How does NEC4 clause 61.4 work?
Your event can be refused on four grounds only, and silence after you notify the failure to reply means the event is treated as accepted.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
For deemed acceptance at every stage, with the dates worked through, see whether a compensation event is deemed accepted if nobody replies.
The answer
Clause 61.4 is the decision on an event you have notified under clause 61.3. In the NEC4 main contract the Project Manager decides. On an NEC subcontract your main contractor does. It works in two halves. The first half is the decision. The Prices, the Completion Date and the Key Dates can be left unchanged on four grounds only. The event arises from your fault. It has not happened and is not expected to happen. It has no effect on Defined Cost, Completion or meeting a Key Date. Or it is not one of the compensation events stated in the contract. If none of those applies, you are told the event is a compensation event and asked to quote. The reply is due within the period the clause gives. The second half is what silence means. If no reply comes in that period, you may notify the failure. Then, if there is still no reply within the further period the clause gives, your notification counts as acceptance. The event is treated as a compensation event, and you are treated as asked to quote. Three things go wrong. First, replies that are not decisions. A reply saying the notification is noted or under review is not a decision. Nor is a refusal on a ground outside the four, such as there being no budget for it. Second, subcontractors often fail to send the second notice, so deemed acceptance never starts and the event drifts. Third, both sides confuse what deemed acceptance settles. It settles that the event is a compensation event and that a quotation is due, nothing more. The amount is still assessed under clauses 62 and 63, and an own assessment under clause 64 is still possible if the quotation is wrong.
Example
Illustrative example. The scenario and figures are invented.
The facts
A subcontractor notifies that free-issue steelwork the main contractor was to provide arrived after its date on the Accepted Programme. It says it believes compensation event 60.1(3) applies. The main contractor has the period the clause gives to reply.
What happens
- A reply that the steel was late only because the subcontractor changed its own sequence is a decision on the fault ground. The subcontractor tests it against the Accepted Programme and the delivery records.
- If there is silence instead, the subcontractor notifies the failure to reply.
- If the silence continues for the further period the clause gives, the notification is treated as accepted, and the subcontractor quotes as if instructed.
The outcome
Deemed acceptance settles the event, not the money: a forecast of £12,000 in that quotation still has to be assessed.
Our Compensation Event Claim reads the Project Manager's reply against the four grounds before you answer it.