6. RECOVERY BY CONTRACTOR OF COSTS DUE TO INSTRUCTIONS OR DIRECTIONS. To try to define the practical scope of this, possibly the most important provision in these Conditions, it is necessary to consider separately the four ingredients specified for a claim by the contractor: (a) “instructions or directions”, and (b) “in pursuance of Clause 5 or sub-clause (1) of this Clause”, and (c)“which involve the Contractor in delay or disrupt his arrangements or methods of construction", (d) “so as to cause him to incur cost beyond that reasonably to have been foreseen by an experienced contractor at the time of tender”. None of these requirements is free from difficulty.
(a) To give the contractor a right to compensation the instruction or direction need not be in writing, or confirmed by the contractor in writing. Notice of any claim to extra payment is required under cl. 52 (4) but only “as soon as reasonably possible after the happening of the events giving rise to the claim”, which is the incurring of extra cost by the contractor, not the receipt of the instruction. Thus the engineer may receive notice of a claim for extra money founded on some misunderstanding or misinterpretation of an instruction or much larger than he expected, when it is too late for him to clarify or alter the instruction involved.
No distinction is intended between an instruction or direction and an order (“instructions including the ordering”—cl. 26 (2) (b) and see cl. 40 (1) and N. 11).
Possibly a requirement of the engineer authorised by the Conditions (e.g. cls. 14 (2), 16, 19 and 31, and see cls. 49 and 50) is distinct from an instruction or direction, and does not bring this sub-clause into effect (but see the description of what is “required” by the Engineer under cls. 49 (2) and 50 as “work ordered” in cl. 60 (5) (c)). For cl. 20 (2) refer to p. 100, N. 6.
The engineer may avoid a claim under this clause by avoiding instructions and directions. For example, if the specification says that the contractor may not use explosives without the engineer’s consent, then the engineer may prohibit explosives where necessary without having to instruct the contractor not to use them. The engineer also has a general wide power of refusing approval under sub-clause (2) of this clause. He will also have to avoid later “instructing” the contractor to stop work for which he has refused consent or approval, and instead merely point out that the method of working has not been approved.
It does not appear that in such a case the contractor is entitled to argue that the refusal of approval amounts to an instruction, or claim merely on the grounds that the engineer’s refusal of consent or approval was unreasonable, although he will have a claim if the engineer is not acting on correct principles in good faith (p. 416). The argument that cls. 51 and 52 may entitle the contractor to extra payment where refusal of approval leads to changes in temporary works is discussed on p. 170. N. 4. Whether positive action by the engineer following disapproval, under cls. 39 or 40, entitles the contractor to claim under this clause is discussed in the next part of this note. The engineer as a last resort may give a certificate for forfeiture under cl. 63 where his disapproval is being flouted. By persisting with doubtful temporary works or methods the contractor also takes the risk of liability for failure or damage to the temporary or permanent works or for injury or damage to the person or property of third parties (p. 52, N. 2).
It is a strange result that the engineer is in a position very much to restrict the scope of this clause in so far as he can direct the works by stating in the specification what the contractor is not to do without his consent, or even rely on cl. 13 (2), rather than positively instructing the contractor during the contract.
(b) If an instruction or direction from the engineer is provided for specifically in another clause of the Conditions, the instruction or direction normally would be said to be issued in pursuance of that clause, and not in pursuance of sub-cl. (1). This interpretation is strengthened by the specific statement in cl. 5 that an instruction under that clause is to be regarded as an instruction issued in accordance with cl. 13 and the separate reference here to an instruction in pursuance of cl. 5, both unnecessary if every instruction or direction by the engineer within the contract is to be deemed to be given “in pursuance of…sub-clause (1) of this Clause”. Again, in contrast to, e.g., cls., 26 (2) (b) and 48 (1), cl. 71 (2) (a) says that the engineer may “instruct the Contractor pursuant to Clause 13”.
The reference to variations (N. 11) and the words in brackets in cl. 12 (3), perhaps pointing the other way, increase the confusion.
If there is this distinction that the right to extra payment under this clause does not apply to instructions given under the terms of some other clause of the Conditions, the reason for it, if there is a reason, is presumably that the contractor can allow in his tender for the possibility of delay or disruption due to exercise of the engineer’s power to give instructions mentioned in other clauses of the contract, but not under the wide and general power in this clause. Unfortunately, the practical results of the distinction are distinctly odd. The contractor has a specific right to payment for disruption due to an instruction under cl. 5, but not to disruption due to an order under cls. 38 or 39 to remove or uncover work previously approved, or under cl. 36 if a test instructed causes delay or disruption. The contractor may have a claim due to exercise of any of the engineer’s powers arising only out of this cl. 13 (1), but what of instructions empowered by the specification ?
On the other hand, if the wider interpretation is intended, that the contractor has a remedy under this sub-clause for delay or disruption due to any instructions or directions whether mentioned elsewhere or not, it would have been easy to say so by leaving out “in pursuance” to and including the second “Clause” in the opening line of this sub-clause.
Unfortunately the arguments are so evenly balanced that it would be rash to give an opinion as to the solution of this conundrum, which will have to be found by the courts, or by an amendment to these Conditions.
(c) The draftsman must have searched hard and long to discover a word so wide and vague in meaning as “arrangements”. Arrangements by the contractor with his suppliers and sub-contractors, internal staff arrangements, arrangements with his labour—all appear to be included, however private, peculiar or unreasonable they may be and unrevealed to the engineer at the time the tender is accepted or when he gives his instruction or direction. But the engineer will have some help if he obtains as soon as possible, as he should, “a general description of the arrangements and methods of construction which the Contractor intends to adopt”, to which he is entitled under cl. 14, within 21 days after acceptance of the tender. Presumably the arrangements affected must relate to the works for which the claim is made, not to other contracts which the contractor happens to be carrying out at the same time.
(d) It is the cost which must be beyond that reasonably to have been foreseen, not the instruction or direction. An experienced contractor must be taken to foresee that the engineer will give him the necessary instruction to correct any breach of the contract by the contractor, but even in that case the strict wording of this clause produces the strange result that the contractor may recover if the cost of delay or disruption due to making the correction exceeds the costs which he would have reasonably foreseen. An example of the type of claim with which the engineer may be harassed is a situation where an instruction to make good failure to fence the site to safeguard the public has to be carried out immediately and disrupts the contractor’s arrangements or causes delay with other work. May the contractor claim that owing to the particular time at which he had to carry out the instruction, the costs of delay were “beyond that reasonably to have been foreseen by an experienced contractor at the time of tender”? h″
Note also the different and, it seems, less stringent wording compared with cl. 12—“beyond that reasonably to have been foreseen” instead of “could not reasonably have been foreseen”. If a substantial risk of extra cost is foreseeable it will not be recoverable under cl. 12 (p. 65); under this clause any cost beyond that which is the likely foreseeable cost appears to be recoverable.
This clause is more conducive to chaos than to good order in contract administration and management. At the least, clarification of the meaning and restriction of extra payments to instructions given or confirmed in writing are essential, and should be written into the special conditions under cl. 72. It is hoped that official amendments will be made soon.
