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Sun February 28 2021

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Campaign warns of misuse of Z clauses in NEC contracts

18 Nov 14 A campaign has been launched to educate the industry in the perils of adding Z clauses to NEC contracts as misuse is said to be increasing ambiguity and costs.

Z clauses can be inserted into NEC contracts to enable parties to agree additional conditions of contracts, in order to cater for specific needs relating to the project and the terms of its delivery.

Rekha Thawrani, general manager for NEC, said: “The biggest problem with the misuse of Z clauses is that when they’re used incorrectly, they change the risk profile of a contract. The issue all users can face is that if a Z clause is wrongly inserted, it can make the contract ambiguous. As a result, good project management can be hampered and the project is likely to cost more, or take longer to complete.”

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NEC contracts have a balanced risk allocation to tailor to almost any circumstance, which means that if you don’t like the balance, then both parties should reconsider the contract you’re using, before adding clauses, said Thawrani.  “If an additional clause does need to be inserted then the client should ensure that it complements the existing contract terms, avoids duplication and what’s more is; flexible, clear and stimulates good project management. Clauses should only be inserted if they define what is required and should be drafted by someone with experience of NEC, who understands how the clauses will affect the rest of the contract.”

Peter Higgins, previous chairman of the NEC drafting panel and member of the NEC board, and Robert Gerrard, NEC users’ group secretary have spoken in a webinar warning  NEC users that incorrect use of Z clauses counteracting the effectiveness of the contracts.The webinar discussed the need for Z clauses, the types available and the major impact incorrect usage can have on NEC contracts.

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