By Robert Ribeiro
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Extra resources for Engineering Contracts
Normally, the only time that a contract will be rectified on the ground of an error affecting the price is if the two parties have already reached agreement, and subsequently the document setting out the agreement alters the terms, and this is known to one party but unknown to the other. So in the case of Roberts & Co. 42 Priceand payment Ltd v. Leicestershire County Council (1961), a tender for works stated that the period for the completion of the works was eighteen months. However, the contract was drawn up by the other party, and it gave a period of thirty months for the completion of the work.
2 Alternative method of deduction of retention money and creation of a retention fund the One way in which a retention fund may be created is simply by providing for stage payments, and by arranging that the last stage payment will be retained by the employer, after the completion and taking over of the works, until a specific period of time has elapsed. The period of time may be a few months, or as long as two or three years, again depending upon what has been agreed. 1. An alternative and rather more complicated way of creating a retention fund is for the employer to agree stage payments with the contractor, and also to agree that as each stage payment is due, a fixed percentage of the stage payment that is due will be held back as retention money.
In the event there was a 'change order' which required the equipment to be of a specification for which the sum required by the subcontractor would be in excess of $2 000 000. The main contractor asked for a change in terms of payment, which was refused by the employer. The Supreme Court of Canada held that the change order went beyond what was contemplated by the parties, and a terms would be implied that this fell outside the definition of a 'change', and the employer would not be entitled to call for the alteration to the specification without being prepared to agree a different sum in respect of overheads and profit.