Is a compensation event deemed accepted if nobody replies?
It can be, but only after you notify the failure to reply and a further 2 weeks pass, under an unamended NEC4 contract.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
For the clause behind the first step, see how NEC4 clause 61.4 works.
The answer
Deemed acceptance is NEC's cure for silence. It works at three points in the compensation event procedure. First, your notification of an event. If no reply comes in time, notify the failure. If 2 more weeks pass, the event is treated as a compensation event and you are treated as asked to quote. Second, your quotation. If no reply comes in time, notify the failure. If 2 more weeks pass, the quotation is treated as accepted. Third, an assessment your main contractor was due to make itself. If none arrives in time, notify the failure. If 2 more weeks pass, your quotation is treated as accepted. On an NEC subcontract your main contractor plays the Project Manager's part, and your subcontract may set different periods. The step people miss is the second notice. Without it, silence alone does nothing, and the event drifts to the final account. So diarise each reply date. The day it passes, send a short notice of the failure, naming the event and the clause. Also know what deemed acceptance settles. After a notification, it settles that the event counts, not what it is worth. After a quotation, it settles the price and the time in that quotation. Our Compensation Event Claim service picks up events left unanswered and presses them to implementation.
Example
Illustrative example. The scenario and figures are invented.
The facts
A groundworks subcontractor notifies a compensation event for late access to a work area on 3 March. No reply comes within the 1 week its subcontract allows.
What happens
- On 11 March the subcontractor notifies the failure to reply, naming the event and the clause.
- No reply comes by 25 March, 2 weeks later, so the event is treated as a compensation event and a request to quote.
- The subcontractor quotes £11,600 on 8 April, inside its 3 weeks.
- Silence again: once the 2 week reply period has passed, it notifies the failure on 23 April.
- No reply comes by 7 May, so the quotation is treated as accepted.
The outcome
The event is implemented at £11,600 without a single reply from the main contractor, because each silence was answered with a notice.
To have unanswered events pressed through deemed acceptance to implementation, see our Compensation Event Claim service.