We are a sub-contractor under NEC3 ECS Option A which includes Clause X7 and X18.
Clause X7 states that delay damages are £0 per day.
Clause X18 states that the liability for indirect and consequential loss is limited to unlimited.
There is a Z clause which states that both Clauses X18.2 and X18.4 are deleted in their entirety.
Unfortunately we have delayed the project by around 7 weeks which has consequently affected follow on trades but not the overall completion date of the main contract.
On the last Payless Notice, the Main Contractor deducted substantial payments against prolongation costs for the follow on trades as well as their own staff costs including prelims.
I have been reading other questions on your website concerning this topic but couldn’t find any questions where Clauses 18.2 and 18.4 had been removed and would be grateful if you could advise if a claim for prolongation costs under X18 is valid in this situation.
With damages set at £0 per day for late Completion, the main Contractor has no right to deduct damages if you are late overall. Likewise, if X5 foe sectional Completion was specified.
The other contractual mechanism for deducting monies is by stating Key Dates in the Contract Data. If you do not then meet a Key Date, you are liable for the direct costs only of the Employer doing the work or paying an Other to do the work faster etc.
There is no other contractual mechanism for deducting costs for lateness.
However, dates that you have to meet could also be stated in the Works Information as constraints. If you did not meet them and you were not delayed due to compensation events, then you would be in breach of contract. The legal mechanism to recover costs would ‘potentially’ be suing for breach of contract. I say ‘potentially’ because., in the past, I have received mixed legal advice on whether a court would enforce this.
Just to add one simple line to Jon’s very good answer just to make it absolutely clear to other readers of this question. X18 is not an alternative to X7. If you don’t have X7, it does not mean that the Client can then instantly claim damages using X18.
All X18 does is set a liability limit if something occurs for a reason within X18.
Thank you both for the detailed responses…
We have now been advised by our Client that the prolongation costs are being claimed under the following Z Clause.
20.11 “The Subcontractor shall observe, perform and comply with the Main Contract, all the additional conditions of contract and amendments to the Main Contract as provided by the Contractor under this subcontract (including but not limited to those additional conditions of contract) on the part of the Contractor to be observed, performed and complied with so far as they relate and apply to this subcontract (or any portion of the same) and the subcontract works. For the purposes of giving effect to this clause references to the Employer and the Contractor in the Main Contract shall be construed as references to the Contractor and to the Subcontractor respectively where the context so admits (but to the intent that no such meaning shall be applied so as to give rise to absurdity or impracticality). The Subcontractor further acknowledges that any breach of this subcontract may cause the Contractor to be in breach of the Main Contract and cause the Contractor to suffer loss or damage. The Subcontractor acknowledges that it shall be liable for any such breach and agrees to indemnify the Contractor against any such loss or damage which shall be in addition to any Disallowed Cost. The Subcontractor acknowledges having had the opportunity before the date of this subcontract and subsequent thereto to inspect a copy of the Main Contract ( excluding all rates and prices and other commercially sensitive information) that it shall be deemed to have taken full account of the Contractor’s obligations under the Main Contract in its performance of this subcontract (including any updates or amendments thereto) and if by reason of any breach by the Subcontractor of the provisions of this clause the Contractor is prevented from recovering any sum from the Employer under the Main Contract in respect of the Works, then without prejudice to any other remedy of the Contractor for such breach, the Contractor may retain from the Subcontractor or the Subcontractor will pay such amount which the Contractor was prevented from recovering."
We have since been presented with a consequential loss claim that includes costs for site accommodation hire, agency labour charges and prolongation costs for another sub-contractor.
Does the inclusion of the above Z Clause vary the original answer whereby X7 is set to £0 per day.