We are Contractors on a project in which we have entered into an NEC3 contract with our customer. The customer has received some CEs from another sub-contractor. The customer has decided that these costs are to be borne by us as he is of the opinion that these costs have arisen due to something we requested, and as such has raised a Compensation Event to us.
Two questions please:
(a) can the customer do this via a Compensation Event or should it be done via other means
(b) what form/document/template must I use to reply to them, assuming that the CE is the correct vehicle for this dispute.
The answer to your first part is no the Employer can not do this. They cant just “issue a compensation event” - as what reason within clause 60.1 can they tag it to? They can’t. That means I don’t need to answer the second part as it is not valid. If that is a compensation event between them and the Employer, this does not instantly transfer across to the main Contractor.
The Employer can only recover this cost from the Contractor if that contract between the Contractor and the Employer allows them to. Had they defined certain works to be done by a defined Key Date that they miss and the Employer incurs cost from a subcontractor as a result, then that would be recoverable through 25.3 (but his is not via a CE).