NEC ECC: Delay Damages under Option B

NEC3 and NEC4 Contracts Secondary X, W and Y options
1

I have a badly worded limitation to Delay Delay damages clause. The Main Option is Option B.

The delay damages are limited to 5% of the contract value. Contract value is not defined in the contract. Total Prices are of course re-measurable.

A large portion of the works have been de-scoped which already reduced the possible re-measurement of the Prices.

The Employer wants to impose delay damages and has indicated it will be based on the estimated Total Prices being all the BOQ items added up at the tender stage of the contract.

So how do I work out what the Employer can impose as delay damages? Is it 5% of the Prices accepted at the start of the contract or should it be based on the current contract value based on work done to date?

1 Like
2

At face value this could be argued either way as the term “contract value” is not an NEC term. Naturally the Employer has given it the interpretation most favourable to them and you will argue the opposite.

Make sure you’ve read the entire contract including Z clauses and Works Information to ascertain if any further clarity is given elsewhere. Also ensure that you are recovering what you’re entitled to through the compensation events related to changed quantities in Option B.

3

This sounds as if it is one where the contra proferentum rule will be applied : namely interpreted in the light least favourable to the Party that caused the ambiguity. I.e. the the Employer so damages should be set at the lower of reasonable interpretations.

4

Thanks Neil

The rest of the contract is silent regarding "contract value"and in fact the term is never used again.

This is a typical problem we have in South Africa where parties go outside of the contract terms leaving us with this type of problem. I agree it will now come down to an interpretation issue.

Thanks for your help.

5

Thanks Jon

That’s exactly what my argument will have to come down to.

Thanks for the help.