We are a client using the NEC3 Engineering and Construction Short Contract (ECSC). We let a contract and stated the contractor was liable to us for loss or damage to our property to an unlimited extend. The contractor now seeks to limit its liability to the contract value. What implication does this value have for us?
How does this value (detailed in clause 80.1) affect the insurances in the insurance table? Finally, what is meant by ‘Employer’s property’ and how does this differ to property referred to in the third insurance?
How does this value (detailed in clause 80.1) affect the insurances in the insurance table? Finally, what is meant by ‘Employer’s property’ and how does this differ to property referred to in the third insurance?
If you have already let the contract, then you and the contractor are both bound by the terms of the contract. They cannot be changed unless both agree – see clause 12.2 as to how this should be done.
It is very difficult to say what implications changing the contractor’s liability may have on you as it will depend upon the work and circumstances. For example, if the contractor was carrying out £20,000 worth of refurbishment work in your building and accidently knocked the building down, the cost implications could be a lot higher than the contract value.
Clause 80.1 does not have a direct relationship with the insurance table, but it does have an indirect relationship. The insurer is only liable to the extent the contractor is, so will be covered by any limits in the contract.
‘Employer’s property’ is not a defined term, so it will mean what the English words mean. You may need to get some legal advice on that if you are not sure, as it may or may not include the works being carries out. The term property in the third insurance covers all property, no matter who owns it. But it does specifically exclude the works, plant and materials and equipment as they are covered by the first two insurances.