Construction works – Subcontractor bringing proceedings to recover sums for works partially completed – Court finding works substantially performed under fixed-price contracts – Subcontractor entitled to claim in full – Whether finding of fixed-price contracts correct – Whether implied term relating to price variation – Appeal dismissed
The appellant was the main contractor and the respondent was the subcontractor in respect of construction works that were being carried out on two buildings. The respondent submitted two tenders in writing, quoting for certain works “complete for the sum of” £97,800 for one building and £239,443.29 for the other. The works were described in each case “as detailed on the tender record sheet attached, and as detailed on your issued tender drawings….”. The tender record sheets contained no details of the works that were to be performed other than by reference to general headings, but the detail was contained in the drawings. The tenders did not refer to the respondent’s standard terms and conditions.
The site owner altered the specification for the works and the appellant asked the respondent to do less. The respondent brought proceedings against the appellant in respect of a claim for £51,114.66 that had originally been made under six invoices. The appellant put in defences, contending that the respondent had not performed all the work for which it had charged, with the result that it owed money to the appellant.
The county court gave judgment for the respondent. The judge decided that the subcontracts between the parties were fixed-price contracts. He found that the respondent had substantially completed the works and that the appellant was not entitled to a reduction in the price. A joint expert had measured and valued the work and concluded that the respondent had underperformed to the extent of £40,000. However, the judge made no reduction to reflect that figure.
The appellant appealed, arguing, inter alia, that the agreements were unit-priced contracts, at least by implication. Since the respondent was aware that, under the main contract, the site owner could vary the works, a term had to be implied that the appellant would be entitled to vary the works to be carried out by the respondent and that the price quoted would be varied downwards.
Held: The appeal was dismissed.
The judge had been right to hold that the subcontracts were all fixed-price contracts. However, that did not necessarily conclude matters in favour of the respondent.
Without some term allowing for variations under a fixed-price contract to perform works, the paying party was not normally entitled to vary the contract by reducing the work to be carried out. The builder would have a right to say that it had quoted a fixed price to perform certain work and that it was prepared to carry out all such work in order to receive its payment. If the paying party waived its right to have the complete works performed, the builder would still be entitled to its full price for what it had done and would not be in breach of contract for non-performance.
In the present case, even if a term were to be implied to allow the appellant to insist on some variation of the works where the site owner insisted, it did not follow that a term had to be implied under which the fixed price was to be altered with any variation. In the circumstances, a term relating to a reduction in price could not be implied.
The concept of substantial performance enabled a party with a fixed price to recover that price even though it might not have performed every item. The theory was that it should be allowed to recover the entire price with a reduction for what it had not performed, but that worked only if the builder was in breach of contract.
In the present case, the question of whether the appellant could seek a reduction in the quoted price came back to the terms of the contract. The appellant had failed to establish any express agreement that it could reduce the contract work and pay less if it did so. Even if there had been an implied term that the appellant could request variations to which the respondent was bound to agree, it was not necessary to imply a further term that the price would be reduced if the contact was substantially the same as the one for which quotations had been give.
Tina Asgarian (instructed by Hughes Paddison, of Cheltenham) appeared for the appellant; Jonathan Rushton (instructed by Jameson & Hill, of Hertford) appeared for the respondent.
Eileen O’Grady, barrister
