Both common law and civil law systems try to ensure that contractors are properly compensated for variations that are implemented even in the absence of an instruction.
Civil codes will often contain provisions to regulate how variations should be treated. For example, the Qatar Civil Code, at Article 709 states: “Under a lump sum contract to undertake works to an agreed plan, the contractor may not seek any additional monies because of some alteration or addition to the plan, unless it can be attributed to an act of the employer or the employer has authorised the change and has agreed with the contractor its entitlement.”
The UAE Code, at Article 887, contains similar provisions, providing that the contractor cannot demand additional payment in the carrying out of works unless the employer has consented to changes.
The principles articulated in these codes would be instantly recognisable to an English lawyer. However, the devil is in the detail – whilst the Qatar Code says that no right to compensation is due unless the employer has caused or authorised the change – there is considerable scope for debate as to what may constitute such causation or authorisation.
Two particular problems commonly arise. Firstly, an employer may informally indicate that it wants a change to be made without actually issuing a formal order even though this is required under the contract. Secondly, an employer may be responsible for events or risks which give the contractor no option but to alter the works.
If the employer has informally told the contractor that it wants a change made then it will seem unduly harsh to deny the contractor a remedy just because a formal order has not been raised. The courts in common law jurisdictions will often invoke the concept of waiver or imply a term to establish the contractor’s entitlement. Civil law jurisdictions will often invoke concepts of fairness and good faith to achieve an equitable result. They will also typically provide that the common intention of the parties and the nature of dealings between them may be looked at when considering how the express terms of the contract should be interpreted (see, for example, the Qatar Code article 169).
Suppose, for example, an employer refuses to issue a variation order because it considers that an item of work is within the scope. At a later stage the contractor establishes conclusively that the employer was wrong and that the item of work was indeed extra. The employer may then refuse to pay for the work on the basis that no formal order was issued and therefore, under the terms of the contract, no money is due. Cases in common law jurisdictions have relied on concepts of waiver to give the contractor a remedy; see, for example, the Australian case Molloy v Liebe (1910) (102 LT 616 PC) which was determined on very similar facts to these. Where the contract is subject to civil law then a tribunal is likely to invoke concepts of fairness in the way it interprets the contract and the dealings between the parties.
The other problematic scenario arises where the contractor has no option but to implement a change because of an event or risk that is the employer’s responsibility. For example, the employer’s design proves to be unbuildable such that the contractor has no option but to make alterations if the project is to be completed. It may be possible to imply an obligation on the employer to vary the works in such circumstances and the English courts have certainly considered that such a duty may arise (see Holland Hannen v WHTSO (1981) 18 BLR 80). Certainly Article 709 of the Qatar Code indicates that a contractor may be entitled to payment for additional work in the absence of an instruction where the need for the change can be attributed to an act of the employer.
It can therefore be seen that both common law and civil law systems seek to find equitable solutions to common problems concerning variations even though there may be differences in the way such rights and remedies are expressed.