Legally a variation can be defined as an agreement between parties supported by consideration to change some terms of the contract between them.
The main feature necessary for this is the need for an agreement between parties. If the contract terms do not provide this requirement, there is no power for the employer or his agent to order variations.
Under that situation, if the employer wants to change something, always he must first seek the consent of the contractor before varying any work under the contract.
Therefore, usually in every Conditions of Contact, there is a clause empowering the employer to vary the work. Case law – Stockport MBC v O’Reilly (1978) – discusses the need for having provisions to vary the work in the agreement between parties to the contract.
Stockport Metropolitan Borough Council v O’Reilly (1978)
O’Reilly entered into a contract to build 105 houses, garages, and ancillary works for the council. The contract was in JCT 63 form. According to the agreement, the completion date was in November 1969.
The architect requested to impose phases in place of dates and also gave instructions to employ some people on particular sections of the work.
However, these and other instructions were not allowed by any of the conditions of the contract. In that situation, no power to issue variation is implied.
Disputes between the parties for payments were referred to arbitration. One of the points at issue was the extent to which the work had been varied. The interim award of the arbitrator allowing payments was questioned before the court, and the court set aside the arbitrator’s award.
It was mentioned in the judgment that the arbitrator failed in his interim award to find the extent to which the works had been varied. The arbitrator has confused variations under the contract with orders given by the architect which were not authorized by the contract.
It was held that not to burden the employer with liability because of the architect’s ultra vires acts. It is because the architect has no authority to vary the contract.
However, if the parties agree to the instructions, the contract may be pro tanto varied. If not, the contractor is entitled to protest and ignore the instructions.