This session

starts at 18h30.
Audio checks
are done at
18h20 & 18h25

Fundamentals of Construction
Law 2023: Scope
 Please log in using either
It’s important this URL
to register https://studygoal.jisc.ac.uk/
login/
your
attendance or via
at today’s
session
Your code for this session
is in the chat
Practice Assignment

Red date is out of

time = max mark
50% on module
assessment

Red/amber
similarity score
may prompt
action
 Practice Assignment

• 27 missing! You can still submit if it is this week.

Feedback & ‘indicative’ marks released by 3 November
16:00
• At same time, I will upload lessons learnt which I
recommend everyone reads as no-one got every
element right
• Practice:
• Referencing – see LPs and slides for examples
• Precision – link law to the facts, answer the questions posed
• Clarity – explain all jargon; no assumptions about legal
knowledge
 Referencing Tips

• Referencing: standard forms

– adapted Harvard
– instead of publisher (year) use short name of
contract (publisher, year)
– instead of FIDIC (2017) use Red Book (FIDIC, 2017)

• Referencing: cases
– can shorten names in text but full names & citation in
reference list
 Page Referencing Tips

• In-text: include page numbers for a direct

quotation (not in ref list), not a paraphrase
• Reference list: if referencing a specific book
chapter, list the page numbers
 Assignment Qs

Q1: Letter of advice or report?

Any format that is clear is acceptable. But single
document only in MS Word (no pdfs).
 Last Sessions

A. Is there a contract? (LP2 and 3)

B. What terms are implied (LP4)
 Quick recap

It is trite law that in Contract formation

order to have a offer & acceptance
consideration & intention
building contract you certainty
usually need
agreement as to Contract content
parties, workscope, express terms
price and time... implied terms: custom,
statute, case law
Hart v Fidler (2006)
 Quick recap
Parties
essential
Works
essential... until works started
Price
if no price, then no contract?
if contract silent, reasonable
sum
Time
if contract silent, reasonable
time

Photo by Makarios Tang on Unsplash

 This Session

A. Varying the scope

B. Is it a change?
C. Is it permitted?
D. Change in practice
 Varying the Scope
Practical
• Insufficient time to review, tight deadlines to finish,
contractor not engaged early = projects very rarely fully
designed by time works start
• Each project is unique: local idiosyncrasies, access,
ground conditions = uncertainty
• Role of external factors = regulators, community,
economy, third parties
• Employer right to change mind
 Varying the Scope
Legal
A contract for the execution of work confers on the
contractor not only the duty to carry out the work but the
corresponding right to be able to complete the work which it
contracted to carry out. To take away or to vary the work is
an intrusion into and an infringement of that right and is a
breach of contract... Hence contracts contain provisions to
enable the employer to vary the work in order to achieve
lawfully what could be achieved without breaking the
contract or by a separate further agreement with the
contractor.

Abbey v PP Brickwork Ltd (2003)

 Varying the Scope

CONTRACT
Parties INITIAL CONTRACT
Works Desire/ Original parties
Price need for + NEW CONTRACT
change
Time Changed works,
price and
+ time
 Varying the Scope
Certainty
• Legal ie contract must have certainty of object
– entirely fixed or
– with change management mechanism

• Practical ie contract administrator must establish

– what is within scope & original price
– what is an extra
 Varying the Scope
New (extra) contract Change existing contract
Time consuming Quick mechanism
Client in poor bargaining Independent decision-maker
position (CA)
Needs all essentials (legal Changes to price, works, time
and content) Wide range of variations
Suitable for discrete included
additional works but not Single up-to-date source of
omissions or substitution duties
Parallel duties
 Is it a Change?
• Outside (express/implied) scope?
• Ordered by (agent of) client?
• Agent had authority to issue instruction?
• Client agreed to pay (words or conduct)?
• Not at contractor’s option?
• Not due to contractor’s default?
• Any condition precedent to payment fulfilled?
 Is it a Change?
• Contractor to build house “to be completed and
dry and fit for … occupation by August 1”…and
to provide “the whole of the materials mentioned
or otherwise in the foregoing particulars
necessary for the completion of the work”
• Detailed specification but floorboards not
mentioned
• Contractor ordered the floorboards and wrote to
its client
 Is it a Change?
Contractor letter to client Client response

"I am unable to proceed with your "A letter of this day's date from you has
building for want of the floors being just been put into my hands, but I defy
put down, which are not part of my anyone to understand your meaning.
contract. If you wish me to put them Be good enough to state whether I am
down, I will do so on having an order to understand that you are not going to
from you to that effect. Unless they put in the floors, or whether you are not
are put down immediately I will not be going to nail them down, plane, or fit
able to complete my contract by the them, or what is it that you do not
time fixed, and if they are not down intend to do.”
within four days from this time I shall ...Contractor left site so employer
conclude that you do not intend for used alternative labour and
me to go on with my contract, and I ordered floorboards to finish the
will measure the work that I have
job
done, so as to be paid for that only.”
 Is it a Change?

