Ensuring consistency in contract documentation

Barrister Rudi Klein considers a recent court judgment on inconsistencies in the contract paperwork.

The problem

It is often the case that contract documentation is put together in haphazard fashion. Documents are thrown together without any care or thought as to whether they all fit like a piece of a jigsaw. More often than not, the content of documents pulled together in this way is inconsistent or contradictory.

The dispute

A company called Clancy Docwra Ltd (Clancy) was invited by E.ON Energy Solutions Ltd (E.ON) to bid for the civil works associated with the installation of pipes for an underground heat network. The project was a residential development. Much of the work involved the excavation of trenches along various roads and pipework would be installed in the trenches. Tenderers were requested to “indicate the inclusions/exclusions for each type of work….”

Clancy attached an email to its bid that explained that certain types of work were not included in the price. These included hand-digging, diverting mains and services, disposal of contaminated materials and removal of obstructions in the trenches. After acceptance of Clancy’s bid, the email was subsequently included within the sub-contract documentation as a Numbered Document. The minutes of a post-tender review – which repeated these exclusions – were also included in the documentation as a Numbered Document.

E.ON instructed Clancy to excavate the road around the development. This was outside the types of work specified in Clancy’s email included within its bid. Clancy refused to carry out the instruction and sought a declaration from the court that E.ON had no right to issue the instruction.

The arguments

E.ON argued that it had every right to issue the instruction. In the main sub-contract documentation, the definition of the Sub-Contract Works was to be found in the Scope of Works document. This had made clear that Clancy had to carry out the works as specified in that documentation and they included all the civil works required in the installation of the pipework. Moreover, the contract conditions placed the risk of unforeseen ground conditions on Clancy. There was also an order of precedence clause in the sub-contract which stated that the terms of the sub-contract “trumped” other documents in the event of inconsistences. 

Clancy’s case was that “the Sub-Contract Works” were defined by the Numbered Documents. Therefore, the email sent with the bid and the post-tender review minutes had, in effect, modified what was in the sub-contract. This meant that Clancy was only obliged to carry out the works in a “clear and unrestricted corridor” using mechanical plant, without the need to divert mains and services and not having to remove or break out obstructions.

Decision of the court

The court held that the scope of the sub-contract works had been modified by Clancy’s email and the post-tender review minutes. Therefore, Clancy was able to claim against E.ON in respect of the work highlighted in the instruction to Clancy. E.ON had been undone by the terms of its own invitation to tender, which had encouraged prospective suppliers to indicate any exclusions limiting the scope of its works.

Lessons for Scaffolding Association member contractors

Scope of works disputes occur as regularly as clockwork. If scope is not addressed carefully enough, the consequences for a scaffolding company could be disastrous. 
Always check contract documentation for requirements or obligations relating to the scope of your work; they could be spread over a number of documents. Ensure that there is consistency throughout. If not, raise this with the other side before putting the proverbial pen to paper.