Clause 60.1(14) makes it a compensation event when something happens that the contract lists as one of the Client's liabilities. The list is in clause 80.1 in NEC4 ECC, so this entry connects the risk section of the contract to the compensation event pricing mechanism.
NEC3 has the same structure, with different words: the entry refers to an Employer's risk, again listed in clause 80.1. Under both editions, the list is closed. The fact that something wasn't the Contractor's doing doesn't make it the Client's liability. The guide to Client's liabilities explains the wider risk allocation.
What triggers it
An event has to fall within the list. In plain English, the list covers these broad areas; read the clause for the exact boundaries and exceptions.
| Area | Illustration |
|---|---|
| Claims or costs from Others caused by the unavoidable result of the works, or the Client's negligence or interference with legal rights | A neighbour's claim for loss of access that was inherent in doing the works |
| A fault of the Client or of people it employs or contracts with | The Client's maintenance team damages the Contractor's completed work |
| A fault in design in the Client's Scope or in an instruction changing it | A drawing the Client provided doesn't work and the installed item has to be changed |
| Client-supplied Plant and Materials damaged before the Contractor has received and accepted them | Free-issue switchgear arrives damaged |
| Loss or damage caused by war, rebellion and similar, by strikes and riots not confined to the Contractor's own workforce, or by radioactive contamination | Civil disturbance damages part-finished works |
| Loss or damage to parts the Client has taken over, with exceptions | After early take over, the Client's tenant damages a floor |
| Loss or damage after termination, to Client property, and additional liabilities in the Contract Data | Whatever your Contract Data adds to the list |
The last row is easy to miss. Check Contract Data part one for additional Client's liabilities, as they count just the same.
How it is usually evidenced
- The factual record of what happened: photos, incident reports, statements and any security footage.
- Who did it or what caused it. Fault-based entries depend on it.
- Where the loss sits on the list, including any exceptions that may apply.
- For design faults, the design documents and how they led to the problem.
- The extent of repair work, and the time and cost involved.
Insurance is a separate question
The compensation event deals with Prices and dates between the Parties. Insurance deals with who pays whom afterwards, and whether a policy responds. Keep the two separate, and read the insurance guide. An insurer's position doesn't decide whether a listed event has happened.
Worked example
A fictional hospital wing on Option A, with illustrative figures. The Client's estates electrician, working on a live panel next to the new wing, wrongly isolates and overloads a circuit. The Contractor's newly installed air-handling control panels are damaged. The incident report and the Client's own permit record are clear about what happened.
This is a fault of someone the Client employs, which is on the list. The Contractor notifies under 60.1(14) two days later.
| Effect | Defined Cost |
|---|---|
| Replacement panels, including expedited delivery | £22,500 |
| Strip-out and reinstallation | £5,200 |
| Recommissioning | £3,300 |
| Time-related cost for two weeks' delay to planned Completion | £19,000 |
| Subtotal | £50,000 |
| Fee at an illustrative 10% | £5,000 |
| Change to the Prices | £55,000 |
Had the same damage come from a storm, it wouldn't be on the Client's list at all. The Contractor would look to its own risk, to insurance, and possibly to the weather event for the delay element alone.
How it is assessed
Most of these are notified by the Contractor. The time bar applies, unless the event arises from something like an instruction. The dividing date is the date of notification. The Contractor's duty to carry on and to repair isn't reduced by the event, so prompt action helps both the works and the assessment under 63.9. The rest is covered by the standard assessment.
What people get wrong
- Treating it as "anything not our fault". It's a list. Theft or storm damage may be neither the Client's fault nor on this list.
- Using a Client's fault when a specific entry fits. Late information from the Client is 60.1(3), not a generic fault. The specific route has its own test, and is usually cleaner.
- Using it for design the Contractor produced. Only design in the Client's Scope or in an instruction changing it is covered. For the Contractor's own design, see Contractor's liabilities.
- Applying the NEC3 list to NEC4. The list and its words changed in the move from Employer's risks to Client's liabilities. See Employer and Client for the name change, and check the clause in your edition.
- Forgetting the strike wording. A dispute limited to the Contractor's employees is excluded. Check where it started and who is involved.
Related guides
- NEC Compensation Events: The Complete Guide
- Compensation Event: Client Taking Over Early
- Compensation Event: Materials or Facilities for Tests
- Compensation Event: A Corrected Assumption
- Compensation Event: Physical Conditions
- Compensation Event: Weather
See how this works in practice
Click through Contract Status with sample contracts: raise the notice, reply to it, and watch both sides of one record.
Take the guided tour Book a demo
Take the NEC4 ECC quiz, use the free NEC tools or download free NEC templates.
This guide is general information in our own words, not legal advice. Your contract and its Contract Data always govern. NEC, NEC3 and NEC4 are trade marks of Thomas Telford Ltd; Contract Status is not affiliated with or endorsed by NEC.