Exploring the Contractor’s Compensation Options for Extra Work with no Formal Variation Instruction

Description

ABSTRACT

Exploring the Contractor’s Compensation Options for Extra Work with no Formal Variation Instruction

Osinachi Nwandem*

Most construction contracts entitles the contractor to compensation for extra work performed so far as the employer issued a formal variation instruction under the contract. The unfortunate implication of this rule is that the contractor would not receive compensation for the extra work done, even when the contractor performed this ‘extra’ work upon the oral instructions of the employer. This rule creates an unfortunate event wherein the employer enjoys the benefit of the ‘extra’ work performed, notwithstanding that such work was not part of the contract, thereby denying the contractor the fruits of its labour. Excitingly, the law has made available options that will enable the contractor to recover compensation for this ‘extra’ work. Thus, the contractor’s claims for extra work will be successful only upon a proper understanding and application of these options. This paper, therefore, provides a detailed and thorough examination of the options available to the contractor for successfully recovering compensation for ‘extra’ work performed notwithstanding its non-compliance with the contractual requirements. Besides the Nigerian authorities discussed and providing an exhaustive and practical study of the subject, this paper refers to decided cases of other jurisdictions on the subject. Notably, this paper provides an insight into the contractor seeking payment for extra work performed, notwithstanding noncompliance with the contractual requirements. It also guides the arbitrators and courts on the essentials they should consider when approving or assessing extra work claims.

Keywords: Construction contracts, Compensation, Variation, Employer, Extra work.

INTRODUCTION
When parties enter construction contracts, the contract includes the scope of work in the contract and there is a clear understanding of the contractor’s work.₁ Yet, it is common to find employers requesting that the contractor performs ‘extra’ work not contemplated by the parties in the contract. Since the parties do not envisage this ‘extra’ work, completing this ‘extra’ work will entitle the contractor to extra compensation. The variation clause, therefore, regulates requests and provisions for ‘extra’ work.₂ It provides for the procedure and manner in which the employer can request ‘extra’ work amongst other variations in the contract.₃

*LL.B, BL, LL.M (University of Ibadan). Membership candidate, Institute of Construction Industry Arbitrators (ICIArb). Associate, ǼLEX Legal Practitioners & Arbitrators.
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1. Michael Sergeant and Max Wieliczko, Construction Contract Variations (Informa Law from
   Routledge 2014) 207.
2. See sub-cl 5.1 of the JCT Standard Building Contract, 2011; sub-cl 13.1 of the FIDIC Red Book 1999. 1
3. See sub-cl 13.1 and 13.3 of the FIDIC Red Book 1999.

THE GRAVITAS REVIEW OF BUSINESS & PROPERTY LAW VOL.12 NO.2