Case Law – Is it a Variation or Not?

To be a variation, there must be changes to what parties have agreed in the original contract. 

In a construction contract, it may be in the form of a change to the original design, quality, or quantity of the works set out in the original scope of works under the contract. 

Therefore, one has to carefully examine the original contract document, in which the description of the work and other obligations of the parties are mentioned, to clarify whether any work comes under variation or not.

Following case law gives understanding about whether any work item is included in the contract or else to be treated as a variation. 

Williams v Fitzmaurice (1858)

In this case, a contractor – the plaintiff – agreed to build a house for the client – the defendant. He prepared a specification that included particulars of the different portions of the work. Under the section – Carpenter and Joinery – specification contained scantling of the joists for different floors, rafters, ridge, and wall pieces to be used. But, there was no mention of the floorboards to be used. The agreed price was £1,100.

The wordings of the specification were as follows;

“the whole of the materials mentioned or otherwise in the foregoing particulars, necessary for the completion of the work, must be provided by the contractor”.

At the foot of the specification, the plaintiff signed a memorandum. In that, the plaintiff has agreed with the defendant the following.

“to do all the work mentioned and contained in the foregoing particulars, according to in every respect to the drawings furnished or to be furnished, for the sum of £1,100”.

As per the contract, the house was to be completed and fit for the defendant’s occupation by the 1st of August, 1858.

The plaintiff refused to fix floorboards until paid extra, saying that they were not part of his contract. The defendant terminated the contract.

The Court held that the plaintiff could not recover either the amount outstanding or the cost of the floorboards, which the defendant had seized upon taking over the site. 

“not entitled to recover for the flooring as an extra, because it was included in the contract though not mentioned in the specification”.

According to the words used in the contract, it was inferred that flooring was necessary to complete the house. 

Therefore, whether a particular work is a variation or not will depend on as long as it comes within the general scope of the contract. 

Some works, although not specifically described, are nevertheless considered as implied or form a necessary part of the contract. 

Sharpe v San Paulo Railway Co (1873)

On 8th February 1860, Robert Sharpe & Sons – the plaintiff – signed a contract with the San Paulo Railway Company – the defendant – to build a railway line between Santos and Jundiahy, via São Paulo, in Brazil, for the agreed sum of £1,745,000. 

It was a lump-sum contract to complete the whole railway line, with everything necessary completion, from the beginning to the end. 

On 1st October 1866, the railway line was completed, handed over to, and accepted by the company.

However, the engineer’s original plans were inadequate for the construction, and vastly underestimated the amount of excavation required. Additional plans were provided. And the contractor had to carry out 2 million cubic yards of excavation over and above what they had initially anticipated.

In 1871, the contractor attempted to sue San Paulo Railway to recover additional costs of £617,143 which they had incurred when the company’s engineer had altered the plans from the original specification. 

The case reached the Court of Appeal in 1872 but was rejected. 

The learned judge held that: 

“the amount of excavation was a thing the contractors ought to have looked at for themselves and made out their own calculations”. 

“if the contractors had disapproved of the new arrangements, they ought to have entered into a fresh contract with the company”. 

“The (plaintiff) says that the original specification was not sufficient to make a complete railway line and that it became obvious that something more would be required to be done to make the line. But their business, and what they had contracted to do for a lump sum, was to make the line from terminus to terminus complete. And both these items seem to me to be on the face of them entirely included in the contract. They are not in any sense of the word extra works”. 

“the works were not in any sense additional to the contractually required performance. Because of the wording of the contract, the additional work could not be described as extra works”.

It should be noted in this particular contract, the engineer’s plans did not supersede the primary commitment to building the railway line. 

If there were differently worded commitment (e.g. ‘build the railway in accordance with the engineer’s plans’) would have given rise to the risk of insufficiency of the engineer’s plans falling upon the employer. 

Conclusion

All construction contract conditions comprise the provision for a written instruction or order for varied and/or extra work. Without those written instructions, the Contractor cannot recover nor get compensation for such additional works unless he can prove that there has been a new and succeeding contract for him to be paid for those extra works. 

This subsequent contract may be in the form of an oral agreement. Or it may be in the implied form from the conduct of the parties. 

It must show an agreement by the parties that the additional work was to be done and an agreement by the owner to pay for it or at least the owner must have benefited from the extra work. 

Therefore, it is suggested that the Contractors should at least put in writing any oral instruction or confirmation or agreement. These written confirmations must show the intention and conduct of the parties for such ‘extra work’. Then the contractor can provide those as prima facie evidence for claiming the additional payment for such extra work when a dispute arises.