• …it was clearly to be inferred from the language

of the specification that the [contractor] was to
do the flooring

• Contractor could not recover

– the cost of the floorboards or
– the amount outstanding under the contract

Williams v Fitzmaurice (1858)

 Is it a Change?

“Pillow”
cladding

(cc) Image by Tony Webster from flickr

Is it a Change?
Subcontractor to fabricate and fit
steelwork to support pillow cladding “in
accordance with the Engineer’s drawings
and specification”

Initial drawings T2 and tender drawings

T7 differed in number of tubular bars to
which subcontractor’s steelwork would
be attached

Final details in instruction 85

 Is it a Change?
Subcontractor priced Contractor priced
Instruction 85 as costing Instruction 85 at £36,822
£740,801.65 more than representing the cost of
the original contract price changing some of the bolt
and welding detail only
Focus on narrow scope
detail from tender Focus on wider scope
documents details (provided to
subcontractor)
 Is it a Change?

As defined by subcontract:
“any alteration or addition to or omission from the
Sub-Contract Works or any change in the design,
quality or quantity of the Sub-Contract Works
which is required by a direction of the Contractor
issued under the Sub-Contract.”
 Is it a Change?
Scope = deficient tender drawings + all other information
in subcontractor’s possession
“It is legitimate, in my opinion, when interpreting the
contractual obligation undertaken by the [subcontractor]
in terms of the pricing schedule to have regard to the
greater degree of specification contained in the table.
Such specification constituted background knowledge
available to the parties at the time when the contract was
entered into and thus relevant to identification of the
intention of the parties”

Martifer UK Ltd v Lend Lease (2016) per Tyre, L. at [22]

 Is it Permitted?

• Is similar in character and nature?

– how much can you vary and still be under the same
contract?
• Is it within the definition of a change?
• Can works be omitted?
• Is it within agent’s authority?

NB For an overview see, e.g. Chapter 5 of Sergeant and Wieliczko (2014)

 Is it Permitted?

Dredged material to be “The island was substantial

discharged through in dimensions and, …it
800m of self-float involved the construction of a
pipeline carefully designed bund wall
V [using materials imported
All dredged material to
be deposited 750m from from nearby quarry] together
centre-line of trench with weir boards, channels,
draining pipes and so forth”
 Is it Permitted?

“Could the employer have ordered the work

required by it against the wishes of the contractor
as a variation under clause 51? If the answer is
‘No’ then the agreement under which such work is
carried out cannot constitute a variation but must
be a separate agreement.”

Change? No: totally different extent of work

Blue Circle Industries Plc v Holland Dredging Co (UK) Ltd (1987)

 Is it Permitted?

Similar character and nature?

• Contract for construction of oil platforms
• From 22 drawings to 161
• Permitted change? Yes: did not ‘transform’
contract nor ‘distort its identity or substance’
McAlpine v McDermott International (1996)
 Is it Permitted?
Can you remove work from the scope using a
change mechanism?

What is a change? Impact

alteration or modification of
design, quality or quantity relevant event
JCT DB including addition, (time)
2016 substitution or omission of relevant matter
work or change in (loss/expense)
access/hours/space or order
compensation
NEC4 any change to Scope
event
 Is it Permitted?

Right to Finish?

A contract for the execution of work confers on the

contractor not only the duty to carry out the work but the
corresponding right to be able to complete the work
which it contracted to carry out. To take away or to vary the
work is an intrusion into and an infringement of that right
and is a breach of contract.

Abbey v PP Brickwork Ltd (2003)

 Is it Permitted?
the courts are seeking to Omissions
regulate opportunistic what if client wants to do it
behaviour or attempts to themselves or pass to
recapture the opportunities another contractor?
lost on contracting... The if express right to omit,
omission of work for should contractor get lost
reasons which are profits?
dishonest or deliberate different impact on re-
attempts to maximise self- measurement contracts
interests are not permitted

Colledge (1999)
 Is it Permitted?
A clause entitling [a party] Omissions
to vary the works must be Right to finish
construed carefully so as Do not deprive contractor
not to deprive the of profit
contractor of his Clear words to pass to
contractual right to the another contractor
opportunity to complete Motive is irrelevant
the works and realise such
profit as may then be
made.

Van Oord v Dragados (2020)

 Is it Permitted?
Authority of contract administrator
• Express ie what does the contract say?
– read the contract
– follow the processes

• Implied ie what has case law said?

