The contract is an NEC3 ECC Contract. The employer is currently reviewing subcontract tender options regarding the procurement of plant and equipment.
The employer has been presented with two options:
- The Contractor to purchase an element of equipment (a JCB)
- The Contractor to hire an element of equipment (a JCB)
The price for purchase is slightly lower than the option for hire.
The question has been raised, after the works are completed the employer does not wish to keep the piece of equipment, however the Contractor would like to keep the equipment. Under the Contract does the Employer have the right to sell back the equipment to the contractor for the risidual value of the equipment? Or would this warrant a new contract to deal with such an agreeement?
2 Likes
I’m presuming it is an Option C (or D) contract.
A separate contract for the sale would be needed.
2 Likes
Possible ways to deal with this under the Schedule of Cost Components;
Under s22 treated as Equipment owned by the Contractor with an ‘open market’ rate ‘agreed’ between the Parties,
Under s23 an additional item of Equipment assessed as though it were listed in the Contract Data with payments made based on ‘change in value’ with a corresponding time related on cost (maintenance etc),
Under s24 an additional item of special Equipment assessed as though it were listed in the Contract Data.
I don’t see why the Employer has ‘ownership’ of the Equipment simply because they have made payment for it.
2 Likes
Hi Andrew,
I found your last sentence as interesting point. How does the NEC deal with Title of Equipment. I can see cl 70 deals with Plant and Materials but it seems to be silent on Equipment. We’re in a project where we may purchase a significant amount of Equipment under an Option F and can’t put our finger on who holds the title.
2 Likes