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X2

Changes in the law

Reviewed by LazyQS Editorial·Last reviewed: 2026-02-19

Plain English Explanation

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 requirements come into force after the contract is signed and affect the Contractor's cost or programme, X2 provides relief.

Without X2, the Contractor bears the risk of legislative changes throughout the project. Common examples include changes to minimum wage legislation, tax rates, health and safety regulations, environmental requirements, or import duties.

X2 is particularly important on longer-duration contracts and on contracts where there is legislative uncertainty (for example, post-Brexit regulatory changes).

Key Takeaway

A change in law must be distinguished from stricter enforcement of existing law — only a genuine legislative change after the base date triggers X2, so monitor statutory developments actively on long-duration projects.

What This Means for Subcontractors

Subcontractors are affected by changes in employment law, materials regulations, and safety requirements just as main contractors are. If X2 is in the main contract, ensure it flows down into your subcontract. Keep records of any additional cost incurred due to legislative changes after the subcontract base date.

Common Risks & Disputes

  • 1Distinguishing between a change in law and stricter enforcement of existing law (the latter may not trigger X2)
  • 2The base date not being clearly defined in the Contract Data
  • 3Legislative changes affecting only part of the works, making cost assessment complex
  • 4Delays in identifying that a legislative change has occurred and triggered the CE
  • 5X2 not being included in the subcontract when it is in the main contract

Sources

  1. NEC4 ECC Secondary Option X2— NEC4 ECC
  2. RICS Guidance Note: Legislative Change and CE Entitlement Under NEC4— RICS
  3. Fenwick Elliott: Changes in the Law as a Compensation Event Under NEC4— Fenwick Elliott

Related Clauses

X1

Price adjustment for inflation

Inflation adjustment — both protect against post-base date cost increases beyond your control

Continue Learning

Category Overview

Back to X Clauses (Secondary Options)

Adjacent Clauses

X1 Price adjustment for inflationX3 Multiple currencies

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