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Contractor could claim payment for extra work even though worksheets were not signed

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Legal news
calendar 29 March 2015
globus Denmark

A contractor had a just claim for payment for his extra work even though the owner had not signed the worksheets. This was decided by the Court of Arbitration which also found that the owner’s notification of a number of visible defects was given too late.

A contractor was to rebuild an owner’s property and did a lot of extra work in the process. Some of the worksheets for the extra work were not signed by the owner, and subsequently the parties disagreed on whether the contractor could claim payment for the extra work.

In addition, the owner claimed that the contractor’s work suffered from defects and eighteen months after the work was done, the owner gave notice of the defects. Therefore, the contractor filed a case against the owner at the Court of Arbitration.

The Court of Arbitration: Contractor could claim payment
The owner refused to pay for the extra work, partly because it was agreed in the contract that the contractor could only claim payment for extra work if the owner had signed the worksheets. This had also been emphasized at the site meetings.

However, the contractor claimed that he had a legitimate claim because the extra works were executed and had been necessary for the further work. Besides, the contractor had other evidence showing that the extra work had been agreed with the owner.

The Court of Arbitration sustained the contractor’s claim for payment for some of the extra works even though the worksheets were not signed. The Court of Arbitration emphasized that according to common practice a contractor is not prevented from claiming payment even though the worksheet has not been signed, but the contractor must prove that an agreement has been made and that the work is extra work.

The Court of Arbitration: Owner gave notice too late
The rebuilding was completed by the end of 2010. In the autumn of 2012, a survey was made and at the same time the owner notified the contractor of a number of visible defects. The contractor stated that the notice was given too late.

The parties had agreed that the General Conditions for the provision of works and supplies within building and engineering, AB 92, should be in force. According to these conditions the owner can only rely upon defects if he notify the contractor in writing within a reasonable period of time after the defects were or should have been observed.

The Court of Arbitration found that the owner had not notified the contractor within a reasonable period of time about the visible defects, which should have been discovered at the handing-over or within a reasonable period hereafter. The owner’s notice eighteen months later was too late.

IUNO’s opinion

In this case, the contractor could claim payment for extra work despite the missing signature, which was a condition according to the contract. The judgment illustrates that a signed worksheet is not a condition for claiming payment for extra work, but the contractor must prove that the extra work has been agreed.

IUNO recommends that contractors always make sure to have visible proof of extra work that has been agreed. In this case, the Court of Arbitration sustained some of the contractor’s claims, but the case could perhaps have been avoided if the worksheets had been signed during the process. In relation to the notice of defects, this should have been done in writing as well and as soon as possible.

[The Court of Arbitration, 16 July 2014, C-12660]

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