces the chance of dispute and, where a dispute cannot be avoided, aids the case of that party in managing the dispute. The provisions are written to encourage the parties to highlight and deal with compensation events at the earliest opportunity. Those parties that do not, either mischievously or inadvertently, are likely to suffer in financial terms. Non-compliance rarely assists a party’s position either in day to day work or in dispute resolution. Adjudicators are well used to reading tales of “we didn’t comply, but then neither did the other lot” and are rarely swayed by such arguments. Having compliance measures in place from the start of a contract will benefit both Parties.

Written by Patrick Waterhouse, Adjudicator, Bowdon Consulting

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