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Construction Law - Presentation - Construction Contractual Claims
- 1. Chapter 7 Construction Contractual Claims 0330764 WAN YEE LEN 0327653 WONG WEN NEE
- 2. Contract claims in Construction A contractual claim is an entitlement under the contract itself where specific provisions or implied conditions of the contract can be invoked to support the entitlement. In construction contract, parties can pursue his rights to implications of time and cost.
- 3. The Standard Form of Contract provides provision empowering the Architect to change or vary the contracted works, either additions or omissions. There is nothing in the contract to prevent both parties from agreeing that the varied work should be undertaken under a separate contract. Variation Claims PAM 2006/2018 Clause 11.2 A successful claim, Valid variation order The Architect must be authorised under the Conditions of Contract to issue such instructions and that the instruction carries an express or implied promise that the Contractor will be paid for the work. Extra work or work executed under different conditions Subject of varied work must fall within the scope of work.
- 4. A successful claim, Valid variation order The Architect must be authorised under the Conditions of Contract to issue such instructions and that the instruction carries an express or implied promise that the Contractor will be paid for the work. Extra work or work executed under different conditions Subject of varied work must fall within the scope of work. A variation order need not be issued but implied, so the first test may be dispensed with: â Differences between the quantity of the executed works and quantity shown in the Bills of Quantities. â Discrepancies between different Contract Drawing. â Changes in construction methods.
- 5. The Contractor can request the Architect to specify which provision of the Conditions empowers the issuance of said instruction. Clause 1.4 Discrepancy or divergence between documents Clause 3.4 Further drawings or details Clause 3.5 Revised Works Programme Clause 4.2 Inconsistencies with statutory requirements Clause 4.4 Fees, Levies and charges Clause 5.1 Setting Out Clause 6.2 Provision of Vouchers Clause 6.3 Inspection and Testing Clause 6.5 Works not in accordance with the Contract Clause 8.3 Exclusion of Person employed on the Works Clause 11.2 No variation issued by the Architect shall vitiate Contract/Instruction ordering a Variation Clause 11.3 Issue of Variations after Practical Completion Clause 11.4 AI on P.C. Sums and Provisional Sum Clause 12.2 Correction of errors or omissions Clause 15.4 Schedule of Defects Clause 16.3 Contractor to remove equipment upon Partial Possession by Employer Clause 21.1 Commencement and Completion Clause 21.4 Postponement or suspension of the Works Clause 23.3 Insufficient information for EOT Clause 25.4 Contractorâs duty to remove temporary buildings, plant, tool, equipment upon determination of Contractorâs employment Clause 25.7 Instruction to remove temporary buildings, plant, tool, equipment upon determination of Contractorâs employment Clause 27.1 Nominated Subcontractor Clause 27.4 Action following objection to nomination of Subcontractor Clause 27.11 Re-nomination of subcontractor due to determination of contractor Clause 27.12 Re-nomination of subcontractor due to determination of subcontractor Clause 28.1 Nominated Supplier Clause 28.4 Actions following objection of suppliers Clause 31.3 Protective work in event of outbreak of hostilities Clause 32.1 Removal or disposal of debris or damaged works following war damage or protective Clause 33.1 Antiquities - discovery on site
- 6. The Power to Issue Variation Order A variation order which is issued outside the scope of the power or which contradict the terms of the power is not a valid order. Architect has no implied power to: â Vary the terms of the contract â Order extras â Vary quantity or nature of work âŚexcept only those powers derived from the Conditions. Contractor cannot be compelled to comply with the order. He can totally disregard it. Employer rigorously insists that the Contractor comply with the instruction Treat as repudiating the contract Should the Contractor chose to comply with the order and execute the variation work as ordered, there is no corresponding obligation on the part of the Employer to pay for such works.
