It is common in construction projects for the designof the works to be subject to variation as the work progresses. Neither theEmployer nor the Contractor, however, has any implied right under a buildingcontract to vary the works. In the absence of an express contract provisionauthorising any variation, the Contractor is under no obligation to carry outmore than the specified contract works. The Employer will be in breach ofcontract if it requires the Contractor to omit any part of the work included inthe contract. The JCT SBC/Q 2016invariably make provision entitling the Employer to vary the works by way of aninstruction, and requiring the Contractor to carry out or omit works which arethe subject of such an instruction. In a situation where the instructionresults in more work than contracted for, the Contractor will normally beentitled to payment for the additional works and may also be entitled to an extensionof time for the completion of contract works, if the carrying out of the additionalworks results in delay beyond the original completion date. If Contractor fails to getformal approval from Employer to the scope which was altered to comply withnecessary changes (necessitated by statutory requirements or design1 error), then it will haveto proceed at risk. In other words, the employer may refuse to give a formalinstruction, which is the condition precedent to payment under the contract.
Itmight be possible to avoid this problem to provide that when certain specifiedevents occur that necessitate a change to the scope, it will be treated asdeemed variation, without the need for the Employer to give a formalinstruction. In other cases, if an Employer refuses to pay for a variationbecause there is no written instruction, the Contractor needs to reviewcarefully the contract to establish precisely what is required for avariation and whether an oral instruction is sufficient2. However, the Employer undera building contract is not entitled to vary the contract, (a) to the extentthat it alters the fundamental nature of the contract works, or (b) by omittinglarge parts of the works, then employing another Contractor to carry out thework. Both of these courses of action would constitute repudiatory breach ofcontract, entitling the Contractor to rescind the contract3 and sue for damages. Effect ofvariation of Employer’s payment obligation The basic effect of acontract variation is to impose obligations on the Contractor to carry out theworks4 instructed and for theEmployer to pay for the works as varied. To allow Employer to pay for variedworks, the JCT SBC/Q 2016 provides a detailed valuation mechanism forvariations in clause 5.2. The valuation is an amount agreed by the Employer andthe Contractor or (in the absence of such agreement) a valuation made by thequantity surveyor applying the ‘valuation rules’ in clauses 5.
6 to 5.10. The ‘valuation rules’ inclauses 5.6 to 5.10 of JCT SBC/Q 2016 make provision, among other things, forthe situation where additional or substituted work is measurable. Theprinciples of measurement apply where additional or substituted work are either(a) of a similar character, and is executed under similar conditions, to theexisting contracted-for work, the rates and prices set out in the contractdetermine the valuation. (b) of a similar character, but is not executed undersimilar conditions and/or significantly changes its quantity, to the existing contracted-forwork, the rates and prices set out in the contract determine the valuation butwith due allowance for the different conditions and/or quantity. (b) not of asimilar 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 ofcontract if it requires the Contractor to omit any part of the originalcontract but JCT 2016 suite allow for Employer to vary the works (to carry outor omit) subject to an instruction. The Contractor in this case will beentitled to additional payment and time extension for carrying out theadditional work as necessary (clause 5.1). However, the contract provisionswithin the JCT suite 2016 require the Contractor to serve relevant notices andestablish the breach of obligation by the Employer in the first place prior tosubmission of time extension claim. If the project scope changessignificantly5to render the fundamental assumptions invalid, it will constitute a fundamentalchange that is inconsistent with the original contracting intent of theparties.
The law recognizes such action as a breach and awards the aggrievedContractor damages in a fashion similar to ‘quantum meruit’ recovery (reasonablevalue to determine the compensation amount). In case of dispute, the JCT suite2016 allows resolution of disputes by adjudication, arbitration ormediation. Contractualprovisions to allow time extension If the Employer instructsadditional works or alters works which will make it impossible for theContractor 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) 14BLR 802 Ministry of Defence v Scott Wilson Kirkpatrick 2000 BLR 203 McAlpine Humberoak Ltd. v. McDermott InternationalInc. (No. 2) (1992) 58 B.
L.R. 61 and Commissioner for Main Roads v. Reed Pty. Ltd. (1980) 12 B.L.R.
55.4 Clause 3.10 of JCT SBC/Q 2016 which refers to the Contractor’s obligationto ‘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)
