Cases - Parkinson v Commissioners of Works

Record details

Name

Parkinson v Commissioners of Works

Date

[1949]

Citation

2 KB 632

Keywords

Contracts - rates - extras ordered under the contract- claim for payment on a quantum meruit - agreed rate plus a fixed sum of profits - whether the contractor was entitled to be paid a reasonable remuneration or profit in respect of additional works carried out under the contract

Summary

The claimant contractors agreed with the defendant to erect an ordnance factory according to various specifications for the contract sum of £3,500,000. Under a contract term, the defendant had power, at their absolute discretion, to modify the extent and character of the work or to order alterations of or additions to the works. By a variation, the method of payment was to be ascertained on the basis of such net rates or prices as should be agreed upon between the architect and contractors, or failing agreement, should be fixed by arbitration. It was further agreed that the sum eventually to be paid to the contractors should not be less than actual cost to them, as defined, plus a net profit or remuneration of £150,000, and not more than actual cost plus a net profit of £300,000.

The defendant ordered work to be executed greatly in excess of the amount contemplated, although not different in character. The actual cost to the contractors was £6,683,056, which amount had been paid to the contractor along with the £300,000 maximum profit. The contractors claimed a net profit in excess of the £300,000 fixed by the contract. The Court held that the work which was contemplated at the time at which the deed of variation was executed was that which was to be executed under the original contract plus perhaps a further £500,000 worth of work. Under the contract as varied the contractors would not have been bound to continue making alterations and additions, if ordered, for years and years, without any extra payment by way of profit. That would have led to manifest absurdity and injustice. The claimant executed the additional work at the request of the defendant, and they were entitled to be paid a reasonable profit or remuneration in respect of it.