Frequently Asked Questions

My question relates to notifying compensation events in the NEC3 Engineering and Construction Subcontract (ECS). The last paragraph of clause 61.4 states, ‘If the Contractor does not notify his decision, the Subcontractor may notify the Contractor of his failure. A failure by the Contractor to reply within three weeks of this notification is treated as acceptance by the Contractor that the event is a compensation event and an instruction to submit quotations.’ 

Does ‘this notification’ mean (1) the original notification provided by the subcontractor of the compensation event or (2) the notification of failure? If (2), when should the subcontractor initially notify the failure of decision? 

Presumably the contractor would get X plus three weeks to reply to a compensation event before it can be deemed accepted, where X is the length of time before an initial notification of failure is provided.
The notification in the second sentence you quote refers to the operative notification in the first sentence, which is the notification of the failure to reply. Therefore your answer (2) is correct. The subcontractor may notify the failure to reply any time after it happens. 

The previous paragraph of clause 61.4 sets out when the contractor is required to respond to the initial notification of the compensation event by the subcontractor, which is within two weeks. So, assuming the subcontractor notifies the failure as soon as it occurs, X in your calculation will be two weeks. 

However, if the subcontractor does not notify the failure until three weeks after it occurs, then X will be five weeks and the contractor has a further three weeks to reply. Once the failure to respond has occurred, the ball is firmly in the subcontractor’s court.

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