- 7. The Power to Issue Variation Order Stockport MBC v OâReilly (1978) Instructions were not empowered by any of the Conditions of the Contract. Ultra vires âbeyond the powersâ The English Court found that the Architect has acted beyond his remit in issuing such instructions. It was held that an Architectâs ultra vires acts do not saddle the Employer with liability. However, the Contractor is entitled to protest and to ignore them. â The Architect is not the Employerâs agent in that respect. He has no authority to vary the contract. â
- 8. Person given the powers Employer Architect Quantity SurveyorEngineer PAM 2006/2018 The Employer agrees to accept liability for all the contractual consequences of a valid variation order. Engineerâs Instruction to be formalized as Architectâs Instruction
- 9. Extent of powers Architectâs power cannot order works beyond the scope of the original work. Extra work The Contractor may be able to recover a reasonable price for such work on a fresh contract. Case: Astilleros Canarios v Cape Hatteras Shipping (1982) The Employer cannot be saddled with the responsibility for unauthorised instruction issued by the Architect. Case: Stockport MBC v OâReilly (1978) Without Employerâs knowledge With Employerâs knowledge
- 10. Extent of powers Power to vary works is intended to give flexibility and convenience during course of the works but must be controlled to avoid unnecessary risk of additional cost being factored into the contract price. During the tender stage, the Contractor can anticipate potential variation upon studying the drawings, and factor such variation into the schedule of rates or contract price. Hence, Contractor has the profit opportunity when such variation arises. Rationalisation of rates to be conducted by Quantity Surveyor.
- 11. Extent of powers What recourse does a Contractor have if after carrying out an Architectâs Instruction only to find out that the variation order exceeded his authority under the contract? When the Architect issues an order for variations, he warrants by implication that he is authorised to do so and it is reasonable for the Contractor to act on the order. Therefore, based of general principle, Breach of warranty of his authority ArchitectContractor
- 12. Written instruction PAM 2006/2018 Clause 2.2 All instructions issued by the Architect shall be in writing expressly entitled âArchitectâs Instructionâ (âAIâ). Upon written confirmation from the Contractor entitled âConfirmation of Architectâs Instructionâ (âCAIâ). Upon subsequent confirmation of the written instructions by the Architect with an AI. PAM 2006/2018 Clause 2.2(a) PAM 2006/2018 Clause 2.2(b) â Oral instruction â Architectâs team members: Engineer, Clerk of Work
- 13. Written instruction If the Contractor proceed and complete variation work without a written instruction, Complain Ask for a reasonable sum ...notwithstanding that the Employer has benefited from the variation work.
- 14. Written instruction Justifications Enable changes to be better understood. Provide adequate attention by the Employerâs consultant to investigate, measure, and verify the change. Where the change is significant and has huge cost implication, it serves the interest of both parties for the specific detail of the change to be recorded. Alert the other Consultants to start gathering details and records of the change before they are covered up.
- 15. Written instruction Tharsis Sulphur and Copper Co. v McElroy & Sons (1878) The contract expressly provided that no extra work is to be paid for unless there is a written order for the same by the appellantâs agent or engineer. The House of Lords held that the interim certificates did not constitute written orders and that the claimant was not entitled to claim for the additional tonnage of steel work. Facts Judgement The claimant contractor found that it was unable to make certain girders, due to the thinness of the metal specified by the defendant. Claim for payment Interim Certificate
- 16. Written instruction Oral instruction Quantum Meruit Subject that the Contractor is able to prove and justify. If the Contractor fails to claim for the extra works orally ordered under PAM, he can proceed to claim outside the terms of the contract for implied promise to pay for work done.
- 17. Written instruction Molloy v Liebe (1910) Proper inferences: â that the Employer had actual knowledge of the extra works as they were being done â that the Employer knew that they were outside the contract â that the Employer knew that the builder expected to be paid for them as extras ...then a contract to pay for could properly be implied. Extra work There had been no writing for these works as required by the Contract. They had been ordered by the Architect, either in writing signed by him alone, or orally. The Contractor submitted that the Employer had entered into an implied contract to pay the fair value of the works âas extra worksâ.
