NEC4 X11 gives the Client the right to bring the Contractor's work to an end for a reason of its own, outside the listed reasons in the Termination Table. Without X11, a Client under the NEC4 ECC can terminate only for a reason the table allows.
This is a real change from NEC3. The NEC3 ECC said the Employer could terminate for any reason, as a core right, with a row in the Termination Table for it. NEC4 moved this into a secondary Option, so the Client has to choose it deliberately. It sits among the other NEC secondary Options and works with the core NEC4 termination rules.
What happens on an X11 termination
The NEC4 subcontract text sets out the steps below; the ECC follows the same pattern with its own role names.
| Step | What it means |
|---|---|
| Notice | The terminating party tells the other. The NEC4 PSC's X11.1 has it notifying both the manager and the other Party, so check who to notify on your form |
| Certificate | The Project Manager certifies termination promptly, provided the reason is one the contract allows (90.1) |
| Procedures | P1 and P2 in the subcontract's X11.2: the paying party may complete the works and use Plant and Materials it has title to, and can tell the Contractor to go and to pass over the benefit of its subcontracts |
| Amounts due | A1, A2 and A4 in the subcontract's X11.2 |
Those amounts are what make X11 expensive. A1 is the normal amount due plus Defined Cost for Plant and Materials and other cost reasonably incurred in expecting to finish, and it adds back retention and deducts any unpaid advance. A2 is the forecast Defined Cost of removing Equipment. A4 applies the fee percentage to the part of the Prices not yet earned, which compensates for the lost work. That's the price of the Client's freedom to walk away, and it's the same set as NEC3's row for a reason outside R1 to R21.
When a Client would want it
- Funding or political approval could fall away during the job.
- A project is a pilot and later phases may not be needed.
- Regulatory or planning risk could stop the work.
- The Client's own business plans could change before Completion.
Without X11, a Client in that position has fewer options. It can use an instruction to stop the work, under 60.1(4), which is a compensation event. It can also look at the reasons in the table, but those mainly depend on a default or on events outside the Parties' control, such as a long stoppage. Our termination reasons guide covers them.
A worked example
A fictional regeneration scheme under Option A with X11, and illustrative figures. After eight months, the Client loses its funding and terminates under X11. The total of the Prices is £5m. Work done to that date is valued at £2.4m, of which £2.2m has been paid, and the fee percentage is 8%.
| Item | Amount |
|---|---|
| Unpaid work done, plus materials and commitments incurred (A1) | £265,000 |
| Forecast cost of removing Equipment (A2) | £20,000 |
| 8% of the £2.6m not yet earned (A4) | £208,000 |
| Amount due on termination | £493,000 |
A Client should know that figure, in broad terms, before it decides. Our guide to payment on termination covers the assessment.
Other points to watch
- Subcontracts. In the ECS, X11 is termination by the Contractor. The ECS also lets the Contractor terminate where the main contract has been terminated, under its own reason R23, so check what each route pays.
- Tender pricing. Tenderers should consider what they would recover if the work stopped early, particularly where costs are recovered late in the job.
- NEC3 templates. A template carried over to NEC4 without X11 quietly loses the at-will right. Add the Option, if it's wanted.
- Choosing the route. X11 is for a reason outside the table. A listed reason has its own procedures and amounts due, and the outcome can differ considerably, so take advice before terminating.
Related guides
- NEC Secondary Options: X, Y, W and Z Clauses Explained
- X12: Multiparty Collaboration
- X13: Performance Bond
- X14: Advanced Payment to the Contractor
- X9: Transfer of Rights
- X10: Information Modelling
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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.