NEC ECC: Corona virus and effect on delivery of materials

NEC3 and NEC4 Contracts Compensation Events
1

NEC 3, Option A contract

Due to the corona virus, our works contractor is unable to source/ delay to materials from a foreign supplier for the project. Our contractor has stated that his tender was based on using this foreign supplier.

The works information does not state where the materials are to come from. Materials are however available from a different supplier/ country but at an increase in cost.

The Contract has a “force majeure” clause but only allows for time.

Please advise as to the following:-

  1. The Contractor should proceed with the project using the alternative foreign supplier at his additional expense to avoid possible delay to the project and thus payment of delay damages (not a compensation event)

  2. The Contractor should proceed with the project using their originally intended supplier. Works are possible delay (Compensation event but only time applicable as per force majeure clause).

2

As sympathetic as I might be, I do not see that this would be a compensation event specifically. Sourcing the materials is a Contractor risk and it was their choice where they got them from. Any problems e.g. their premises burnt done, they have a lack of raw material would not normally be a compensation event so this is no different.

However, I think in this situation you need to notify an early warning and discuss the issue and agree an action plan going forward. I think in these times everyone (in the spirit of the contract) will be sympathetic to each others plight and at the every least I would expect the Client here to confirm that they would not charge delay damages for any over run. I can also see a point in the very near future where sites will be closed as there will not be enough workers or supervision to operate the sites. This could then be a compensation event.