- 18. Variation Works and Common Claims
- 19. 1. Work which is indispensably necessary The courts are likely to require the Contractor to perform all work which is indispensably necessary for completion of the work, even if each and every minor item of work involved is not specifically referred to in the Contract. Additional works are those not contemplated by the parties at the time of execution of the Contract and are not provided for. Indispensably necessary works are not a variation. Specifications did not specifically refer to any hinges on doors Supplying the hinges will be found to be part of the scope
- 20. 2. Warranty that works can be built When the Contractor undertakes a contract for a lump sum price, he basically warrants that the Works as shown in the Drawings and Specifications can be constructed. Warranty found in Construction Express warranties Implied warranties Warranty is written directly into the Contract The law provides contracts with certain protections regardless if it is included in the Contract or not
- 21. 2. Warranty that works can be built When the Contractor undertakes a contract for a lump sum price, he basically warrants that the Works as shown in the Drawings and Specifications can be constructed. Tharsis Sulphur and Copper Co. v McElroy & Sons (1878) At all events, if the girders could not be made of the precise thickness specified, that was a matter which the Contractor ought to have known beforehand. Casting girders of precise thickness specified
- 22. 3. Items not specifically mentioned An item specifically provided for in the Contract is not an extra. With todayâs Bills of Quantities, any item of work which is not expressly mentioned in the Contract Documents becomes a âpayable variationâ. ?
- 23. Loss of profit The variation in the changes of the requirement can be paid easily but 4. Changes in employerâs requirement Contractor Loss of productivity the variation works delay the project or prevent the optimal deployment of resources on site Change Order Procedure Provide for price of variation works be agreed upon before the contractor proceed with it - to monitor closely the additional expenditure and project budget
- 24. No no⌠the contract specification didn't state that I have to use this Poor drafting of contract specification allows the contractor discretion in the choice of construction materials or component for some work. 5. Poorly drafted contract documents
- 25. Treating it as variation and pays the contractor 6. Omission and discrepancies in contract documents Variation Contract price Content that it has been included as part of the work covered under contract price Leavell-Morrison Knudsen v United States (1971) An air conditioning contract states that ducts shall be insulated Flexible connector from ducts to ceiling diffuser were not insulated Contractor contended that flexible connectors are not duct and not provision to the contract To do so constitute to variation and a payable extra The court held in favour of the contractor
- 26. PAM 2018 Measurement of building works Shall be prepared in accordance with the principles of Standard Method of Measurement of Building Works. PAM 2018 Clause 12.1 PAM 2018 Clause 12.2 7. Deviation from standard method of measurement Correction of errors or omission Non-compliance with standard method measurement, Architect shall correct the error & treat it as variation. Error shall not vitiate the contract.
- 27. The bills contained stipulation that the price inserted for excavation work were to include âremoving natural stone or rock excavationâ Standard method - âE.O excavation in rockâ The court held that by the virtue of the clause 12.1 - contract bills cannot modify the conditions of the contract Thus, the item of the work has to be paid for as variation or extra Bryant & Sons Ltd v Birmingham Hospital Saturday Fund (1938)
- 28. 8. Differences in quantities Where a contract is based on Bills of Quantities, the principle is that the price is contracted for the quantity of works as described in the bills. Actual quantity of works > Quantities shown in the BQ Contractor is entitled to claim the additional as variation Clause 12.2 Whether the parties intended the contract to be a) Lump sum contract - additional quantity of work undertaken to be measured and paid for accordingly to bill rates a) Re-measurement contract - envisages that the entire quantity of work undertaken is to be re- measured and paid accordingly to bill rates Corrected by Architect
- 29. 9. Tender errors PAM 2006/18 Clause 13.1 Shall be corrected and/or rationalised by the Architect or Consultant without any change to the Contract Sum before the signing of the Contract. Contract sum shall not be adjusted or altered.
- 30. 10. Advice by Architect, Engineers and Consultant Architect Quantity SurveyorEngineer Contractor Can I have the advice on the project by suggesting alternative working method? Care must be taken to ensure that such advices are not interpreted as variation instruction where the contractor is then entitled to claim for additional expenditure involved in implementing the solution, even though he was only assisting the contractor to discharge his obligations.
