The NEC4 termination table links each reason to one or more of four procedures, P1 to P4. P1 always applies, and lets the Client finish the works and use Plant and Materials it has title to, while P2, P3 and P4 decide who leaves the Site, what they take with them, and what the Client can keep using.
These are in clause 92 of the contract, and the procedures start straight after the Project Manager issues the termination certificate. For the bigger picture, see NEC disputes and termination.
The four procedures in plain English
| Procedure | What it allows or requires | Clause |
|---|---|---|
| P1 | The Client may finish the works, using Plant and Materials it has title to | 92.1 |
| P2 | By instruction, the Client can have the Contractor leave the Site, remove Equipment and Plant and Materials, and pass over the benefit of subcontracts and other related contracts | 92.2 |
| P3 | The Client may use the Contractor's Equipment (if the Contractor has title) to finish, and the Contractor removes it promptly when told it's no longer needed | 92.2 |
| P4 | The Contractor takes its Equipment and leaves the Working Areas | 92.2 |
Which applies when
| Situation | Reasons | Procedures | What it feels like on site |
|---|---|---|---|
| Contractor at fault | R1 to R15, R18, R22 (terminated by the Client) | P1, P2, P3 | The Client takes control, and may keep the cranes |
| Client at fault | R1 to R10, R16, R19 (terminated by the Contractor) | P1, P4 | The Contractor packs up and goes |
| Nobody at fault | R17, R20 or R21, as stated | P1, P4 in the NEC4 subcontract text; NEC3 gives P1, P3 for the Employer on R17 and R20 | An orderly exit |
| Client's own choice | X11 (NEC4), or a reason other than R1 to R21 (NEC3) | P1, P2 | The Client decides who leaves, and how |
The middle rows of this table come from the NEC4 subcontract text and NEC3. Read the table in your own ECC too, since this is an area with amendments.
What P2's assignment means
Of the four, P2 usually causes the most work. The Client may want the benefit of subcontracts so it can carry on, and key subcontractors may not be easy to replace. Points to look at:
- Do the subcontracts allow the benefit to pass over?
- Will subcontractors work for the Client if the Contractor owes them money?
- Do you hold the design rights you need? See Contractor's design.
- Are any warranties, including collateral warranties, still in place?
The instruction on P2 is a separate instruction (92.2), so it needs to be given properly, and it can't be assumed.
A worked scenario
A fictional Contractor goes into administration midway through a housing scheme. The Client notifies under R8 and the Project Manager issues a certificate on Monday morning. All details are illustrative.
- Monday, before noon: the Project Manager instructs under P2 to leave the Site, and sets out which items should remain.
- Monday, afternoon: the Client's team takes control of security and locks the gates. They list Plant and Materials, marked items and Equipment with photographs.
- Tuesday: Client's lawyers write to the administrator about the Equipment under P3 and the subcontracts under P2, and the Client talks to the steel subcontractor about continuing.
- Later: as the replacement contractor finishes with the scaffolding, the Client tells the Contractor to remove it.
Administrators have their own legal position, and a court or the law may restrict what you can do. See insolvency and NEC contracts, and get advice before any step.
A checklist for the day of the certificate
- Site safety first: who's responsible for the Site tonight? Consider principal contractor duties under health and safety law.
- Secure the Site and record its state with dated photographs and video.
- List Plant and Materials: who has title, and what's been marked? See Equipment, Plant and Materials.
- List Equipment, and find out who actually owns it. Hired plant isn't the Contractor's to leave behind.
- Collect the records: programme, test results, drawings, the Defects register.
- Tell insurers, and check how long works cover continues. The Client's liabilities extend to things it keeps on Site after termination.
- Note what's being claimed: start keeping records of the cost of finishing, for the amount due on termination.
Common mistakes
- Applying P3 to hired-in items. The clause only covers Equipment to which the Contractor has title.
- Starting the procedures before the certificate. They begin once it has been issued.
- Telling a Contractor to leave without saying what happens to the Plant and Materials.
Related guides
- NEC Disputes and Termination
- Payment on Termination
- What Changed in NEC4 Termination
- Insolvency and NEC Contracts
- Termination Under NEC
- Reasons for Termination
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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.