Right of Assignment - Clause 28.1 of NEC 4 ECC Option A

NEC3 and NEC4 Contracts
1

As part of an active ITT a tenderer has asked:

“For Insurance reasons, please may we request the right of assignment in clause 28.1 be limited to two occasions without the Contractor’s consent.”

The relevant clause states:

Either Party notifies the other Party if they intend to transfer the benefit of the contract or any rights under it. The Client does not transfer a benefit or any rights if the party receiving the benefit or right does not intend to act in a spirit of mutual trust and co-operation.

We have sought professional Insurance advice from independent Insurance SME - they do not feel this question relates to insurance. My interpretation is that the Tenderer is seeking to limit the number fo variation orders that could be issued post contract award. Whilst we would be seeking to limit any variation orders we do not have an appetite to limit the number ahead of contract award.

Grateful for any clarification or advice please?

Many thanks,

Jenny

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Jenny, welcome to the community.

The tenderer’s request relates to the number of times the contract will be assigned (e.g from the Client to a funder and then to another party etc.). There is a market trend (or generally accepted balance) to limit this to a maximum of two occasions, by virtue of reducing the risk of having to deal with different/unknown entities in the future and usually pertains to latent defects during the limitation period (e.g. 6 or 12 years for breach depending on the way the contract was signed).

There is no relevance to “variation orders” (by which I assume you refer to compensation events) if that is your concern.

I would suggest you cross check my view with your legal advisors.

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3

Peter, Thank you for your clarification - very helpful and much appreciated.

Jenny

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4

No problem - all the best

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