The NEC4 suite of contracts was published in June 2017. Following publication there has been continuing discussion and feedback from users and industry experts on the new features, forms and changes from NEC3 that were introduced. In response, NEC published a set of amendments to NEC4 in January 2019 and have now issued a second set of amendments (dated October 2020).
A schedule of all the amendments from each set is available for each contract on the NEC website (www.neccontract.com) but the principal changes are summarised below.
The key changes to the NEC4 Engineering and Construction Contract are:
- Optional clause X7 has been amended so that the obligation to pay delay damages arising if the Completion Date is missed runs from the Completion Date until the earlier of
- the achievement of contractual completion or
- the Client taking over the works or
- the issuing of a termination notice under the contract by the Project Manager.
This means that the period in relation to which delay damages are payable where the works are unfinished expressly ceases on the date of the termination notice.
- After the date of termination any further delay costs to the Client will be considered as part of the general costs/damages resulting from the breach of the Contractor’s obligation to Provide the Works. This appears to be a response to the focus on the drafting of such clauses in the recent case of Triple Point Technology Inc v PTT Public Co Ltd.
Secondary Option X22 – Early Contractor involvement
The revised drafting of this optional clause introduces two main changes to the ECI process:
- to provide expressly for proposed and resulting changes to the Access Dates, Key Dates and the Completion Date which stem from the Contractor’s proposals for Stage Two and
- a more detailed process for the submission of the Contractor’s proposals for Stage Two to the Project Manager for acceptance, including a requirement for the Contractor to consult with the Project Manager in the preparation of these proposals.
Secondary Option Y(UK)1 – Project Bank Account
The optional drafting providing for the establishment and use of a Project Bank Account has been updated (along with a number of drafting and timescale changes) to provide for
- the establishment of the Project Bank Account by any of the Parties, rather than solely the Contractor, who then become the “account holder”;
- the provision of different procedures or authorising payments depending on who is the account holder;
- the maintenance by the Contractor of a Payment Schedule (setting out payments to be made to the Contractor and Named Suppliers from the Project Bank Accounts) and the Project Bank Account Tracker (which is a register of all payments made to and from the Project Bank Account and the dates on which they were made); and
- provision that until the Project Bank Account is established, payments are made by the Client to the Contractor.
Many of these amendments are replicated across the other NEC4 standard forms which are also subject to further specific amendments.
Secondary Option Y(UK)2 – The Housing Grants, Construction and Regeneration Act 1996 (as amended)
In particular, users of the NEC4 Term Service Contract and/or NEC4 Professional Services Contract should note the amendments to Y(UK)2 which linked the “final date for payment” to the submission of an invoice from the party to whom payment is due (something which is not a feature of the equivalent payment provisions in the ECC). This change reflects recent UK case law which considered the compliance of a similar clause with the Construction Act and aims to provide certainty of due date and final date for payment in the event that an invoice is not provided by the payee.
The “due date” has been amended so that it is the date of receipt of an invoice by the paying party or fourteen days from the assessment date, whichever is later. The final date for payment is a fixed period of time from the due date. The timescales for payment under the standard drafting otherwise remain unchanged.
The NEC has published a schedule of amendments for each contract on its contracts website. The NEC states that the schedules detail all amendments being made except minor typographical amends that do not affect the interpretation or application of the contracts.
Users of the NEC3 suite of contracts should note that the NEC will no longer be providing updates to the NEC3 suite.
 Triple Point Technology Inc v PTT Public Co Ltd  EWCA Civ 502
 Rochford Construction Ltd v Kilhan Construction Ltd  EWHC 941 (TCC)
Our Infrastructure and Construction teams have significant experience drafting and advising on NEC contracts. Our specialist adjudication unit, SP Adjudication, is on hand to assist with disputes relating to the same.
This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any of the issues raised in this article, please contact us today by telephone or email firstname.lastname@example.org.