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Mutual trust and co-operation in the new engineering contract

Building Law Monthly

Mutual trust and co-operation in the new engineering contract

In Van Oord UK Ltd v Dragados UK Ltd [2021] CSIH 50 the Inner House of the Court of Session held that cl 10.1 of the third revision of the New Engineering Contract, which imposed on the parties an obligation to act “in a spirit of mutual trust and co-operation”, is not merely “an avowal of aspiration”. Instead, it “reflects and reinforces” the general principle of good faith in contract in Scots law. Clause 10.1 was held to be the “counterpart” to cl 63.10 of the contract with the consequence that the defender was held not to be entitled to rely on the latter clause in order to reduce the bill rate payable to the pursuer for the remaining works. The problem which the defender faced was that its instructions had been given in breach of contract and it was held that cl 63.10 only applied to changes which had been lawfully instructed. It is sometimes doubted whether cl 10.1 of the NEC contract has any real practical consequence. The present case shows that, at least as a matter of Scots law, it does have a real application in so far as it informed the interpretation placed by the court on the scope of cl 63.10 of the contract.

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