Contract practice

Question 1

What contract suites are you aware of in the UK construction industry, other than JCT?

Answer 1

NEC
FIDIC

Question 2

What are the main differences between the NEC and JCT contracts?

Answer 2

• NEC uses compensation events to assess time and cost together, JCT assesses these separate under Loss & expense and extension of time.
• Programme and Early warning register are key contract documents under the NEC forms.
• NEC uses Core/ Main and Secondary option clauses
• NEC uses simple, present tense language
• NEC encourages collaboration
• NEC is forecast rather than retrospective (i.e. variation costs can be agreed at FA on JCT, however we agree them prior to instructing)
• NEC does not provide for the use of Provisional Sums

Question 3

You mention that you are aware of collateral warranties, What is a Collateral Warranty and why is it used?

Answer 3

Provides security for investors. A collateral warranty is used to create direct contractual relationships between parties that would otherwise not exist. It extends the rights under a principal contract, i.e. duty of care/ Professional Indemnity etc. It extends the duty of care for the whole of the principal contract. IT IS A CONTRACT BETWEEN THE THIRD PART AND SUB-CONTRACTOR/ CONTRACTOR ETC.