SINS OF OMISSION
Like its predecessors, JCT 2005 in clause 5 empowers the architect to order variations, including omitting work, writes Sue Lindsey. Does that mean that work can be omitted whatever the reason?
There are various circumstances in which an employer might want work omitted. They may have changed their mind. Or maybe they cannot now afford part of the work. Or they have decided to have it done by someone else, perhaps more cheaply.
There are about eight cases, some dating back to the 1890s, from common law in countries as far flung as Australia and Canada, that suggest that provisions like clause 5 do not cover work being omitted in the last of those circumstances.
They hold that to omit work for the purpose of having it carried out by someone else is breach of contract, entitling the contractor to claim for loss of profit on the omitted work.
In one English case, Sweatfield v Hathaway, the omission was held to be such a serious breach that the contract came to an end.
Why has such an apparently broad power to omit work been interpreted so narrowly? The answer in each case must lie in the exact wording of the omission clause.
But, unhelpfully, in only four of the cases do the reports set out the wording, and that makes analysis difficult.
One of them (Gallagher v Hirsh, an American case from 1899) said that 'omission' in the contract under consideration meant omission from the works rather than an omission from the contractor's contract. That, arguably, does not hold true for JCT 2005 where the power is to omit 'any work', while it is 'works' that defines the scope of the contractor's contract.
The past judgments give a range of reasons for finding as they did. These include that, as a matter of commercial balance, where a contractor is obliged to accept variations to do more work, the corollary is that he should be entitled to carry out the work already entrusted to him. A different angle is that the employer should not prevent the contractor from performing his contractual obligations.
So, reading between the lines, there may be policy considerations at work. Some of the cases are about omitting work to make financial gain.
In Simplex v Duranceau (Canada, 1941) the contractor omitted work from one sub-contractor's contract and gave it to another, who did it more cheaply. The court found that the true reason for the omission was the contractor's unwillingness to pay the sub-contractor the full amount it had received from the employer for the work.
But the striking thing about the limited number of cases that we have to help us interpret omission provisions is that they have all gone the same way. There are none that say you can omit work with a view to having it carried out by someone else. So the detailed provision of the applicable contract needs to be very carefully considered if you are asked to omit work in order for it to be done by someone else.
Sue Lindsey is a barrister at Crown Office Chambers in London.
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