Where Work Is Omitted from the Contract; The Financial Implications

•Contractors often argue that where work is omitted from their contract, they lose an opportunity of earning the profit element which was built into the value of work omitted.

•This being the case, they claim from the employer the loss they allege to have been suffered.

• Whether or not the contractor is entitled to the loss of profit is not clear cut.

•The answer to the question is not straight forward but depends upon the wording of the contract.

•Most Standard forms of contract in general use provide for the work to be varied, including omissions, and If there is a significant change of quantities or the work is executed under changed conditions then the contractor may become entitled to an adjustment of the contract rates on the varied work.

•However, this contract rate adjustment should take account of the loss of profit in respect of the work omitted or the adverse financial impact. 

CASE LAW

• Mitsui Construction Co Ltd v. The Attorney General of Hong Kong (1986)
• Wraight Ltd v. PH & T Holdings (1968)

Call the PMG on +1 317 629 3820 for more information on these matters