- 31. 11. Approval of construction method Architect Engineer Contractor Submit construction method for approval before commencement of work Instruct the contractor to modify his method of construction or use another method Contractor may able to claim for additional cost if a) The engineer was not honest in his decision; or a) The contract expressly provides for price adjustment if an unreasonable onerous or uneconomical method of construction in selected Neodox Ltd v Swinton & Pendlebury Borough Council (1958)
- 32. Conditions of contract Carr v JA Berriman Pty Ltd (1953) Court held that the architect powers to omit works are for those works that are desirable to be omitted in the course of the construction. The clause did not authorise him to omit a particular item of work so that they can be carried out by other party. without intention to deceive or legal Bona fide omission Award to another contractor Architect to omit part of work with attendance adjustment on the contract price 12. Valid omission
- 33. 13. Variation that changes the scope of contract must not change the scope of the contract or the works character which is fundamentally different from that contemplated by the parties at the time of contract Variation order Employer ordered greatly in excess of the amount contemplated The court of Appeal held that the additional work executed exceed the contemplation of the party BQ cannot be applied but had to paid in quantum meruit Sir Lindsay Parkinson & Co Ltd v Commissioners of Her Majestyâs Works and Public Buildings (1950)
- 34. What can the Contractor do if he cannot precisely determine the variation order is valid or invalid? The contractor cannot be forced to carry out an invalid variation order Breach of contract ArchitectContractor Proceed with the disputed work first and state that he is working under protest on the basis Entitled to be compensated if it is not in the scope of contract Original contract price Quantum meruit Effect of changes to scope of contract
- 36. 1 Damaged roof to be repaired Upon acknowledging the damage, the Employer made instructions to the Contractor to repair. Which provision under the PAM Contract can be uphold to justify the scope of work specified? Under PAM Contract 2018 Article 7(be), means the works described in the Articles of Agreement and referred to in the Contract Documents and include any changes made to these works in accordance with the Contract. It is an extra work and the Contractor is not obligated to comply with. Works
- 37. 2 Can a Contractor claim extras in respect of items of work not mentioned in the Contract Bills? Chittick V. Taylor An item specifically provided for in the contract is not an "extra." Without any instructions - Supplied material of a better quality than the minimum quality necessary for the fulfilment of the contract - Did work or supplied materials not called by the contract (plans of specifications) not entitled to charge this additional work or materials as an "extra." If the employer, without giving definite instructions, knew the contractor was doing extra work or supplying extra materials and stood by and approved of what was being done, and encouraged the contractor to do it, that, amounts to an implied instruction to the contractor.
- 38. End of presentation Thank You
Editor's Notes
- A contractual claim is an entitlement under the contract itself with specific provisions or implied conditions. In construction contract, it is the entitlement to time and cost implications.
- For variation claims, the PAM contract empowered the architect to issue variation, either additions, omissions or substitutions. Therefore, such varied work is not required to be undertaken under a separate contract. For a successful claim, the contractor must show that the variation work satisfy two tests: Contractor must show that the instruction to change the works constitutes a valid variation order, in which the Architect is given the authorisation and thereâs an express or implied promise to pay Contractor also need to show that the variation is an extra work or work executed under different conditions, subject that the variation must fall within the scope of work.
- A variation order need not be issued but implied, so the first test may be dispensed with: Differences between the actual quantity and BQ Discrepancies between different contract drawings And Changes in construction methods
- When the Architect issues an instruction, the contractor can request to specify the provision of the conditions* that empowers the issuance And thereâs a total of 30 provisions under the PAM contract.
- The Architect has no implied power to vary the terms of the contract, order extras, or vary quantity or nature of work, except those derived from the conditions. A variation order which is issued outside the scope of the power or which contradict the terms of the power is not a valid order, and therefore the contractor cannot be forced to comply. If the Employer insist upon the instruction, the Contractor may be entitled to treat the employer as repudiating the contract. In the event that the contractor chose to comply with the order, the employer has no corresponding obligation to pay.
