NEC ECC Option A: Subcontractor misses a key date. General damages are at large and I & CL excluded. Subcontractor had access to main contract for inspection prior to entering contract.
In missing the key date the Contractor is entitled to claim costs under 25.3. Is the interpretation or meaning of cost here to put the Contractor into the position they would have been had the delay not occurred or is the Contractor also able to claim direct loss of profit / incentive payment they may have otherwise received under the main contract? (or would this be deemed as indirect or a special circumstance that was not made clear at the time of entering into the subcontract?)
Assuming you’re talking about a subcontractor who is employed by a contractor using the ECS and the contractor in turn is employed by a client under the ECC …
Clause 25.3 provides a three point test which must be passed in order for a contractor to recover anything from a subcontractor as a result of failing to meet a key date:
(1) it must be an additional cost that the contractor has paid or will incur
(2) the additional cost must be incurred on the same project and
(3) the cost must be incurred in relation to the carrying out of work
Further, the final sentence in the clause seeks to exclude indirect or consequential loss from being recovered in relation to this breach of contract.
You can see how loss of a bonus, an incentive payment or profit fails to meet the tests in this clause and indeed is specifically excluded by the final sentence.
This said, it’s not unusual to see the ECS being heavily amended by contractors so check your Z clauses, you may find they give the contractor very broad rights to recover costs, losses, damages etc.
Thank Neil.
Do you think the Contractor could have a route to claim (loss of bonus/incentive) as a direct cost for breach in a court (out with & assuming it fails 25.3 test under the standard form)?