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.

Recent Projects

Recent news

Work starts on Square Kilometre Array Observatory in Australia and South Africa

Work starts on Square Kilometre Array Observatory in Australia and South Africa

Work has now started in Australia and South Africa on the €2 billion (£1.7 billion) NEC-procured Square Kilometre Array Observatory (SKAO).

Read more
NEC delivering vast cavern complex for relocating Hong Kong sewage works

NEC delivering vast cavern complex for relocating Hong Kong sewage works

NEC contracts are being used to create the largest underground cavern complex in Hong Kong.

Read more
Why we need to start adapting project bank accounts to ring-fence retentions

Why we need to start adapting project bank accounts to ring-fence retentions

As I mentioned in my last editorial, it is over 5 years since the UK government published its consultation report on reforming the practice of withholding cash retentions

Read more
View all news