X clauses are secondary options that are bolted onto the main contract. Each one adds a specific obligation or right — from delay damages (X7) to BIM requirements (X10). Always check which X clauses are included in the Contract Data.
X clauses are secondary options — stand-alone provisions that are bolted onto whichever main option governs the contract. None of them apply automatically. Each X clause must be expressly included by reference in Contract Data Part 1, and only the X clauses listed there form part of the contract. This means two NEC contracts using the same main option can have completely different risk profiles depending on which X clauses are selected. Always read the Contract Data first — before you read anything else.
The X clauses cover a wide range of additional obligations and entitlements: X1 and X2 deal with inflation and legislative change risk; X4 and X13 with security requirements (parent company guarantees and performance bonds); X5, X6, and X7 with programme incentives and consequences (sectional completion, early completion bonuses, and delay damages); X8 through X10 with third-party obligations, intellectual property, and BIM; X11 and X12 with termination and collaborative contracting; and X13 with performance bonds.
For subcontractors, the most commercially significant X clauses are typically X7 (delay damages), X5 (sectional completion), X1 (inflation protection on long contracts), X13 (performance bond cost), and X4 (parent company guarantee requirements). The delay damages rate under X7 is often the largest single financial risk in a subcontract — a rate that is disproportionate to your package value can result in losses that exceed your contract sum. Always check the rate, check whether it has been passed down unmodified from the main contract, and ensure all CE notifications are made promptly to protect your programme.
| Clause | Title | Purpose | Watch For |
|---|---|---|---|
| X1 | Price adjustment for inflation | Adjusts contract price for published index movements | Not being passed down into subcontract on long projects |
| X2 | Changes in the law | CE for legislative changes after the base date | Distinguishing law changes from stricter enforcement |
| X3 | Multiple currencies | Exchange rate protection for specified foreign currency items | Currency exposure on non-X3 items remaining with Contractor |
| X4 | Parent company guarantee | PCG required from Contractor's parent company | Arranging a suitable guarantor if no appropriate parent exists |
| X5 | Sectional completion | Separate Completion dates per section with individual delay damages | Multiple simultaneous delay damage exposures |
| X6 | Bonus for early Completion | Financial incentive for completing before the Completion date | Bonus not flowing down to subcontractors who enabled early finish |
| X7 | Delay damages | Liquidated damages for late Completion | Rate being disproportionate to subcontract value |
| X8 | Undertakings to Client or Others | Structured obligations to named third parties | Obligations to funders or tenants creating direct third-party liability |
| X9 | Transfer of rights | Assignment or licensing of intellectual property to the Client | PI insurance restrictions on scope of rights transferred |
| X10 | Information modelling (BIM) | BIM compliance requirements as a contractual obligation | BIM capability gaps and unpriced BIM deliverables |
| X11 | Termination by Client on notice | Client's right to terminate for convenience | Termination fee adequacy versus lost profit on remaining works |
| X12 | Multi-party collaboration | Alliance/collaborative governance structure | Resource burden of Core Group participation |
| X13 | Performance bond | Capped surety bond as security for Contractor performance | Bond cost not being priced into bid; on-demand bond risk |
X7 (delay damages) is the most commercially significant — check the rate and ensure it is proportionate to your package value. X5 (sectional completion), X1 (inflation adjustment), X13 (performance bond), and X4 (parent company guarantee) are also commonly relevant.
No. X clauses only apply if they are expressly listed in Contract Data Part 1. Two NEC contracts using the same main option can have completely different X clause selections. Always check the Contract Data before assuming any X clause applies.
X7 provides for liquidated damages payable by the Contractor if Completion is later than the Completion Date. The rate is stated in Contract Data Part 1. For subcontractors, a disproportionate X7 rate passed down from the main contract is one of the largest financial risks in any NEC subcontract.
X1 provides for the contract price to be adjusted upward (or downward) to reflect changes in the price level of labour, materials, and plant between the base date and the date of work. It uses a formu...
X2 provides for a compensation event if there is a change in the law of the country in which the site is located after the base date of the contract. If new legislation, regulations, or statutory requ...
X3 allows for certain defined items in the contract to be paid in currencies other than the currency of the main contract. This is relevant for international projects or where key components are purch...
X4 requires the Contractor to provide a parent company guarantee (PCG) from its parent or holding company. A PCG is an undertaking by the parent company to meet the Contractor's obligations if the Con...
X5 allows the contract to be divided into sections, each with its own Completion date, defects correction period, and associated delay damages. Without X5, the NEC contract has a single Completion dat...
X6 provides a financial incentive for the Contractor to complete the works (or sections under X5) earlier than the Completion date. If the PM certifies Completion before the Completion date, the Contr...
X7 provides for delay damages (liquidated damages) to be levied against the Contractor if they fail to complete the works by the Completion date. The rate of delay damages is stated in the Contract Da...
X8 (introduced in NEC4) requires the Contractor to provide undertakings to the Client and to third parties (Others) as stated in the Contract Data. These undertakings are direct obligations that sit a...
X9 addresses the transfer of intellectual property rights. Under X9, the Contractor assigns or licenses the Client to use documents, designs, software, and other materials created in connection with t...
X10 sets out the requirements for information modelling — principally Building Information Modelling (BIM). The Contractor is required to comply with an Information Model and Information Execution Pla...
X11 gives the Client the right to terminate the contract at any time by giving notice to the Contractor, without needing to demonstrate fault on the Contractor's part. This is a 'termination for conve...
X12 establishes a multi-party collaborative structure where two or more parties work together under a collaboration agreement coordinated with their individual NEC contracts. Under X12, a Core Group m...
X13 requires the Contractor to provide a performance bond — a bond from a surety (typically an insurer or bank) that will pay out to the Client if the Contractor fails to perform their obligations. Th...
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