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NEC ECC: When should X3 be used??

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Can you give an example as to when X3 would be sensible to use, and example of what it shouldn't be used for?
asked Nov 8 in Compensation Events by anonymous (3,060 points)  

1 Answer

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Secondary Option X3 is used for main option A and B (lump sum) contracts where the Contractor is to be paid in more than one currency.  The last part of clause 51.1 makes reference to this with ' Payments are in the currency of this contract unless otherwise stated in the contract'.

The other main options have their own specific arrangements to deal with this matter.in option specific clauses 50.6 (options C & D) or 50.7 (options E & F), which convert the amounts paid back to the currency of the contract using the specified exchange rates.

Option X3 would most likely be used where the Employer / Client specifies Plant or Materials that can only reasonably be procured from an international supplier which trades in a different currency to that stated under the contract.

Corresponding items in the Activity Schedule or Bill of Quantities are listed in the Contract Data and payment for these is made in the currency stated, calculated with reference to the exchange rates specified, up to a maximum amount.  This mechanism means that the Employer takes the risk of any fluctuations in exchange rates, at least up to the maximum amount stated to be paid in the currency.

One potential issue with this is that all purchases must be converted into sterling for VAT purposes, so will create additional work for the finance and accounting departments.
answered Nov 8 by Andrew W-I Panel Member (24,040 points)