Z Clauses: More harm than good
28/10/24
Newsletter #30:
Welcome to the Instruct newsletter. Your weekly digest of NEC content.
This week we delve into the Do’s and Don'ts of Z Clauses.
Z Clauses can be added freely into an NEC contract, but are they just being used for any old request, even when its already covered in the main contract?
Let’s go through what you should and should not do with Z Clauses!
Why use Z Clauses:
The primary use for Z clauses is to enable the Client to include additional requirements specific to the project that are not covered in the vanilla NEC.
This is sensible as some Clients may have confidentiality requirements, or security protocols that require strict governance. Additionally Z Clauses can be used to confirm document hierarchy or a common use is to define the ‘prevention’ clause 60.1(19) and explain the limitations of the clause.
So what exactly should you be doing when you draft a Z clause and how do you structure them?
Let’s look at Do’s and Don’ts:
Do’s
Terminology - Using the correct terminology when drafting Z clauses is paramount. Often loose language is used to detail the Z clause and this doesn’t follow the terminology used in NEC. This causes ambiguities around definition and interface of the Z clause with the default clauses. Always remember to use the language from the contract, a quick guide is to look up the terms in the index!
Check Conflicts - A Z clause will place additional responsibility on one or more parties, make sure that the requirements of the Z clause doesn’t conflict with the default contract. For example including a Z clause to state what the Contractor should include on a programme submission will only cause confusion unless it is worded to complement and enhance the requirements of clause 31.2.
Structure - Always follow the structure of NEC, building ono the clause numbering, following the same logic (Z1, Z2, Z1.1 etc). This provides a common base to structure and logically building clauses. Integrate the use of bullet points to further details the clause and expand on the requirements you are trying to convey.
Test - Always test your Z clause by ‘gaming’ situations where the Z clause may come into effect. Use NEC colleagues to test what would happen during a live project, check references, impacts upon other parts of the contract, and how the Z clause would be administered in ‘real life’. This could be critical in identifying problems!
But what about the stuff to avoid…Don’ts
Don’ts
Be Lazy - The NEC has a comprehensive structure to cover usual project occurrences. Don’t use a Z clause for something which is already in the contract. You might want to cover all bases but the reality is, this can cause inconsistency. We often see Z clauses drafted for ground conditions, apportioning what risks the Client is or is not willing to accept. In reality this is already covered by 60.1(12) and subsequently 60.2 and 60.3. Don’t be lazy, use the existing clauses and only when these are not acceptable, expand with a Z clause.
Try to Cover All - Catch all Z clauses sound great, providing the Client with perceived protection. But the reality is, they can be difficult to administer, are rarely adhered to, and often result in long negotiations to change the wording. Be specific when adding Z clauses, why are they there?
Difficult to follow - NEC is written in plain English and is intended to be an easy to read legal document. Follow this intention. Do not try to incorporate legal jargon into Z clauses. It creates unnecessary difficulty when trying to follow and implement the requirements.
Copy and paste - Z clauses are to be used when specific situations require them. They should not be copied from contract to contract, but carefully crafted to work for the specific contract at hand. A copy and paste can introduce ambiguities, conflicts, and in some cases, requirements which aren’t relevant to the contract at all!
Z Clauses are a great feature of NEC, but are abused in their wording, inclusion, and execution.
Substantial Z clauses do not enhance an NEC contract, they hinder.
Use sparingly, and only when they complement the existing structure!