Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Options definition

What does Options mean? In legal practice, an option is a contractual right, not an obligation, to buy (a call) or sell (a put) an identified underlying (for example shares, commodities or currency) at an agreed strike price either on the expiry date (European-style) or at any time up to expiry (American-style). The holder pays an option premium for this right; key terms include the underlying and quantity, strike, expiry and the settlement method (physical delivery or cash settlement). Options are used to hedge risk, obtain price protection or leverage exposure, and are fundamental in derivatives, corporate finance and remuneration structures. The term is...

NEC3/NEC4 ECC pricing and payment: Options A–F, Defined Cost and Fee, interim/final payments, negative assessments, corrections, and HGCRA 1996 Y(UK)2 compliance

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Practice notes

Payments and price under the NEC Engineering and Construction Contract (ECC)

This Practice Note examines how payments are made and how the contract sum is worked out under the NEC Engineering and Construction Contract (ECC). It sets out how each principal pricing option operates, how the price for the works is determined and how the risk of rising Costs is allocated between the parties. For broader information on payment in construction contracts, see Practice Notes: Interim payments in construction contracts, Interim payments in construction contracts and The Final account in construction and engineering contracts. This Practice Note addresses both NEC3 and NEC4 editions of the ECC. For consistency, the term ‘Client’ is used throughout this Practice Note, as that is the expression adopted for the developer/employer in NEC4 contracts (the NEC3 ECC uses the term ‘Employer’). The term ‘Scope’ is also used throughout this Practice Note, in line with the NEC4 ECC, to denote the document that specifies and describes the works the Contractor is to undertake (under the NEC3 ECC the equivalent term is ‘Works information’). For a glossary of NEC terminology, see Practice Note: NEC contracts—glossary...

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Web page updated on 29/05/2026

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