To omit or not to omit: What is the correct question?

My colleagues Karen Manning and Kirstin Beattie’s blog on “New Year, new start for construction?” gave me food for thought on what trends we might see emerging in contractual disputes in 2021.

I recalled an uncommon clause in a contract last year which allowed the employer to omit works and then give the work to another contractor.

So, given the impact of coronavirus on the economy, will developers look to try and omit works as a means of reducing the cost of the project?

What does your contract say?

The starting point will always be the contract. Standard form contracts allow for the omission of work.

The Scottish Building Contract Committee (SBCC) under both standard and design & build forms, states that a Variation includes “the alteration or modification of the design, quality or quantity of the Works including the addition, omission or substitution of any work” (clause 5.1.1.1).

The NEC suite of contracts doesn’t specifically refer to omissions.  Any omission would be dealt with by a Project Manager giving an instruction.

So, can an employer omit all or the majority of the works?

In short, no.

While the SBCC contracts expressly entitle employers to omit works, these provisions are subject to limitations on the amount of work which can be omitted (unless your contract specifically allows it!).

This is because a contractor has a right and a duty to carry out the works. Where works are being omitted, the contractor is being deprived of that right which may be considered to be a breach of contract.

Can omitted works be given to another contactor?

Again, the short answer is no. Unless your contract allows for it.

What should I do if I receive an instruction to omit works?

First, read your contract to check that the employer is entitled to omit the works. If they are, consider what works are being omitted and why in the context of the project.

Are they effectively trying to change the nature and character of the works? If so, you should put the employer/CA on notice that the instruction is not an instruction in accordance with the contract; that they are potentially in breach of contract and reserve your rights at common law for any damages which could arise as a result of the breach of contract.

If the omission is an omission of part of the works, legitimately within the context of the project, then the instruction must be followed.

If you are currently negotiating contracts and there is a provision which entitles the employer to omit large sections of work, you should consider what this means for you in terms of profitability - and whether there is any compensatory provision in the contract to protect you.