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Not all Z clauses are bad

A key objective of NEC4 was to reduce the need for Z clauses. The first NEC4 working party in 2015 did a comprehensive review of comments made on the NEC3 good, bad or indifferent.

This working party identified common amendments made to NEC3 many of which were taken on board for NEC4.

An issue with the common amendments is that they were often written poorly and not consistent with the terminology and language of the contract. So drafting a standard NEC clause would avoid arguments about the true meaning of the clause.

The need for Z clauses has therefore been reduced by including in NEC4 new core clauses, main options and secondary options.

All of this is great for consistency but not all Z clauses are necessarily bad. No standard contract can possibly cater for every situation. NEC is the martini of contracts for use any time, any place, anywhere in the world. So it needs the flexibility to deal with different legal jurisdictions, different types of industry or special circumstances.

The different legal systems is a prime example but NEC is working on this. We have the YUK clauses which cater for UK legislation but only in March 2021, NEC has now published Y clauses for Australia and Ireland. This again offers consistency of approach for those different legal jurisdictions.

Special circumstances could be the need for an extended warranty on Plant and Equipment installed early on a project of long duration or perhaps dealing with access arrangements on operational facilities such as airports, railways, power plants, etc.

We then have the special circumstances for your contract. What are those things which are concerning you and are going to keep you awake at night? This is something which Peter Higgins, Chair of the NEC Contract Board refers to as “what is the mischief that you are trying to deal with?”

If you, therefore, have concerns then these need to be identified and articulated - at this point do not even think about drafting or amending clauses, instead write a clause specification statement and identify the clauses which may be impacted by dealing with the mischief identified.

Once you have fully considered the reasons for the Z clause then you can start to draft in the same style, using the same terminology and language of the contract and you can check how it works with the other clauses and in some instances maybe also the flow charts.

The NEC prides itself on the fact that every clause is flow charted so checking your Z clause against the flow chart is a good idea.

The other clue in Z clauses is that they are additional conditions of the contract. So in many instances, you can simply add to rather than amend or change existing clauses. It is best to avoid amending, altering existing clauses as this again tends to unravel the carefully crafted contract.

So not all Z clauses are bad, but you must understand the mischief that you are trying to mitigate against and carefully draft them.


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