– impartial
– logical
 Change in Practice
• How is change valued?
– similar conditions or character
– role of pricing documents
– failure to follow procedures

• Conditions precedent
– impact on rights of parties
– enforceable?
Change in Practice
 Change in Practice (1)

Similar conditions?
• Arbitrator examined pre-contract data relating to ground
conditions (the relevant conditions for the change)
• Court restricted to determining similar conditions from
contract documents

Wates Construction v Bredero Fleet (1993)

Change in Practice (2)
Tender: cold water pipes 4.35m
above datum point

Post tender: pipes lowered by 1m.

Trench needed sheet pile temp
4.35
m supports in two areas (grey)

Contract: Rate included calculated

on basis of both areas, but referred to
just one
When more piping was instructed,
3.35
m what rate applied?
 Change in Practice (2)
Where work is not of a similar “So far as reasonable”
character or is not executed Not: wide, impressionistic
under similar conditions or is Excludes: extraneous
ordered during the Defects matters
Correction Period the rates and Yes: physical nature of
prices in the Bill of Quantities works, or conditions
shall be used as the basis for Even if: bill rates appear
valuation so far as may be unreasonable
reasonable failing which a fair
valuation shall be made.
Henry Boot v Alstom (2000)
Change in Practice (3)

Tender: A rate £8.63/m3

B rate £44.6/m3

Contract: A and B both £0/m3

as A could (assumed) be
disposed on site

When more piping was

instructed, what rate applied?
 Change in Practice (3)

Fair valuation only if not Client: £0/m3

similar character Contractor: £44.6/m3
Arbitrator fair valuation using
Aldi Stores Ltd v WSP (2007) (B-A in tender) £36.10/m3
Court: similar character = use
contract rate ie £0/m3
Change in Practice (4)
 Change in Practice (4)
Change defined as (modified MF/1) “variation, alteration,
addition or omission from or to the Works in accordance with
a validly issued Variation Order.”

Change procedure: Change valuation:

• employer variation • rate from Schedule if
request specifically described
• contractor proposals • “suitable” rate if equivalent
• employer variation order rate available
• “reasonable” amount
 Change in Practice (4)
• Variation = omitting Lisa A and using MPI Resolution
(valid, correct procedure)
• Hire of MPI Resolution = client assumed associated delay
risks
• Valuation = avoided hire costs of Lisa A
• Client argued for valuation to include voluntary hire costs
of MPI Res and costs avoided by contractor arising from
Lisa A running late ~ €40m (unilateral decision so not
valid)
 Is it a Change?
• Outside (express/implied) scope?
• Ordered by (agent of) client?
• Agent had authority to issue instruction?
• Client agreed to pay (words or conduct)?
• Not at contractor’s option?
• Not due to contractor’s default?
• Any condition precedent to payment fulfilled?
 Conditions Precedent
If contractor does A Characteristics
[make application for procedure to be followed
loss/expense]
time limit for compliance
Then B will happen
[CM will ascertain loss/expense] benefits conditional on
Provided always that compliance
the contractor does A
within C days
[application made within 2
months of facts]

WW Gear v McGee Group Ltd

(2010)
 Conditions Precedent
NEC4
 Reference List
Sergeant, M. & Wieliczko, M. (2014). Construction Contract Variations. Routledge.
Colledge, B (1999). Good Faith In Construction Contracts: The Hidden Agenda. Const LJ
15(4) 288-299.

Abbey Developments Ltd v PP Brickwork Ltd [2003] EWHC 1987 (TCC)

Aldi Stores Ltd v WSP Group Plc & Ors [2007] EWCA Civ 1260
Blue Circle Industries Plc v Holland Dredging Co (UK) Ltd (1987) 30 BLR 40, CA
Hart Investments Ltd v Fidler and Another [2006] EWHC 2857
Henry Boot Construction v Alstom Combined Cycles [2000] BLR 247
Martifer UK Ltd v Lend Lease Construction (EMEA) Ltd [2016] ScotCS CSOH_98
M T Højgaard A/S v E.On Climate And Renewables UK Robin Rigg East Ltd & Anor [2017]
UKSC 59
McAlpine Humberoak v McDermott International (1996) 58 BLR 1 (CA)
Van Oord v Dragados [2020] CSOH 87
Wates Construction v Bredero Fleet (1993) BLR 63, 128
Williams v Fitzmaurice 157 E.R. 709; (1858) 3 Hurl. & N. 844
WW Gear Construction Ltd v McGee Group Ltd [2010] EWHC 1460 (TCC)
 Next Steps
• Review the assessment
– Analyse contract formation (LP2 and 3)
– Analyse any implied terms (LP4)
– Consider scope changes (LP5)

• Bring or email your questions!