I am currently in month 3 of a project and the client is advising that retention held on the
contractor should be 5% and not 3%. In the tender documents the percentage
stipulated to be held during the construction phase of the project was 5%.
However, inadvertently a figure of 3% was included in the contract that was
signed. The client is adamant that the percentage of retention to be held
should be 5% and that this should be applied to the gross value of work
completed to date. Understandably the contractor is not happy and is
threatening to terminate the contract. The client is of the opinion that this is
what the contractor would have taken into consideration in finalising their
tender. The client is also citing the fact the contractor has completed two
previous contracts for their development company where the retention held
was 5%. How can this matter be resolved within the provisions of NEC4 ECC Option A?
Whatever % is stated in Data Part 1 is the retention that CAN be taken. It does not matter what is stated in tender documents or occurred on previous contracts. Any termination needs to in accordance with the reasons as stated in the contract; anything other will result in breach.
To resolve, the Contractor can either accept 5% retention which should involve a Deed of Variation, or the Contractor could write to the Client and advise that 5% retention is not in accordance with the agreed terms and that his intent is to claim interest on the EO 2% of retained monies.
It’s 3%. The client filled in Contract Data Part 1, this required them to put the percentage for retention in under X.16. The contract is signed and executed as a legal deed, it’s their mistake. They could propose changing it via a Deed of Variation (Cl.12.3), you have the right to decline this proposal, with no further implications. The percentage held for retention remains at 3%. The two previous contracts complete at 5% retention have no bearing at all on the discussion.
I agree with the previous two answers. I would just add that Clause 12.4 (NEC4 unamended standard form), which states that the contract is the entire agreement between the Parties, could be pointed out to help settle the matter. It makes clear that anything not in the contract documents is irrelevant. This would certainly cover off the previous projects argument, and presumably the tender documents argument too, unless they have somehow been bound into the executed contract.