- In the case of Stockport, the architect imposed instructions which were not empowered by any of the conditions of the contract. It was held that the architect acted beyond the scope of his authority and ultra vires do not saddle the employer with liability. However, the contractor is entitled to protest and ignore them. https://www.isurv.com/directory_record/4562/stockport_mbc_v_oreilly http://what-when-how.com/Tutorial/topic-865l3k3p/Building-Contract-319.html
- Under the PAM contract, the power to issue variation order is given to the Architect by the Employer and by implication; the Employer agrees to accept liability for all the contractual consequences of a valid variation order. Hence, the engineer and qs are not empowered to issue variation under their own name. * In the event thereâs Engineerâs instruction, it needs to be formalized as Architectâs instruction.
- The architectâs power cannot order works beyond the scope of the original work, which is also known as extra work. When the architect conducted otherwise and the employer is unaware of it, the employer cannot be saddled with the responsibility; Whereas if the employer knew about it, the contractor may be able to recover a reasonable price on a fresh contract.
- The power to vary works is intended to give flexibility and convenience, but it must be controlled to avoid unnecessary risk For example, during the tender stage, the contractor can foresee potential variation when studying the drawings, and factor additional cost into the contract price. So, it is important for the qs to conduct rationalisation of rates.
- When the architect issues a variation order, he warrants by implication that he is authorised to do so, and it is reasonable for the contractor to act on the order. But when the contractor carried out the work after only to find out that the order exceeded the architectâs authority, The contractor may be entitled to proceed against the architect for breach of warranty of his authority.
- Clause 2.2 in the pam contract provided that all instructions issued by the architect shall be in writing expressly entitled architectâs instruction. Say if it is an oral instruction, or by the architectâs team member, the contractor can request for confirmation of architectâs instruction as stated under clause 2.2(a) and receive subsequent confirmation with an AI.
- If the contractor proceed and complete variation work without a written instruction*, he cannot complain or ask for a reasonable sum despite that the employer has benefited from the work.
- The purpose of written instruction is to allow better understanding of the changes, alert parties concerned to take appropriate actions and also serve as a record.
- In the case of tharsis sulphur, The contractor found that it was unable to make certain girders due to the thinness of the metal and took the risk of changing it. In a claim for payment for the extra, the contractor relied on the fact that it was reflected in the interim certificate. As a judgement, it was held that the interim certificate is not a written order and the contractor is not entitled to recover the extra cost. https://lawcarenigeria.com/tharsis-sulphur-and-copper-co-v-melroy-sons-1878-ukhl-777-4-june-1878/ https://www.isurv.com/directory_record/4592/tharsis_sulphur_and_copper_company_v_mcelroy_and_sons
- If the contractor fails to claim for the extra work orally ordered, he can proceed to claim outside the terms of the contract for implied promise on the basis of quantum meruit. Subject that the contractor is able to prove and justify. * As for the implied promise to pay *
- The proper inference is that the employer had actual knowledge of the extra works, that it is outside the contract, and the contractor expected to be paid for as extra In the case of molloy v liebe, The contractor wished to claim payment for certain extra works, but there was no valid variation order. Given that the employer fit the three inference, there was an implied promise to pay and the contractor may recover on the basis of quantum meruit. https://mosaicprojects.com.au/PDF-Casewatch/1038_Liebe-v-Molloy.pdf
- The courts are likely to require the Contractor to perform all work which is indispensably necessary for completion of the work, even if each and every minor item of work involved is not specifically referred to in the Contract. * For example, the specifications did not specifically refer to any hinges on the doors, supplying the hinges will be found to be part of the scope, as it is work which is indispensably necessary for the completion of that work. http://www.constructionlawmadeeasy.com/chapter4 As indicated, whether a particular work is a variation will depend on whether it comes within the general scope of the contract. Some works, although not specifically described, are nevertheless considered as implied or form a necessary part of the contract. An early case on this point is Williams v Fitzmaurice (1858) 157 ER 709. In that case, the contractor undertook to provide 'the whole of the material mentioned or otherwise in the foregoing particulars necessary for the completion of the work' and 'to perform all works of every kind mentioned and contained in the foregoing specifications for the sum of 100.00 pounds'. Flooring was not specifically mentioned and the issue was whether it was included in the contract. The court held that it was. Similarly, in Walker v Randwick Municipal Council (1929) SR (NSW) 84 the contractor agreed to 'do and perform the whole of the works required in or about the construction of a concrete retaining wall'. In performing the works, Walker had to remove a sandbank to construct the retaining wall. The plan (which was not incorporated in the contract) showed the bank to be 6 feet wide. Walker claimed the bank was in fact 12 feet wide and claimed for work and labour in removing the extra 6 feet. The majority of the court held that the contract was an entire one to build a retaining wall at a fixed price and that the risk lay with contractor. Rogers J said (at page 87): The contract is not to perform the work set out in any plan; all work necessarily required for the construction must be done whether set out in the plan or not.
