Amendments to the NEC4 suite of contracts published

The NEC has published amendments to its NEC4 suite of contracts.

NEC contracts are widely used in construction, engineering and maintenance projects in Northern Ireland and remain as the contracts of choice for construction works and services procured by the public sector in Northern Ireland.

First published in June 2017, the NEC4 suite of contracts replaced the NEC3 suite.

Following previous amendments in January 2019 and October 2020, this is the third set of amendments that have been published. The amendments are said to have been made to improve the contracts in response to constructive feedback.

Whilst the amendments impact across the NEC4 suite of contracts, this note highlights just some of the changes to the ECC and ECSC.

Engineering and Construction Contract (ECC)

Amongst the changes to the ECC, which is the main works contract within the NEC4 suite, is an extension to the Client’s right to use the Contractor’s design, to include documents prepared for design.

In practice, we expect that many Clients will continue to amend the ECC by inserting detailed copyright provisions. In the public sector, for example, the standardised “Z” clauses published by CPD provide the wording for an irrevocable copyright licence, which includes a right to grant sub-licences in favour of a Client.

Engineering and Construction Short Contract (ECSC)

The ECSC is designed as a simpler alternative to the ECC for use on projects that comprise straightforward works and are low-risk.

The amendments to the ECSC include an option for the Client to reduce the Contractor’s obligation for any design they produce to reasonable skill and care—a standard generally in line with usual professional indemnity insurance terms.

We expect that many Contractors will push to have this option included, with many in the industry reluctant to accept the default position of an absolute obligation.

Incorporating the amendments

Many users of NEC4 contracts use a form of agreement, setting out the contractual terms that the parties have agreed to incorporate into their contract—including which of the NEC4’s primary options and secondary options are to apply and listing any additional conditions (or “Z” clauses).

A simple reference to the NEC4 ECC, for example, will not clarify whether it is intended to use the contract as published in June 2017 or with the subsequent amendments incorporated.

To avoid uncertainty on which terms apply, any form of agreement ought to specify which version of the particular NEC4 contract is being used.

Carson McDowell view

In addition to the amendments to the NEC4 suite, new editions of the JCT suite of contracts are expected to be published in 2023 or 2024.

Parties using either NEC4 or JCT contracts on construction and engineering projects ought to keep abreast of the changes.

If you would like any further information or advice, please contact John Dugdale from the Construction team.

*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.