Contractor’s Liabilities

NEC Contractor liabilities are set out in clause 81.1 of the NEC4 ECC, and they apply unless the same matter is stated to be a Client's liability. They cover claims arising from Providing the Works, loss of or damage to the works and to Plant and Materials and Equipment, damage to the Client's property caused by the work, and injury to the Contractor's own employees.

The allocation between the two lists is the core of the NEC risk and liabilities section. This page explains the Contractor's side, using the structure of the NEC4 subcontract text, so check your own contract for the precise words.

The four main items

Liability	What it means in practice	Example
Claims from Others arising from or in connection with Providing the Works	Third-party claims that the works' activity caused	Dust from cutting damages cars in a neighbouring car park
Damage to or loss of the works, Plant and Materials and Equipment	The Contractor's own working environment, up to the point of take over	Storm damage to temporary works and stored pipes
Damage to or loss of the Client's other property, where connected with Providing the Works	Damage the work itself does to existing assets	A piling rig cracks the Client's existing building
Death or bodily injury to the Contractor's employees	Employer's liability	An operative injured in a fall

The opening words matter

The list only applies where a matter isn't stated as the Client's liability. So you read the Client's list first. For instance, damage to the works is on the Contractor's list, while damage to the works from war is on the Client's list: the second takes priority.

How NEC4 changed NEC3

NEC3's 81.1 is a single sentence: for the period from the starting date to the Defects Certificate, any risk the Employer doesn't hold is the Contractor's. That worked as a catch-all, and it left no gaps. NEC4 replaced it with a stated list, under the heading of liabilities.

NEC3 also has a duty at 82.1 for the Contractor to replace loss and repair damage promptly, unless instructed otherwise. The instruction in that clause doesn't exist in NEC4, where clause 82 is about recovering costs. On an NEC4 contract, the Contractor still has to deliver what the Scope requires, so damaged work has to be put right in practice.

The split: a side-by-side view

Matter	The Contractor carries it if	The Client carries it if
Damage to the works	It's the general position before take over	War, riots and so on, or the part has been taken over (with exceptions)
Claims from Others	They arise from Providing the Works	They're due to unavoidable effects, or the Client's people's negligence
Design faults	It is the Contractor's own design	It is in the Scope provided by the Client, or an instruction changing it
Client-supplied Plant and Materials	After receiving and accepting them	Until they are received and accepted
Client's other property	The damage arises from or in connection with Providing the Works	Otherwise

A worked example

A fictional sewer renewal, with illustrative figures. A trench collapse damages a neighbour's garden wall (£12,000), damages new pipes already laid (£8,000), and injures one of the Contractor's operatives. The ground conditions were as the Site Information showed.

• The wall: a claim from Others in connection with Providing the Works. It's the Contractor's, unless the collapse was the unavoidable result of the works, which is unlikely here.
• The pipes: damage to the works, the Contractor's. No compensation event.
• The injury: the Contractor's, and subject to its employer's liability cover and to statutory reporting.

If the Client has already paid the neighbour, it can recover that from the Contractor under clause 82. Our guide to indemnities under NEC explains how that works.

Subcontractors don't reduce the Contractor's liability

Subcontracting doesn't change the Contractor's responsibility for the whole of the work (26.1). So a subcontractor's negligence doesn't change the position under the main contract. To protect itself, a Contractor makes sure the liability passes down, by using an NEC subcontract or an equivalent. See back-to-back subcontracts.

What to do with this list

• Check the insurance programme against each of the four items.
• Look for additional Contractor's liabilities in the Contract Data, and price them.
• Consider whether Option X18 gives you a cap, and the things it doesn't cap.
• Think about uninsured items such as policy excesses and exclusions. They still fall on the Contractor.

Related guides

• NEC Risk, Liabilities and Insurance
• Insurance Under NEC
• Indemnities Under NEC
• Risk Allocation by Main Option
• Client's Liabilities

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.