- When the Contractor undertakes a lump sum contract, he basically warrants that the Works as shown in the Drawings and Specifications can be constructed. In construction, there are 2 main types of warranty, which are express and implied. https://www.levelset.com/blog/workmanship-warranty/ Every contractor impliedly warrants that his work will be built in a good and workmanlike manner and that it will be sufficiently free of any major defects.
- * From the previous case of tharsis sulphur, the contractor should have known beforehand if the girders could not be made of the precise thickness specified. https://www.levelset.com/blog/workmanship-warranty/ in casting certain iron girders, owing to the unequal cooling of the iron, it was found difficult to make the girders of the precise thickness specified. it requires greater care to cast the girders of the thickness specified in the contract than it would require to cast them thicker. In fact it would have been by no means difficult to cast the girders of the required thickness if the right course had been taken.
- An item specifically provided for in the Contract is not an extra. While, those that are not expressly mentioned in the Contract Documents becomes a âpayable variationâ.
- When there is changes in employerâs requirement, it is easy for the employer to pay for the variation but the contractor may claim for compensation of loss of profit and productivity if he can prove that the variation works delay the project or prevent the optimal deployment of resources on site Some contract are modified to have change order procedure to Provide for price of variation works be agreed upon before the contractor proceed with it but it can work against the employer as not always easy to agree prices Loss of productivity https://www.adroitprojectconsultants.com/2018/12/17/loss-of-productivity-in-construction-some-considerations/
- Poor drafted contract documents caused variation arise. Common problem like poor drafting of contract specification allows the contractor discretion in the choice of construction materials or component for some work.
- When there is omission and discrepancies in contract documents, the architect can resolve the problem by either Treating it as variation and pays the contractor or argue that it has been included as part of the work covered under contract price example the case of leavell morrison knudsen v united state (1971) An air conditioning contract states that ducts shall be insulated. During inspection, it was found that Flexible connector from ducts were not insulated. Contractor contended that flexible connectors are not duct and not provision to the contract. To do so constitute to variation and a payable extra. In the end, The court held in favour of the contractor Leavell morrison case law https://law.justia.com/cases/federal/appellate-courts/F2/436/451/210184/
- Deviation from standard method of measurement is one of the variation work Here you can see that as per PAM 2018 clause 12.1 stated that Measurement of building works shall be prepared in accordance with the principles of SMM Which also means that the contract conditions prioritise over the contract BQ in the event of document conflicts Moving on, the clause 12.2 stated that if there is non compliances of with SMM, Architect shall correct the error & treat it as variation. The Error shall not vitiate the contract.
