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What does NEC4 clause 60.1(9) mean?

It makes it a compensation event when acceptance of something you submitted is withheld for a reason the contract does not state.

Updated: . By Jack Butler-Kettle, Construction Claims Consultant.

The answer

In the NEC4 main contract it is the Project Manager who withholds acceptance. On an NEC subcontract it is your main contractor. You often have to submit things for acceptance, such as a design, a subcontractor, a programme or proposed subcontract terms. For each, the relevant clause lists the reasons for not accepting it. Acceptance can be withheld for other reasons too, and this clause makes that a compensation event. To rely on it, show your submission, the reply withholding acceptance, the reason the reply gives, and that the reason is not one the relevant clause states. Where the reply gives no reason, you are weaker, because you then have to show what the real reason was. So first ask for the reason in writing. Notify under clause 61.3 within 8 weeks of becoming aware of the withheld acceptance. The change to the Prices, your contract price, is assessed under clause 63.1. It is the effect on actual Defined Cost up to the notification and forecast Defined Cost after it, plus the Fee. In practice that is the difference between what the refused proposal would have cost and what you had to do instead. You are expected to limit the damage by resubmitting or proposing an alternative quickly. Two things go wrong most. The refusal is dressed up in a stated reason the facts do not support, and you accept it without challenge. Or a programme is refused for a stated reason, and you try to use this clause when the real complaint lies elsewhere. Any delay to the Completion Date is assessed separately under clause 63, and that is a job for your planner.

Example

Illustrative example. The scenario and figures are invented.

The facts

A demolition subcontractor proposes a licensed asbestos firm as its own subcontractor, with the information the contract requires. The main contractor withholds acceptance because it prefers a different firm it has used before.

What happens

  1. That is not a reason the contract states, so the demolition subcontractor asks for the reason in writing, and gets it.
  2. It notifies the event under clause 61.3, and uses the preferred firm to keep the work moving.
  3. The quotation assesses the difference between the two firms' prices, £22,500 of extra forecast Defined Cost, under clause 63.1.
  4. With a fee percentage of 13 per cent, a Fee of £2,925 is added, a proposed change to the Prices of £25,425.
  5. The quotation attaches both firms' quotations and the main contractor's written reason.

The quotation in figures

ItemAmount
Difference between the two firms' quotations, additional forecast Defined Cost£22,500
Fee at 13 per cent£2,925
Proposed change to the Prices£25,425

The outcome

The compensation event is quoted at £25,425, with the written reason and both quotations behind it.

To have a refused event tested against the clause it falls under and pressed to implementation, see our Compensation Event Claim service.