Variation clauses often allow work timing changes, but what if an employer hits the pause button with no start date in sight?

In Grain Communications Limited v Shepherd Groundworks Limited, the TCC found that an employer’s email instruction to postpone works without specifying a restart date was a valid exercise of its contractual right to instruct a variation – but noted the employer’s clear intention for the works to commence in the future.

What happened?

The parties entered into a framework agreement for various telecoms groundworks where Grain, the employer, could call off individual work packages through a work order.

The dispute concerned work order no. 11500. The day before the works were due to start, Grain emailed Shepherd saying – while Grain intended to continue with the work order – the work couldn’t start before the end of the year. Grain said they’d keep in touch regarding their programme.

Shepherd argued the open-ended postponement was a termination of the work order and claimed damages for mobilisation and loss of profit. The Adjudicator agreed: since the email didn’t say it was a “variation,” a reasonable recipient would interpret it as cancelling the work order.

Grain issued a Part 8 claim for the proper construction of the employer’s variation rights.

What did the Court decide?

Overturning the Adjudicator’s decision, HHJ Kelly ruled that:

• The work order allowed the employer to vary the “period” for performing works. This wording gave Grain the right to delay the work start date.
• Variation instructions are to be interpreted broadly, not “read strictly or pedantically.” Since Grain’s email stated its intention to continue with the work order, there was no cancellation but only a variation in the timeframe for carrying out the works.
• No implied terms would restrict Grain’s right to postpone the works as they would contradict the express terms of the contract. If the parties wanted to restrict the employer’s postponement rights, they should have included that in the contract.

What can we learn from this?

Don’t expect the Courts to rescue you from incomplete or imprecise contract drafting. While the Courts are willing to interpret variation instructions broadly and pragmatically, they will respect what is actually written in the contract and won’t try to “fix” a contract by adding terms the parties could have included themselves.

Ultimately, if you want to place constraints on allowable variations, you need to draft for it. The Court will not come to your rescue if your drafting falls short.

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This article contains information of general interest about current legal issues, but does not provide legal advice. It is prepared for the general information of our clients and other interested parties. This article should not be relied upon in any specific situation without appropriate legal advice. If you require legal advice on any of the issues raised in this article, please contact one of our specialist construction lawyers.

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