- Heres an example. In the case of Bryant & Sons Ltd v Birmingham Hospital Saturday Fund (1938) The bills contained stipulation that the price inserted for excavation work were to include âremoving natural stone or rock excavationâ but in the SMM stated that the excavation of rock have to be measurement separately and treated as an extra over So in the end the rock was encountered on site & as aforementioned clause 12.1 stated that contract bills cannot modify the conditions of the contract Thus, the item of the work has to be paid for as variation or extra
- when the actual quantity of works executed by the contractor is more than the Quantities shown in the BQ then the Contractor is entitled to claim the additional as variation and The differences are to be corrected by the Architect When there's differences in quantities, it is important that the parties determine whether the contract to be lump sum contract or remeasurement contract As it will determine how the remeasurement works Extra info : Under a lump sum contract, a single âlump sumâ price for all the works is agreed before the works begin. It is defined as a fixed price contract, where the contractors agree to execute the work for a stated total sum of money. Lump sum contracts are generally appropriate where the project is well defined when tenders are sought and significant changes to requirements are unlikely. This means that the contractor is able to accurately price the works they are being asked to carry out. Measurement contracts (sometimes called âre-measurementâ or âmeasure and valueâ contracts) are generally used in situations where the design (or type of works) can be described in reasonable detail, but the amount cannot. For example, excavation works where the quantity of excavation required is difficult to assess until after the works have begun. The contract sum for measurement contracts is not finalised until the project is complete. At this point it is assessed on based on re-measurement of the actual amount of work carried out.
- Variation arise when there is error or mistake in the price or rates entered in the Contract Bills so based on PAM 2018 clause 13.1 . Any error aforementioned shall be correct by the Architect without any change to the Contract Sum before the signing of the Contract. Contract sum shall not be adjusted or altered.
- When contractor encounters problems during construction and ask the Architect/Consultant for advice, * You can give advice but take note that Care must be taken to ensure that such advices are not interpreted as variation instruction where the contractor is then entitled to claim for additional expenditure involved in implementing the solution, * Therefore Architect/Engineer responding to such requests should ensure that the contractor understand that the directions given are intended to assist him in his obligations under the contract
- Before the commencement of work, the contractor has to submit method of approval before commencement of work If the Architect/Engineer instruct the contractor to modify his method of construction or use another method, the contractor may able to claim for additional cost if The engineer was not honest in his decision; or The contract expressly provides for price adjustment if an unreasonable or uneconomical method of construction in selected See Neodox Ltd v Swinton & Pendlebury Borough Council (1958) as an example where the contractor's claim failed because the court held that the engineer was honest in his decision of the method of working.
- Conditions of contract usually give powers to the Architect to omit part of work with attendance adjustment on the contract price in respect of bona fide omission But he cannot omit work from the contract in order to award to another contractor which is supported by the case of Carr v JA Berriman Pty Ltd (1953)
- Last, The power to vary works is limited by the rule that the variation order not change the scope of the contract or the works character which is fundamentally different from that contemplated by the parties at the time of contract In the case of Sir Lindsay Parkinson v Commissioners of Her Majestyâs Works. The court of Appeal held that the additional work executed exceed the contemplation of the party thus BQ cannot be applied but had to paid in quantum meruit
- So in the effect of changes to scope of contract The contractor cannot be forced to carry out an invalid variation order as Such action is a breach of contract However, most of situations the contractor cannot be precisely determine if the vo is valid or invalid during construction So what the contractor can do is to proceed with the disputed work first and state that he is working under protest on the basis if later established that THE WORK does not fall within the scope of contract, the contractor are entitled to be compensated based on quantum meruit as the original contract price cannot be apply to work that is outside of the scoop of contract
- An item specifically provided for in the contract is not an "extra." The contractor supplied material of a better quality than the minimum quality necessary for the fulfilment of the contract, or did work or supplied materials not called by the contract (plans of specifications) without any instructions, express or implied, from the employer to do so, he is not entitled to charge the extra cost as an "extra." When the contractor did work or supplied material not called for by the contract on the instructions, express to implied of the employer, he is entitled to charge for the additional work or materials as an "extra." If the employer, without giving definite instructions, knew the plaintiff was doing extra work or supplying extra materials and stood by and approved of what was being done, and encouraged the contractor to do it, that, in my opinion amounts to an implied instruction to the contractor.