The contract is an NEC3 ECC Option C contract. Is the Employer obliged to pay Contractor’s subcontractors work, when the Contractor has still not agree and signed subcontractors terms? Our concen is that any payment made appears to eb ex-gratia and imply agreed terms?
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Cl. 11.2(23), 11.2(29) and section 5 of the contract outlines the subcontractor costs that form part of Defined Cost and the amount due for payment (Price for Work Done to Date). Defined Cost includes “the amounts of payment due to Subcontractors” but in order for it to be payable this would normally require the contract to be in writing. There are also obligations on the Contractor to get subcontractor’s terms agreed to comply with the requirements of Cl. 26. It might be argued by the Contractor that this is in hand and subcontract will be signed and payment made before the next assessment date and in which case definition of the Price for Work Done to Date, may cover this eventuality. 11.2(29) is somewhat unusual in that the Project Manager should include a forecast of what the Contractor will have paid by the next assessment date. Cl. 52.2 sets out the records required from the Contractor if respect of proof of payment, but these might follow in the subsquent month.
Notwithstanding these points the contract is clear that the subcontracting of work doesn’t relieve the Contractor of his duties to deliver the works.