What prompted the inclusion of this “spirit of mutual trust” clause, and how is it legally enforceable?
The “infamous” spirit of mutual trust element to clause 10.1 came in with NEC2(1995). It wasn’t in NEC(1) when it first came out in 1993. The original NEC contract did not fail without it, but it came about as one of the Latham recommendations in 1994 where he strongly endorsed the NEC family of contracts but did suggest a few enhancements of which the name change from “new engineering contract” to “engineering and construction contract” and the “spirit of trust” element where two key ones.
It is there to remind people how to act – it underpins the contract and creates a culture/obligation as to how people should be working. However, it is only one part of clause 10.1. The other part of clause 10.1 states that all the Parties have “to act as stated in the contract” i.e. do what the contract says. If it says someone has to do something, they have to do it. If it states it has to be in writing and/or within a certain timescale then again that has to be followed. So in simple terms – clause 10.1 first says do what the contract says, and then second says do it in a spirit of mutual trust…
Next is the important bit. The most important word in clause 10.1 is the word AND that hinges the two elements together and emphasises that you have to do BOTH, not one OR the other. Some people seem to act as though it says OR, in as much as if they have a good relationship they think that is at the expense of having to follow the contract. If you follow the contract then it should improve relationships and naturally people will be working in the spirit intended.
You have probably noted the change to NEC4 in this regard – where by clause 10.1 states “the Parties act as stated in the contract. A separate clause 10.2 now states “the Parties act in a spirit of mutual trust and cooperation”. The emphasise here is that the Parties have to do both, not one or the other.
I kind of some up the spirit of trust but as something and nothing. It is good to have it there as a reminder – but will rarely if ever be tested specifically in court. If there is a dispute – it will be on a specific aspect of the contract. Has a CE been assessed correctly, is it a CE, was a payment unfairly withheld etc etc. It will rarely if ever come down to how the Parties acted. If someone is going to formal dispute simply on “they are not acting in a spirit of mutual trust” then in my experience they really are clutching at straws.
It could be questioned why have it at all. I think it does no harm what so ever, and I would rather have it than not but I think it is less significant than many make out. It is there to remind people to be truthfull, honest and work in the right way. Contractors should not be assessing compensation events way higher than they are worth, they should not be holding onto information they should be sharing, they should not delay an activity in the hope a future CE might effect it, Employers should not be delaying payments or disallowing costs at the 11th hour.
It is a reminder how people should be working and not much more. Any formal disputes will be on specific aspects or clauses of the contract – has a CE been assessed correctly, has a sensible level of risk been applied, where they disrupted. Spirit of mutual trust will not specifically affect these outcomes in court.
In an update to Glenn’s post you might find my article of interest:
It only summarises the judgement but you can find more in-depth analysis of the case on other parts of the internet.