November 23, 2021

Delay and Loss and Expense Claims: NEC vs JCT

Lawrence Pearce, specialist construction solicitor at Holmes & Hills, discusses notification requirements within standard NEC vs JCT construction contracts.  

Rather appropriately, this was meant to be published in September, but as with a lot of construction projects, it was delayed.

Delays are typically unavoidable in construction and can lead to the costs of a project unexpectedly increasing far beyond what was originally anticipated. Be it delays on relatively low scale residential projects or delays on larger scale commercial projects; the inconvenience and disruption caused by delays is frequently the route of significant tension and construction dispute between Employers, Contractors, and Subcontractors alike.

The current economic climate has seen delays attributable to shortages of materials, the depletion of the labour force following EU nationals returning to their home countries in the wake of the pandemic and even due to logistics problems caused by the more recent HGV driver shortage in the UK. These factors are of course an irritation yet are unfortunately beyond our immediate control. However, knowing who is responsible and consequently accountable (under the contract) when delay arises is critical.

Therefore unsurprisingly, the most pressing question we are frequently asked by our clients in such disputes is, “Who is accountable for the delay under the contract?”

With many of our clients choosing to use industry-standard contracts, this article touches on how delay and loss and expense is addressed in standard form contracts and what are the common oversights by contracting parties.  

Notification of a Delay Event: NEC vs JCT contracts

This is the area whereby most Contractors fail to apply the terms of the Contract. It is also the area where you are most likely to find condition precedent clauses which may well stop your claim for an extension of time in its tracks for failing to notify within the required period.

Under the JCT Suite, the Contractor is required to notify the Contract Administrator/Architect when it becomes reasonably apparent that the progress of the works is being, or is likely to be delayed by the occurrence of a Relevant Event and/or Relevant Matter. However, unlike the NEC suite of contracts, no limitation is applied unless the contract is amended. More often than not, a very onerous time period will be inserted as a condition precedent clause.

This is the area whereby most Contractors fail to apply the terms of the Contract. It is also the area where you are most likely to find condition precedent clauses which may well stop your claim for an extension of time in its tracks for failing to notify within the required period.

Under the JCT Suite, the Contractor is required to notify the Contract Administrator/Architect when it becomes reasonably apparent that the progress of the works is being, or is likely to be delayed by the occurrence of a Relevant Event and/or Relevant Matter. However, unlike the NEC suite of contracts, no limitation is applied unless the contract is amended. More often than not, a very onerous time period will be inserted as a condition precedent clause.

The NEC on the other hand requires the Contractor to notify the Project Manager of the occurrence/anticipated occurrence of a Compensation Event within 8 weeks of the Contractor becoming aware of the occurrence. A failure to do so means the Contractor is not entitled to claim additional time/costs for the Compensation Event. Contractors should be mindful of the notice provisions within the Contract as these will often be amended to benefit the Employer.

Knowing your NEC or JCT construction contract

Exposing yourself to liability is inevitable if you do not understand your obligations under the contract; particularly if you make the wrongful assumption that all the standard industry contracts say the same thing. Knowledge of the differences is of course key, however, fundamentally you must understand what your contract says about delay events and what it expects of you and the other party in such circumstances.

Accurate record-keeping of when and why delays have occurred as well as documentation illustrating when you notified the Employer of the delay to evidence compliance to the required time frame are both imperative. Notifying the Employer even one day later than the specified time period will leave you open to liability for delay and any attached compensation clause triggered by your non-compliance. Despite the seemingly unscrupulous nature of such clauses and lack of movement for error, such obligations are lawfully enforceable and are in fact enforced time and time again.

Having a good understanding of your contractual obligations (and possible entitlements) for delays before commencement on site will therefore prove invaluable to you. Any claim for an EOT should not be a reactive approach after completion of the project but a proactive approach as and when the delay arises. Any attempt to raise an EOT as a method of defeating LAD’s in the Final Account is likely to be swiftly dismissed.

Get advice on your construction contract

Holmes & Hills’ team of construction solicitors is always on hand to discuss the various forms of contracts, and to help you to choose the most appropriate contract for your specific project. We are frequently instructed to review contracts before works commence to highlight the key provisions that Contractors need to be aware of. This means that Contractors can be reassured that they know the good, the bad and the ugly of a construction contract, before it's too late!

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Call 01206 593933 and speak to a specialist construction solicitor. 
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Key Contact

Lawrence Pearce

Associate

lpp@holmes-hills.co.uk

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