Our Subcontractor Notified Late: Can We Still Claim Upstream?

Often yes, because the two contracts run separate clocks. A subcontractor's late notification affects its own entitlement under the subcontract, while your claim against the Client depends on whether the same event is a compensation event under your contract and whether you notified within eight weeks of becoming aware of it.

So check two dates, not one. Under the unamended NEC4 forms, the subcontract's period under 61.3 is seven weeks, and the main contract's is eight. See how the two sets of periods line up.

What to do today

1. Work out your own awareness date. When did anyone in your team first know of the event? Check diaries, emails and meeting notes, not just the subcontractor's letter.
2. If you're inside your eight weeks, notify the Project Manager now. Do this even if you haven't decided how to answer the subcontractor. It's a separate notice under 61.3.
3. Reply to the subcontractor in time. Under the NEC4 subcontract you have two weeks under 61.4 (and the Project Manager has one week above you). Silence can be followed by a notice and then treated acceptance.
4. Check whether the event arises from an instruction. If it arises from a certain kind of communication, such as an instruction, the bar doesn't apply at that level.
5. Keep the two files apart. The tests, the dates and even the facts in each contract can differ.

How it plays out

Subcontractor's notice	Your notice upstream	Likely result
Late	In time	Your claim stands if the event qualifies. The subcontractor may have no change under its subcontract, so its costs may not be yours to pass up. Your own costs and any delay can still be assessed
In time	Late	The worst outcome. You owe the subcontractor but can't recover from the Client, unless the upstream event arises from an instruction or similar
Late	Late	No change at either level, for events subject to the bar
In time	In time	Normal. Pass the quotation up, taking account of the shorter periods below

The argument you should expect

Clause 26.1 says you remain responsible as if you hadn't subcontracted, and treats a Subcontractor's employees as yours. So a Project Manager may say that your subcontractor's knowledge counts as yours, and your eight weeks started when its foreman knew. The contract text speaks of the Contractor becoming aware and doesn't settle this directly. Take advice if a large sum turns on it. In practice, it's a reason to have subcontractors report events to you quickly, as the example below shows.

What can you actually recover?

The main contract assesses the effect on you. A quotation is built on Defined Cost, so the subcontractor's price forms part of your cost only if you'll actually have to pay it. If the subcontractor is time-barred and you hold it to that, there may be no such cost to pass up. Under the cost-based Options, the same applies to amounts actually due to a Subcontractor, as the guide to Subcontractors and Defined Cost explains. Your own preliminaries and any time still count.

You can choose to waive the point and pay the subcontractor anyway. Do this with open eyes: a voluntary payment may be challenged upstream as a cost you didn't have to incur, particularly on Options C to E.

A fictional example

A steelwork subcontractor meets ground conditions in week 10, and tells the site manager the same day. Its formal notice arrives in week 18, a week outside its seven. The Contractor's notice goes up in week 18 too. The Contractor treats week 10 as its awareness date, leaving it inside eight weeks by a few days. It rejects the subcontract notice as late but notifies upstream, including its own prelims. A week's more delay would have lost the main contract claim as well. See missing the eight weeks for what follows then.

Reply wording

"Your notification dated [date] concerns an event of which you became aware on [date]. Under clause 61.3 of the subcontract, it was notified outside seven weeks. Our reply under clause 61.4 is that nothing changes: not the Prices, nor the dates. Please provide any evidence if your awareness date differs."

More problems like this sit in the NEC questions hub.

Related guides

• NEC Questions Answered: Real Situations on Site
• Our Subcontract Is Not on an NEC Form: Does It Matter?
• Our Main Contractor Has Not Paid Us: What Can a Subcontractor Do?
• Should a Subcontractor Warn the Main Contractor or the PM?
• We Need to Replace a Key Person: What Is Required?
• Do We Need the PM's Acceptance to Appoint a Subcontractor?

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.