Where Work Is Omitted from a Contract & Given to Another Contractor to Carry Out; The Implications

•The parties are at liberty to enter into a contract which allows the employer to omit work included in the contract and arrange for it to be carried out by others.

•If this be the case, the terms of the contract should then go on to indicate whether or not the contractor is entitled to claim loss of profit.

•The standard forms of contract in current use do not include a provision of this nature.

•In the absence of such a clause what remedy, if any, do contractors have where work included in their contract is omitted and the employer arranges to have it carried out by others?

•Court judgments passed on similar cases in the past implied into construction contracts, an obligation not to omit work and have it carried out by others.

•If work is omitted from a contract and arrangements made for the work to be carried out by others, this would be a breach of contract, which would carry with it an obligation to pay damages to the injured party.

•In the case of a contractor or subcontractor who had suffered in this way, their entitlement would be to have paid to them their loss of profit on the value of the work omitted.

•It has been held in several legal cases that where work is omitted and given to others, the contractor is entitled to claim for loss of profit.

•This also applies to provisional sums omitted where the work is given to others to carry out.

CASE LAW;

• Amec Building Ltd v. Cadmus Investments Co Ltd (1996),
• Abbey Developments Ltd v. PP Brickwork Ltd (2003)
• Carr v. JA Berriman Pty Ltd (1953)

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