Changes in the Law NEC 3 and 4

What mechanisms exist within the NEC 3 and 4 contracts to allow a Contractor to recover the cost of changes in the Law (X2), where the change do not affect the Contractors Defined Cost, but do affect the cost which are covered by the Fee? For example, an increase in UK corporation tax rates.


I think the answer is none… It’s either a recoverable under the titles within the SCC, or deemed in the Fee. The Fee can’t be changed post Contract Commencement, unless both parties agreed to a deed of variation. If it were a change in law that affects the People employed “within the working areas” (eg, a rise in Employers National Insurance contributions) then that is recoverable under the SCC:

People 1.11 “Amounts paid by the Contractor including those for meeting the requirements of the law and for pension provision”

It’s a risk the contractor needs to consider at tender stage, and build into their Fee. If Corporation Tax were reduced, there’s no mechanism for the Employer to benefit and recover the saving…


Thanks for the response

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