It time for the completion of contract works, if

It is common in construction projects for the design
of the works to be subject to variation as the work progresses. Neither the
Employer nor the Contractor, however, has any implied right under a building
contract to vary the works. In the absence of an express contract provision
authorising any variation, the Contractor is under no obligation to carry out
more than the specified contract works. The Employer will be in breach of
contract if it requires the Contractor to omit any part of the work included in
the contract.

 

The JCT SBC/Q 2016
invariably make provision entitling the Employer to vary the works by way of an
instruction, and requiring the Contractor to carry out or omit works which are
the subject of such an instruction. In a situation where the instruction
results in more work than contracted for, the Contractor will normally be
entitled to payment for the additional works and may also be entitled to an extension
of time for the completion of contract works, if the carrying out of the additional
works results in delay beyond the original completion date.

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If Contractor fails to get
formal approval from Employer to the scope which was altered to comply with
necessary changes (necessitated by statutory requirements or design1 error), then it will have
to proceed at risk. In other words, the employer may refuse to give a formal
instruction, which is the condition precedent to payment under the contract. It
might be possible to avoid this problem to provide that when certain specified
events occur that necessitate a change to the scope, it will be treated as
deemed variation, without the need for the Employer to give a formal
instruction. In other cases, if an Employer refuses to pay for a variation
because there is no written instruction, the Contractor needs to review
carefully the contract to establish precisely what is required for a
variation and whether an oral instruction is sufficient2.

 

However, the Employer under
a building contract is not entitled to vary the contract, (a) to the extent
that it alters the fundamental nature of the contract works, or (b) by omitting
large parts of the works, then employing another Contractor to carry out the
work. Both of these courses of action would constitute repudiatory breach of
contract, entitling the Contractor to rescind the contract3 and sue for damages.

 

Effect of
variation of Employer’s payment obligation 

 

The basic effect of a
contract variation is to impose obligations on the Contractor to carry out the
works4 instructed and for the
Employer to pay for the works as varied. To allow Employer to pay for varied
works, the JCT SBC/Q 2016 provides a detailed valuation mechanism for
variations in clause 5.2. The valuation is an amount agreed by the Employer and
the Contractor or (in the absence of such agreement) a valuation made by the
quantity surveyor applying the ‘valuation rules’ in clauses 5.6 to 5.10.

 

The ‘valuation rules’ in
clauses 5.6 to 5.10 of JCT SBC/Q 2016 make provision, among other things, for
the situation where additional or substituted work is measurable. The
principles of measurement apply where additional or substituted work are either
(a) of a similar character, and is executed under similar conditions, to the
existing contracted-for work, the rates and prices set out in the contract
determine the valuation. (b) of a similar character, but is not executed under
similar conditions and/or significantly changes its quantity, to the existing contracted-for
work, the rates and prices set out in the contract determine the valuation but
with due allowance for the different conditions and/or quantity. (b) not of a
similar character to the existing contracted for work, the work is valued at
‘fair rates and prices’.

 

It may be the case that the Employer is in breach of
contract if it requires the Contractor to omit any part of the original
contract but JCT 2016 suite allow for Employer to vary the works (to carry out
or omit) subject to an instruction. The Contractor in this case will be
entitled to additional payment and time extension for carrying out the
additional work as necessary (clause 5.1). However, the contract provisions
within the JCT suite 2016 require the Contractor to serve relevant notices and
establish the breach of obligation by the Employer in the first place prior to
submission of time extension claim.

If the project scope changes
significantly5
to render the fundamental assumptions invalid, it will constitute a fundamental
change that is inconsistent with the original contracting intent of the
parties. The law recognizes such action as a breach and awards the aggrieved
Contractor damages in a fashion similar to ‘quantum meruit’ recovery (reasonable
value to determine the compensation amount). In case of dispute, the JCT suite
2016 allows resolution of disputes by adjudication, arbitration or
mediation. 

 

Contractual
provisions to allow time extension

 

If the Employer instructs
additional works or alters works which will make it impossible for the
Contractor to complete whole of the works within the contract completion date,
he is eligible to complete the works in reasonable time.

 

1 Simplex Concrete Piles v Borough of St Pancras (1958) 14
BLR 80

2  Ministry of Defence v Scott Wilson Kirkpatrick 2000 BLR 20

3 McAlpine Humberoak Ltd. v. McDermott International
Inc. (No. 2) (1992) 58 B.L.R. 61 and Commissioner for Main Roads v. Reed &
Stuart Pty. Ltd. (1980) 12 B.L.R. 55.

4 Clause 3.10 of JCT SBC/Q 2016 which refers to the Contractor’s obligation
to ‘forthwith comply with all instructions issued by architect.

5 Aragona Constr. Co. v. United States, 165 Ct. Cl. 382
(1964) and C. Norman Peterson Co. v. Container Corp. of Am., 218 Cal. Rptr. 592
(Ct. App. 1985)

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