Neutral citation: Dynniq UK Ltd v Lancashire County Council [2017] EWHC 3173 (TCC).

NEC contract topics: application of pricing mechanisms, inclusion of work within price list items.

Form of contract: NEC3 Term Service Contract Option A.

Main areas of law: Interpretation of contracts.

 

Dynniq UK entered into a five-year contract with Lancashire County Council for services relating to traffic signal installations and associated works. The contract adopted the NEC3 Term Service Contract with bespoke amendments. It included provisions for Task Orders under Option X19 and pricing under Option A, which provided for a priced contract with a price list. Schedule 9 contained the units and method of measurement, and Schedule 11 comprised the price list, divided into service series, including Series 100 for Traffic Safety and Management.

Industry practice ordinarily treats traffic safety and management as separately measurable and payable. However, this contract contained bespoke terms that stated these services would only be separately measured and paid when expressly instructed in a Task Order for the exclusive benefit of the Overseeing Organisation or a third party. This dispute arose over the interpretation of sub-paragraph 2(xxviii) of Schedule 9 and the note at the beginning of Series 100. Dynniq contended that traffic safety and management should be paid separately in all cases. Lancashire County Council argued that the contract allowed for separate payment only in the limited circumstances stated in the contract.

 

The primary legal issue was the correct interpretation of sub-paragraph 2(xxviii) in Schedule 9 and the note in Series 100. The court was asked to consider whether these provisions should be read as limiting separate payment for traffic safety and management to specific situations or whether such services were always separately payable. The claimant sought declarations that traffic safety and management items were always to be measured and paid for separately and in addition to other services.

The court considered whether any part of the relevant provisions was inconsistent with other contract terms or should be regarded as surplus. It also examined whether the language used required rectification or whether the standard interpretation rules applied to these bespoke amendments.

 

In considering whether or not the contract included inconsistent provisions, Mr Justice Coulson quoted the words Hamblen LJ  in Alexander v West Bromwich Mortgage Company (2016) EWCA Civ 496:

 

“Where there is an inconsistency clause, one should therefore approach the question of inconsistency without any pre-conceived assumptions. One should not strive to avoid or to find inconsistency. Rather one should ‘approach the documents in a cool and objective spirit to see whether there is inconsistency or not’…”

 

Mr Justice Coulson held that the contract was clear and capable of operation without inconsistency. He stated that sub-paragraph 2(xxviii) and the note in Series 100 both unambiguously provided that traffic safety and management were not to be separately measured or paid for except when expressly instructed in a Task Order for the exclusive use of the Overseeing Organisation or a third party. He found that the ordinary Task Order pricing was inclusive of traffic safety and management, which was deemed to be included in other price list items. This was a departure from usual practice but one which the parties had agreed. The claimant’s argument that these provisions were either inconsistent, inoperative, or merely surplus was rejected by the court and held that the bespoke amendments in the contract would prevail over standard forms or customary approaches.

Mr Justice Coulson also noted that Dynniq had failed to read or question these bespoke provisions during the tender process although their failure was not determinative. He concluded that the claimant’s expectation of separate payment did not align with the contractual language. The court acknowledged the arguments put forward by Dynniq but rejected the declarations sought by the claimant and found in favour of the Council. The only exception recognised was where traffic safety and management was the substantive subject of the Task Order, instructed for the exclusive use or benefit of the employer or a third party.

 

This judgment reinforces the importance of close scrutiny of amendments to standard forms of contract. It highlights that bespoke provisions can override common industry expectations, and such provisions will be enforced as written. The case serves as a cautionary example that parties must not assume industry norms will apply if express contract wording indicates otherwise.

For practitioners using NEC contracts, this decision clarifies that the inclusion of wording in the price list and method of measurement schedules can significantly alter the scope of payment entitlement. The case confirms that the court will give effect to bespoke contract language, provided it is clear and unambiguous, even where it departs from conventional measurement and valuation practice.

The case further confirms that courts will seek to interpret the contract as a coherent whole and will avoid treating any part of it as inoperative or surplus unless necessary. It illustrates how the NEC framework, when modified, must still be operated consistently with its principles, and all parties must ensure that such modifications are properly understood during procurement and prior to contract execution.