Z-CLAUSES: FRIEND OR FOE?

Transcription

1 Z-CLAUSES: FRIEND OR FOE? INGA HALL K&L GATES LLP NEC3 CONTRACTS - OVERVIEW Deliberately and fundamentally different from other standard forms Collaborative not adversarial NEC website: where traditional forms of contract can promote an adversarial relationship between contractor and client, the NEC promotes a partnering, collaborative approach.. 1

2 NEC3 CONTRACTS ENDORSEMENT Endorsed as the public sector contract of choice and used extensively on private sector projects Track record of bringing high profile projects in on time and on budget Not appropriate however for all clients, or all projects other standard forms/bespoke contracts may suit better NEC3 CONTRACTS KEY FEATURES Key features: Stimulus to good management Appropriate for use in a wide variety of commercial situations Clarity and simplicity In-built flexibility regarding risk allocation through appropriate choice of main and secondary options 2

3 Z-CLAUSES SHOULD WE EVER AMEND? Additional conditions should be used only when absolutely necessary to accommodate special needs, such as those peculiar to the country in which the work is to be done. The flexibility of the ECC main and secondary Options minimises the need for additional conditions. Additional conditions should never be used to limit how the Contractor is to do the work in the contract as this is part of the function of the Works Information. (NEC3 ECC Guidance Notes, 2005) Z-CLAUSES ISSUES TO CONSIDER Z-clause or Works Information detail? Taken literally [the Works Information] definition can be argued to exclude the detail of a contractual nature. But the problem is how to fit such detail into the contract if not in the works information. To put the detail into additional conditions is even less attractive. (Eggleston, 2nd ed, 2006 p 57). Z-clauses as additional conditions or amendments to existing NEC3 clauses? 3

4 Z-CLAUSES ISSUES TO CONSIDER Consistency and interrelationship with other contract documents needs to be considered Z-clauses more likely to be appropriate to address the needs of a particular client and/or project Z-clauses unlikely to be appropriate if they depart from the NEC3 ethos and take an adversarial approach CLIENT/PROJECT SPECIFIC ISSUES CLARITY AND SIMPLICITY Simplicity vs arguable lack of legal precision Language largely untested by the courts Amendments may include: - Use of a bespoke form of agreement to define contract documents, contract date, order of priority of contract documents - Obligations to comply with applicable law and defined standards 4

5 CLIENT/PROJECT SPECIFIC ISSUES CLARITY AND SIMPLICITY Assignment restrictions Other boiler plate clauses e.g severability, no waiver, survival after termination Collateral warranties Title Entire agreement Obligations to proceed regularly and diligently Clarifying points e.g exclusions from caps, additional items of Disallowed Cost CLIENT/PROJECT SPECIFIC ISSUES PROJECT SPECIFIC AMENDMENTS Olympics and other unique constraints Expanding list of early warning matters More detailed Completion provisions Amending time periods Insurance obligations IPR 5

6 CLIENT/PROJECT SPECIFIC ISSUES PUBLIC SECTOR NECESSITY Pass down of policy requirements/statutory obligations Publication of public sector Z-clauses by NEC and OGC including: FOIA obligations conflicts of interest assignment and novation official secrets and confidentiality CLIENT/PROJECT SPECIFIC ISSUES PUBLIC SECTOR NECESSITY insurance termination events dispute resolution Cabinet Office publication of fair payment and project bank account Z-clauses 6

7 CHANGES TO THE BALANCE OF RISK Prevention clause 19 Key Dates clause 25.3 sole remedy Indemnities mutual or one-sided? 7