In NEC4 one of the tests for Prevention is that the event impacts Completion of the whole of the works, whereas in NEC3 it was just Completion. I just wanted to understand (i) what the rationale for this change was, and (ii) how this affects the Contractor’s liability for LDs under NEC4 contracts if the event doesn’t impact sections where X5 is used?
I am not aware of the reasoning of the drafting committee but I think, in essence, prevention is supposed to be about a wide event rather than a localised problem and that is why you elevate it to the project as a whole rather than sections (if there are sections)
Clause 19 Prevention leads to an instruction and a CE under 60.1(19). The CE is not limited to impact on the whole of the works that is just what kicks off the process.I don’t think it changes liability for LDs at all. I can’t think of an example of an event that would prevent completion of the whole of the works but have no impact on the sections. If it did occur and there was no impact on the sections then liability for LDs will still arise. If it also impacted the sections that would be part of the CE evaluation.
Not much explanation from authors as to why they changed in wording, but it now expressly makes it clear that it is the effect against planned Completion in NEC4, Under NEC3 it just stated Completion, so was less clear as to whether that meant planned Completion or Completion Date, and hence whether the terminal float could be used by the Client before it applied when assessing a compensation event. NEC4 makes it clear that terminal float remains the Contractor’s.
I would like to think that NEC4 clarifies the rules they always meant which is what they have done in the case of other amendments, but obviously without that being expressly stated either party could argue either way under NEC3 as to what that means.
Here is the link to an article which, in the second half amplifies on what the changes from NEC3 to NEC4 mean in practice: https://www.linkedin.com/pulse/who-pays-covid-19-contract-risk-allocation-under-nec-contracts-jon/ . Because, IMO, they do mean different things in practice!