NEC3 Supply Contract Guidance Notes

Contents
Foreword v
Preface vii
Acknowledgements ix
Amendments x

Chapter 1 Introduction 1
Background 1
Purpose of these Guidance Notes 1
NEC Objectives 1

Chapter 2 Introduction to the Supply Contract 3
When should the Supply Contract be used? 3
Application of the Supply Contract 3
Some features of the Supply Contract 4
Key terminology in the Supply Contract 5
Arrangement of the Supply Contract 5
Subcontracts 5
Clause numbering 6
Roles of the parties 6
The Supply Manager 6
The Adjudicator 7
The contract strategy 7
The Options 7
The Price Schedule 8

Chapter 3 Procedure for preparing a Supply Contract 9
Preparing the tender documents 9
Contract Data part one 9
Goods Information 9
Contract Data part two 11
The Price Schedule 11
Inviting tenders 12
Preparing a tender 12
Assessing tenders 12
Creating the contract 12

Chapter 4 Supply Requirements 13
Introduction 15
Preparing to Supply Requirements 15
Preparing Supply Requirements when using Incoterms 17

Chapter 5 Explanatory notes on the clauses of the Supply Contract 21
1 General 21
2 The Supplier’s main responsibilities 26
3 Time 29
4 Testing and Defects 33
5 Payment 40
6 Compensation events 42
7 Title 48
8 Risks, liabilities, indemnities and insurance 49
9 Termination and dispute resolution 54
Option clauses 60
X1 Price adjustment for inflation 60
X2 Changes in the law 62
X3 Multiple currencies 62
X4 Parent company guarantee 63
X7 Delay damages 63
X12 Partnering 64
X13 Performance bond 65
X14 Advanced payment to the Supplier 66
X17 Low performance damages 67
X20 Key Performance Indicators 67
Y(UK)3 The Contracts (Rights of Third Parties) Act 1999 68
Z Additional conditions of contract 68

Appendices 1 Clause numbering system 69
2 Sample form of tender 73
3 Sample form of agreement 74
4 Use of the SC as a subcontract 76
5 Price Schedule 78
6 Contract Data – worked example 79