NEC3 Z Clauses: What, Why and When?

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What is a Z Clause?

NEC contracts are a collection of construction contracts which are designed to actively promote collaboration and partnership between each key stakeholder in a construction project.  As part of the NEC3 contracts, Z clauses were introduced as a form of adding to or amending the standard clauses to make the contract more ‘fit for purpose’. They can be easily incorporated into the NEC3 contract to amend wording and/ or the conditions of the contract to increase the contract’s relevance to the specific project.

Why are Z Clauses Necessary?

As the NEC3 contract is a standardised format, some deem it necessary to make amendments to bring the contract more in line with the specific project the contract is being applied to.

Parties therefore may make the decision to use a Z clause to change a standard clause, adding particular requirements in writing to ensure the requirements of the project are fully and accurately reflected in the contractual agreement.

When Should Z Clauses be Used?

A frequent example of when the Z clause is used would be in the instance of the Employer holding the Contractor responsible for following project-specific codes of practice, regulations, statutes, etc. as these are not included in the standard clauses of an NEC3 contract.

All parties to the NEC3 contract should have a clear understanding of all Z clauses included. Having a transparent understanding of how a Z clause may affect their responsibilities, expectations and how it may change process or procedure throughout the supply chain.

Potential Z Clause Problems

Even when deemed entirely necessary, Z clauses can, in some instances, add an air of legal ambiguity to NEC3 contract management. Modifying standard clauses of the contract offers up an increased amount of risk as the Z clauses are not always thoroughly checked to ensure they do not completely contradict the contract’s fundamental purpose.

One addition or amendment to a clause may have significant impact on another clause elsewhere in the NEC3 contract. The clauses are designed such that they have an intricate interaction with each other, creating a complex and effective contract to work from. It can be an easy mistake to amend or delete a standard clause which has significant impact elsewhere in the same contract.

NEC4

Looking forward to the impending issue of NEC4, the drafters of the contract have recognised that some Z clauses are used over and over again and, on that basis, have included them as additional standard secondary options. Hopefully this will go some way to avoiding the problems with ambiguity created by poorly drafted Z clauses, however, it is unlikely to greatly impact upon an industry that habitually and regularly amends standard forms of contract to shift risk onto the other party.


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