Common Z Clause Mistakes

An NEC Z clause goes wrong most often when it's copied from another form or written without following the standard text through. The most damaging mistakes tend to be small ones: a word such as "deemed", a broad transfer of risk, or a change to one clause that breaks another.

The examples below are our own, written to illustrate each risk. They aren't taken from any real contract, and they aren't suggested wording. Start with how to write Z clauses if you're new to them, and see the NEC secondary Options for what the standard form already offers.

1. Language from another form

Risky: "The Contractor shall carry out the Works with due diligence, and time shall be of the essence."

Why it hurts: "The Works" and "shall" aren't how NEC is written. More seriously, "time of the essence" has a legal meaning that doesn't fit with the way NEC manages the Completion Date through compensation events.

Better: if you want a stronger consequence for delay, use the contract's own tools: Key Dates, or Option X7.

2. "Deemed" knowledge of site conditions

Risky: "The Contractor is deemed to have satisfied itself as to all ground conditions and shall have no entitlement arising from them."

Why it hurts: this quietly removes the physical conditions event at 60.1(12). The Client may then receive tenders with a higher risk allowance. A tenderer who misses it takes on a risk it hasn't priced.

Better: if you want to change the risk, delete or amend 60.1(12) openly, and explain it in the tender documents, so that everyone prices the same thing.

3. Fitness for purpose in conflict with X15

Risky: Option X15 is selected, and a Z clause adds that the Contractor warrants the design is fit for its intended purpose.

Why it hurts: the two work against each other. Option X15 sets a professional standard, and the Z clause says something stricter. It may also fall outside professional indemnity cover.

Better: decide which standard is wanted, and express it once.

4. Changing a period without following it through

Risky: "Clause 62.3 is amended so that quotations are submitted within one week of the instruction."

Why it hurts: a quotation period that short may be unworkable for complex events, so it pushes the Contractor to submit quick, cautious prices. It may also create more Project Manager assessments under clause 64, adding to everyone's load.

Better: check whether the change serves its purpose, and remember the contract already allows agreed extensions under 62.5. Read clause 62.3 before you touch it.

5. A catch-all condition before any entitlement

Risky: "The Contractor has no entitlement unless it has complied with all of its obligations under this contract."

Why it hurts: read literally, one late report could wipe out every compensation event on the job. A clause like this leads to arguments and may not be enforced as the Client expects.

Better: link a stated consequence to a specific obligation, as the contract does with missed early warnings.

6. Paying only when paid

Risky: a subcontract Z clause states: "The Subcontractor is paid only when and to the extent that the Contractor has been paid by the Client."

Why it hurts: the Construction Act restricts conditional payment provisions, except in limited insolvency cases. A clause like this may simply not work on a contract under the Act.

Better: use the normal payment periods, take legal advice and, if cash flow is the concern, consider a Project Bank Account.

7. Overlap with a secondary Option

Risky: a Z clause caps total liability at £5m, and X18 is also selected with a different total figure.

Why it hurts: now there are two caps, with no rule about which applies or whether the excluded matters carry across.

Better: use Option X18 and amend it clearly if it needs to change.

8. An edition mismatch

Risky: a Z schedule written for NEC3 is reused on an NEC4 contract, and still refers to clause 16 for early warnings and Y2.4 for suspension.

Why it hurts: early warning is clause 15 in NEC4, and suspension moved to Y2.5. Clause 16 of NEC4 deals with something else entirely, so the Z clause now amends the wrong thing.

Better: check every number against the current form. The NEC3 and NEC4 comparison is a good place to start.

A quick pre-signing check

• Does every Z clause name a role, an action and a date?
• Does each use the correct terms for this form and edition?
• Have you run a compensation event, a payment and a termination through the amended text?
• If a clause is removing risk from one side, was that made clear to the people pricing the job?
• Has a lawyer familiar with NEC reviewed it?

Related guides

• NEC Secondary Options: X, Y, W and Z Clauses Explained
• Choosing Secondary Options
• W3: Dispute Avoidance Board
• Z Clauses: Writing Additional Conditions

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.