NEC ECSC: Indemnities Cl.81.2

We are working under the ECC NEC3 Short contract. The Employer has chosen to engage each trade on the project under separate contracts. The issue we have encountered is that whilst there were notified defects on the scheme, which were promptly rectified, the Employer is now effectively applying ‘contra charges’ for the costs of engaging other trades to support our work in correcting defective work. The Employer is suggesting that the indemnity offered in Clause 81.2, gives redress ‘The contractor indemnifies the Employer against…claims, proceedings, compensation and costs payable arising from or in connection with the Contractors providing the Works’. In turn they are then pinning their perceived right to deduct monies under Clause 50.3 (bullet 3), ‘less amounts to be paid or retained from the contractor.’

So I guess my question is, what is contemplated by the contract in this scenario?

I stress I am in no way an expert in insurance, but from looking at the clauses it does seem that the Employer is justified as:

  • they have “costs payable” arising from or in connection with you (not) Providing the Works where this means doing the work “in accordance with this contract”. Defects are not in accordance with the contract. And you indemnify them for these amounts under clause 81.2
  • further, as you point out, in clause 50.3, the Employer can deduct from amounts due, the amounts to be “paid by” the Contractor.

Jon would your answer be the same if the “engaging other trades” was a facility/attendance to be provided by the Employer eg under the contract the Employer was to provide traffic management, and traffic management was necessary for the Contractor to carry out the Defect.

Hmm, that adds an extra bit of complexity.

My answer would probably be ‘Yes’ for the same reasoning as above in that the Employer is incurring this extra cost as a result of not doing work in accordance with the contract. However, I suspect that this one might turn on the detail of what is stated in the Works Information. I would certainly want to check it out.