Where an item of work is properly in the Employer's Requirements but missing from the Contractor's Proposals, can the contractor's claim extra payment on the ground that it was never in the contract price?
A design-and-build contract runs on the Employer's Requirements and the Contractor's Proposals, and the two do not always match. Whether a contractor can charge extra for an item missing from its Proposals turns on the form and on how obvious the work was.
It depends: some forms make the Employer's Requirements prevail over the Contractor's Proposals at no extra cost, others are silent and the discrepancy is resolved by construction, but a contractor cannot charge extra for work obviously necessary to complete the described scope, which is taken to be in the price
It depends on the form and on how obvious the work was. Some design-and-build forms, in the government and engineering families, state that the Employer's Requirements prevail over the Contractor's Proposals without any adjustment to the contract sum, so a discrepancy is resolved for the employer at no extra cost. The common building form is silent on precedence, and one widely used engineering form leaves the point to the works information; where the form is silent the discrepancy is resolved by construing the documents. Under the silent building form the recital that the employer has examined and is satisfied with the Proposals is an argument, though without authority, that a later discrepancy is read in the contractor's favour. But a contractor cannot charge extra for work that is obviously necessary to complete the described scope, such as flooring for a house or ironmongery for a door, which is taken to be in the price.
| Some forms | Employer's Requirements prevail, without adjustment to the contract sum |
| Silent forms | The discrepancy is resolved by construing the documents |
| The third recital | The employer's satisfaction may favour the contractor, but no authority |
| Obvious work | Cannot be charged extra; it is taken to be in the price |
| Best practice | Amend the recital to state which document prevails |
The problem
Design-and-build contracts run on two sets of documents: the Employer's Requirements, which state what the employer wants, and the Contractor's Proposals, which state how the contractor will provide it. Human error means the two do not always match. Where an item is properly in the Employer's Requirements but omitted from the Contractor's Proposals, may the contractor charge extra for doing it, on the ground that it was never in the price? The answer turns on the form and on how obvious the work was.
Reading the documents together
A court reads the contract documents together and gives them the meaning a reasonable reader would take from the words, with the relevant background, applying the settled approach to interpretation. On a design-and-build contract the contract documents typically comprise the agreement and conditions, the Employer's Requirements together with the Contractor's Proposals and pricing document, and the contractor must carry out and complete the works in accordance with them. A discrepancy between two of them has to be resolved, and how it is resolved depends first on whether the contract says which prevails.
Which document prevails
The forms take different positions. Some are clear: certain government works and engineering design-and-build conditions state expressly that the Employer's Requirements prevail over the Contractor's Proposals, without any adjustment to the contract sum, so a discrepancy is resolved in the employer's favour at no extra cost. Others are silent: the common building design-and-build form does not say which prevails, and one widely used engineering form leaves the point to the works information. Where the form is silent, the discrepancy has to be resolved by construction.
The third recital
Under the silent building form, one argument favours the contractor. The recitals record recording the employer's examination of the Contractor's Proposals and apparent satisfaction that they respond to the Employer's Requirements. From that it is arguable that a discrepancy discovered after the contract should be read in the contractor's favour, since the employer took the Proposals as they were. There is no authority for the argument, so the sensible course is to amend the recital to state which document takes precedence, rather than leave the point to be fought.
Obvious necessary work
Even where a document is silent about an item, obvious necessary work must be included in the price.
The classic illustration is old but sound: a house will need flooring, and a door will need ironmongery, even if the documents do not spell it out. Work that is obviously necessary to complete what the contract describes is taken to be included in the contractor's price, so the contractor cannot charge extra for it merely because it was not separately listed.
Practical steps
Read the form first. Some expressly make the Employer's Requirements prevail at no extra cost; others are silent.
Where the form is silent, resolve a discrepancy by construction, reading the documents together against the background.
On the silent building form, note the third recital: the employer's satisfaction with the Proposals may favour the contractor, but there is no authority, so amend the recital to fix precedence.
Do not expect to charge extra for work that is obviously necessary to complete the described scope. It is taken to be in the price.
As an employer, state clearly which document prevails, and check the Proposals against the Requirements before signing.
As a contractor, price for the obvious, and raise any genuine discrepancy for an instruction rather than assuming it is extra.
Authorities
| Authority | Citation | What it decides |
|---|---|---|
| Williams v Fitzmaurice | (1858) 3 H&N 844 | Work obviously necessary to complete the described scope is taken to be included in the contractor price |
| Arnold v Britton | [2015] UKSC 36 | Meaning is assessed from the natural and ordinary meaning of the words, the other provisions, the purpose of the document, the known facts and commercial common sense |