CAN WORK BE OMITTED FROM A CONTRACT AND GIVEN TO SOMEONE ELSE?
Standard forms of contract in general provide for the work to be varied, including omissions, and a genuine omission of work is not a breach of contract giving rise to the claiming of damages.
However where work is omitted with the intention of giving it to someone else, perhaps at a lower price, this would constitute a breach entitling the Contractor to recover damages which , in this instance, would be the profit on the work removed from the contract.
This was the decision in Hydro Holdings (Pty) Ltd vs Minister of Public Works 1976(4)778 where McEwan, J. held:
"Where a building contract makes provision for the issue of variation orders by the Owner (or, the Owner's Agent) whereby the Owner may inter alia omit items of work from or add new items of work to, the contract, any omissions so ordered have to be genuine omissions in the sense that the Owner has decided not to go on with the particular items of work. The power cannot be used to take away items in respect of which the Contractor has tendered and then to award them to some other Contractor, If that was done it would amount to a breach of contract on the part of the Owner".
The South African court, while accepting that the power to order omissions could not be used to take way items in respect of which the applicant had tendered in order to award them to some other Contractor, and that any such action would amount to a breach of contract, relied heavily on Hudson and the judgement quotes the following passages from Hudson:
"It is self-evident that the building owner must permit the contractor to carry out the whole of the work and that, if he prevents the contractor from so doing, the contractor will have remedy either on a quantum meruit for what he has done or by way of damages...."
"....the point arises, however, in a more subtle way where there is a variation clause in the contract empowering the employer to omit the work, and the employer attempts to omit work under that clause because he wishes the work to be carried out by someone else than the contractor. Under the terms of most contracts, an employer who exercises a power to omit work must genuinely require the work not to be done at all, and cannot exercise such a power with a view to having the work carried out by someone else".
"The contractor, however, is entitled to perform all the contract work, so that a provision giving the employer or his agent, a power to make omissions only contemplates genuine omissions, that is, things that are to be entirely omitted from the works. The employer is not, it is submitted, entitled to use the power to omit work from the contract works in order to give it to another contractor to do, whether under a provision similar to the above clause or otherwise."
The court found that the propositions set out in Hudson were so clearly based on common sense and business morality that they hardly needed authority to support them.
Substitutions similarly may not be effected to change the conditions. Thus it would not be permissible to substitute a provisional sum for measured work. In this respect the Principal Agents' discretion is restricted.
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