Cl60.1 (12) Physical Conditions and Z clause

I am currently working on an option A, NEC 3 ECC project.

Cl60.1 (12) physical conditions is a compensation event under the contract. However, with regards to 60.2, the Employer has inserted a z clause in to the contract - “The Employer provides Site Information and other documents relating to the condition of the Site by way of information only. The Employer does not warrant or represent their accuracy, reliability or completeness.”

To what extent, if any, does this z clause relieve the employer and transfer the risk (time and cost) to the contractor for the following:-

(i) ground conditions - if rock is encountered, but is not shown on the GI information provided
(ii) ground conditions - if an existing structural foundation is found to be different from that shown on a record drawing
(iii) ground conditions - excavated material “as dug” is to be re-used as fill material but does not meet the contract specification and thus imported fill required.

It is my understanding/ intention of the z clause, that the contractor would not be entitled to notify a compensation event for the above i.e. (i) to (iii).

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I would suggest.

If clause 60.1(12) is in the contract then the Contractor is entitled to a compensation event if the physical conditions pass the test of the 3 bullet points within clause (12).

Clause 60.2 relates to the factors to be considered when assessing the compensation event.

The Z clause does not nullify the Site Information and the Contractor is still entitled (and should) consider it along with the other bulleted items and make its view of what is “likely” to be encountered.

The Z clause does not transfer the risk. The answer to the particular items such as rock will depend upon what was “likely” when considering the information as a whole, so, for example, if the presence of rock could have been identified by an experienced contractor then the assessment will be £0.

In short 60.2 still operates.



Thanks for your response.

However, I am now unclear as to the purpose/ intention of the z clause. I thought the intention of the clause was to reduce the Employers liability/ risk.

What is your understanding/ effect of the z clause?

@Drummond_4 Option Z clauses can do many things e.g. give a party additional rights or obligations, they don’t necessarily always transfer risk in the commercial sense. I’ve seen this particular one a few times, what it’s function is over and above what the contract does in any case I’m not sure as there isn’t a positive statement in the contract which says that the Employer does warrant that it’s “correct” and there’s a procedure for dealing with when it’s “different”. If the Employer had wanted to transfer the risk they would need to delete clause 60.1(12) with an Option Z clause and for completeness also delete clauses 60.2 and 60.3. If they haven’t done this you are still entitled to a CE for different physical conditions. They may argue in response to this that as a result of their (ineffective) Z clause there is an ambiguity or inconsistency which they could then attempt to resolve with a PMI under clause 17.1. I would use my argument set out above to counter this, there is no ambiguity or inconsistency to resolve, the contract is clear, you are entitled to a CE under clause 60.1(12), there Z clause merely has the effect of saying that the Contractor can expect it to be different! Interesting choice of words, the first sentence seems to just say “Site Information is provided for information”. Who pays people to write these words?!


The purpose of a Z-clause like this is to absolve the Employer from a claim in law for innocent or negligent misrepresentation i.e. they had forgotten to put something in (a borehole log) or a report innocently or negligently interprets data wrongly. It does not change the physical condition compensation event nor get them out of fraudulent misrepresentation.