Payment - Scottish Construction Contracts - page 210

Similar difficulties can arise where the contractor is instructed to rectify or alter
work which it is alleged is not in accordance with the contract. If the work was in
accordance with the contract, then the contractor will have incurred the cost of carry-
ing out further work for which they have no appropriate variation order. In such cases
thecourtshave,incertaincircumstances,heldthatthecontractorisentitledtopay-
ment where a variation order should have been issued, but was improperly withheld,
see Brodie v. CorporationofCardif (1919). In other cases, the courts have construed
instructions not purporting to be variations to be in fact, variations, see Shanks &
McEwan (Contractors) Ltd v. Strathclyde Regional Council (1994).
Wherethevariationismadeforthecontractor'sbeneit,however,thecourtshave
not been willing to construe instructions as variations entitling the contractor to addi-
tional payment, see he harsis Sulphur and Copper Company Ltd v. McElroy & Sons
(1878).
8.2.3 Payment for variations under the SBC
Where a building contract provides a mechanism to regulate variations to the works,
it is common and, it is submitted, prudent for the contract also to contain provisions
togovernhowanysuchvariationsaretobevalued.hemethodofvaluationcantakea
number of different forms and indeed many of the standard forms of building contract
contain more than one method of valuation. he relevant provisions in the SBC are to
befoundinclause5,whichprovidesanumberofpossiblealternativesforvaluation.
In the first place, it is provided that the Employer and Contractor can agree the
value of a Variation. Unfortunately, this rarely happens in practice as many Variations
require immediate compliance, leaving little time for agreement of a price in advance
between the Contractor and Employer. It is, however, a useful mechanism, particu-
larly in relation to major Variations. To facilitate the agreement of a price in advance,
when instructing a Variation, the Architect/Contract Administrator can in terms of
clause 5.3.1 stipulate in the instruction that the Contractor is to provide a quotation
in accordance with the provisions of Schedule Part 2. In that case, those provisions
will regulate the valuation of the Variation unless the Contractor disagrees in writing
to the procedure envisaged by the clause within seven days of receipt of the instruc-
tion. In terms of Schedule Part 2, the Contractor is required, not later than 21 days
from the later of (i) the date of receipt of the instruction, or (ii) the date of receipt
by the Contractor of sufficient information to enable the Contractor to quote, to sub-
mit a Schedule Part 2 quotation to the Quantity Surveyor. Paragraph 2 of Schedule
Part 2 specifies in detail what the quotation should contain. The quotation can then
be accepted by the Employer and the acceptance must be confirmed in writing by the
Architect. Schedule Part 2 sets out the timescales within which this should happen.
Until the quotation is accepted, the Variation is not executed by the Contractor. If the
quotation is not accepted by the Employer, then the Architect should either instruct
thattheVariationisnottobecarriedoutorthatitistobecarriedoutbutvaluedin
accordance with the provisions of the Valuation Rules in clauses 5.6-5.10.
hepurposeofclause5.3andSchedulePart2istodealwithVariationswhichthe
Employer may require but for which they wish to know the price prior to confirming