Good Faith In NEC

• Published date: 03 August 2023
• Law Firm: Barton Legal
• Author: Mr Bill Barton

Whilst originally seen as another 'UK' based contract, NEC is now very much an international form that rivals FIDIC in its international reach.

The principle of good faith is a concept that has not yet been incorporated into English law. However, in an effort to increase the cooperation of all parties, NEC3 and 4 imply the principle by inserting a clear obligation in Clause 10. Although the specific wording "good faith" is not used within either contract, it is clear that this clause does indeed amount to a good faith obligation.

Incorporation of Good Faith into NEC

The requirement for the parties to act in a 'spirit of mutual trust and cooperation' was implemented into the NEC3 series of contract following the Latham Report, published in 1994, which stated at 5.18 that 'the most effective form of contract in modern conditions should include:- A specific duty for all parties to deal fairly with each other, and with their subcontractors, specialists and suppliers, in an atmosphere of mutual cooperation.'

NEC3 Engineering and Construction Contract ("ECC")

Clause 10.1:'The Employer, the Contractor, the Project Manager and the Supervisor shall act as stated in this contract and in a spirit of mutual trust and cooperation'

This clause creates the obligation of the Employer, the Contractor, the Project manager and the Supervisor to perform all duties and actions as stated within the contract. It is the only clause which uses the future tense and incorporates an ongoing duty throughout the performance of the contract, implying the obligation of good faith between the parties.

NEC4 ECC:

'Clause 10.1 - The Parties, the Project Manager and the Supervisor shall act as stated in this contract'

'Clause 10.2 - The Parties, the Project Manager and the Supervisor shall act in a spirit of mutual trust and co-operation'

Demonstration of Good...