Frequently Asked Questions

We are the project manager on an NEC3 Engineering and Construction Contract (ECC). The contractor is contending that delays and price increases caused by the war in Europe will make it difficult for them to complete the works and, as such, this is a compensation event under clause 60.1(19) – the NEC ‘force majeure’ clause. We are of the view that just because contract performance has become more onerous or expensive, this is unlikely on its own to be sufficient to trigger this possible compensation event.
Please advise.
You have used the words ‘force majeure’, but that term is not used in the contract. Instead, there are contractual terms that have to be interpreted based upon the words used. The key word used in clause 60.1(19) is ‘stops’, not ‘delays’ or ‘costs more’. That means the clause can only apply if the contractor truly cannot achieve completion, either at all or by the date on the accepted programme, no matter what measures the contractor takes. Just because something costs more will not stop the contractor achieving completion, it just means the contractor has to pay more than originally planned to achieve completion.

As for materials not being available at all − as opposed to being more expensive to purchase – it is doubtful that would apply to most construction projects. If this was the case, it would have to be dealt with on an item-by-item basis rather than on a ‘broad brush’ approach. If the works information requires an item of plant and materials that can no longer be supplied at all because of the war, clause 60.1(19) could apply. In that case you as project manager should be managing that problem under clause 19.1 and looking into getting the works information changed to solve the problem. That change would, of course, be a compensation event in itself.

Finally, with regard to delays in receiving plant and materials, the contractor needs to show that delays could not be caught up no matter what measures it carried out. Only then will the contractor be able to show that this will stop it achieving completion.

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