“Option Z: The additional conditions of contract” is almost a footnote in the NEC contracts at the back of the secondary option clauses. So why does it often evolve into a document several times longer than the contract?
Are the authors of NEC culpable of omitting great swathes of important contractual process and obligations of the Parties? Having read many z-clause “novels” I would suggest not!
There are themes that appear time and again throughout these tomes and generally they can be classified as Good, Bad or just plain Ugly.
One thing is for sure, if you use too many ugly ones, the Price will go up as the industry struggles to assess the risk they present. Each one written erodes the benefit of using a published form.
Or ‘the benign’ as far as NEC goes. These are Z clauses of the boiler-plate variety and there’s nothing wrong with them. They set out how the Parties behave in terms of freedom of information, TUPE, confidentiality, security, etc.
They make contracts compatible with the organisations they serve. Importantly they coexist with NEC and do not conflict with its aims and characteristics.
Ideally they would be written in plain English, in less than forty words, use present tense, punctuation and bullet points and not reference other clauses. Usually they aren’t, but one step at a time…
Or more accurately ‘the unnecessarily restrictive’. If you read z-clauses that start “The Contractor will not…” or anything similar then consider whether the clause aims to constrain the Contractor on how he Provides the Works. If it does then consider putting it in the Works Information – see clause 11.2(19).
If such constraints later need to be changed or removed, then the Project Manager can do so under clause 14.3. The compensation event process then provides a contemporary assessment of the impacts on time and money.
If the constraints are stated in the conditions of contract, the only way to change them is to use clause 12.3 and most likely a commercial negotiation. (Unpredictable, lengthy, costly?)
Don’t unnecessarily tie your own hands. Spot the constraints and put them in the Works Information.
The mobile phone analogy...
When delivering training I sometimes find it useful to explain the optional structure of an NEC contract by comparison with a mobile phone, bear with me...
So where does the ugly Z clause fit into this analogy?
This kind of Z clause is the Ugly (usually). These are the attempts to ‘improve’ the contract because for one reason or another it doesn’t meet our requirements, or at least we think it doesn’t.
It is unfair to say all Z clauses of this kind are ugly. Sometimes there is genuine need and with careful, informed drafting the contract can be adjusted to fit.
However, there is a lot of bad, destructive drafting that appears in the main to be born of a lack of understanding. A handful of additional words in the wrong place, with the best intentions, can bring a multi-billion pound portfolio into a state of confusion.
Director: CEMAR, ICE Examiner, Tutor: NEC Contracts