Is a main contractor entitled to omit work from a subcontract and transfer it to be undertaken by another subcontractor? This was one of the questions that the Court had to grapple with in the case of Van Oord UK Limited v Dragados UK Limited [2020] CSOH 87 which concerned an amended NEC3 engineering and construction subcontract.
The Court’s answer was that “clear words are needed if the employer is to be entitled to remove work from the contractor in order to have it done by somebody else”. As such, the Court confirmed that “a clause entitling the employer to vary the works must be construed carefully so as not to deprive the contractor of his contractual right to the opportunity to complete the works and realise such profit as may then be made”.
In this particular case, the amended clause 14.3 which gave the main contractor a right to change the Subcontract Works Information did “not amount to a clear contractual entitlement to omit works and transfer them to another subcontractor” except in particular specified circumstances which did not exist.
Accordingly, when entering into a contract you should ensure that the topic of omission and transfer of works is addressed in clear and express terms setting out whether, and to what extent, such omission and transfer is to be permitted and, importantly, what the financial consequences are to be.
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