Most construction contracts require any changes to be made using a formal written instruction and state that without one the right to payment will not arise.
There are good commercial reasons for such an approach; not least that it provides a record of what has been agreed and it provides a contractor with the comfort that it will be paid the additional money from carrying out the work instructed.
However, it is not uncommon for an instruction to be given verbally which is then not confirmed in writing, for example as part of an on-site discussion. A dispute might then arise over whether the contractor is entitled to payment due to the absence of the written instruction.
The Courts have applied a number of ways to stop one party taking advantage of the absence of a written instruction that the contract states must be issued, for example by finding:
- there is an implied promise to pay for work that a contractor is instructed to carry out where as a fact it is found to be additional to or a variation of the original scope of works;
- there is a waiver of compliance with the term that requires the instruction to be in writing before an entitlement to payment will arise and the contractor relies on this and undertakes the work without a written instruction being issued;
- the work was instructed as a separate contract and not a variation under the existing contract and therefore the terms requiring a written instruction as a requirement before payment would be made is not applicable.
Parties will often follow the contractual procedure but it is inevitable that some occasions will arise when this does not happen and a dispute can arise. Obviously, the contractor should ask those instructing him to comply with its obligations under the contract and issue the instruction in writing but if that does not happen and a dispute arises the contractor may still be entitled to recover payment.
Richard Millard is a partner in the Construction Department and specialises in the drafting of construction contracts and documents and advising clients on disputes that arise in construction and commercial contracts. You can call him on 01908 689382 or email firstname.lastname@example.org