Can work be omitted from a building contract and if so is there a cost for doing so? It’s important to understand the principles surrounding this question and this article attempts to outline the basics.
Each form of contract differs slightly and there may be bespoke amendments made to some contracts that alter the general rights and remedies that would otherwise exist but below outlines the basics…
Keating states: “The Contract usually gives the Employer or the Architect power to order part of the work to be omitted with the consequent adjustment of the contract price. There is little English authority dealing with the exercise of such a power. On the construction of the Contract it may not extend to the ordering of variations, and it may not give the Employer the right to omit part of the work from the Contract with the object of giving it or similar work in substitution to another Contractor.”
Almost all forms of contract will contain mechanisms that permit variations to the contract works. This can include the modification, addition or omission of work.
Generally, work can be omitted, but only if it is genuinely no longer required, NOT to be performed by another contractor, which is likely to be construed as a breach with loss of profit being applicable
The extent of the work being omitted can have implications. If the scope or value of work being omitted is significant, you may be entitled to compensation. This could include re-rating the remaining work and loss of profit on the work omitted. If the omission is so significant that it changes the fundamental nature of the works, then it might constitute repudiation for which, you, the contractor, could rescind the contract and pursue damages.
Up and down the line
Don’t forget that the principles will apply not only up the line with your Client/Employer, but as a builder / main contractor, you would need to consider the above in the context of any sub-contracts you have on projects.
There are legal precedents for a variety of scenarios and the precise detail of the contract and the type and size of omission will impact the correct approach. However, work can usually be omitted provided it is not required, You may be entitled to financial compensation for any omission, which will, in part, depend on the scale of the omission.
If you need further input/support in respect of an omission or potential omission, VOLOCO can assist with our team of Consultants and specialist advisors.