Wednesday, April 8, 2009

Case law and whether a developer is entitled to extra payments for additional work on a fixed price contract?

A developer signed an agreement with an agreed price for the development and sale of a 9 house scheme. The purchaser is a council. They requested additional items that were not shown on the original plans/specifications and now say that they are not paying for any additional work as it was an all in price? Any thoughts and preferably any case law out there, thanks.


If the "extra" work is not detailed in the original contract then it should be charged and paid for.

However, it would depend on how the contract is worded. Councils, in fact loads of companies, are notorious for changing specifications and claiming that it was part of the original contract.

I can't think of any actual case law, but there are loads of examples of this happening with government IT contracts specifically.

It's an all-in price for the work set out in the original contract (FPC).

Additional work is a new contract/agreement and it's upon that, not the original fixed-price contract which gives the developer the right to ask for the money.

For the additional work to come within the initial FPC, the FPC terms would need to be expressly varied. I expect the terms of the FPC required any variation to be in writing?

if it's additional work clearly not included in the initial contract, then you definitely have a case to sue the council. just make sure that the initial contract didn't have any 'all encompassing" clauses that cover additional items in general which might come up in the course of the project.

I believe you have a good case on which to sue the council. The requested extra work not in the original plan. You have the original plans to back up your case. I think they are just trying to get something for free.

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