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Scope of works: when does it end? A cautionary tale in knowing your contractual responsibilities

Briefing
14 January 2025
8 MIN READ
2 AUTHORS

What does it mean to accept full design and build responsibility?

If a contractor disagrees with the employer’s interpretation, can it terminate the contract? In the recent case of BNP Paribas Depositary Services Ltd & Anor v Briggs & Forrester Engineering Services Ltd [2024] EWHC 2903 (TCC), the court concluded that the contractor’s scope included activities not expressly provided for in the scope, but which were necessary to complete the works. Consequently, the contractor’s purported termination was a repudiatory breach of the Contract.

This case provides a valuable insight into the court’s approach to the interpretation of complex construction contracts and serves as a useful reminder of the importance of clearly defining the scope of works. It also highlights the risks associated with termination where the basis of the termination is disputed.

Background

BNP Paribas Depositary Services Ltd (BNP) engaged Briggs & Forrester Engineering Services Ltd (Briggs) under an amended form of the JCT 2016 Design and Build Contract to remove an existing stair pressurisation system and install an upgraded system in a 30-storey office building (Contract).

The parties disputed the precise scope, particularly obligations regarding asbestos removal.

It was common ground that there was asbestos in some relevant parts of the building and Briggs’s scope included at least some asbestos removal works. Specifically, the Contract included two documents that identified asbestos in certain areas – a quotation from an asbestos removal subcontractor (the Quotation), and a survey which informed the Quotation (the Survey).

When additional asbestos was identified outside the areas highlighted in the Quotation and Survey, the parties disagreed on whether Briggs’s original scope included addressing this. In particular, did Briggs have to perform certain further activities (Further Activities), namely:

  • Undertake further surveys to identify the presence of asbestos in the areas where it was to undertake works; and,
  • If it found asbestos in those areas, undertake all works necessary to remove the asbestos.1

The Contract did not expressly identify the Further Activities as part of Briggs’s scope.

Briggs refused to perform the Further Activities without a variation instruction. BNP did not issue any such instruction, arguing that the works were implicitly part of Briggs’s original scope.

This led to an impasse of over a year, during which the works ground to a halt. Briggs suspended its works, then attempted to terminate, claiming that BNP’s failure to issue variation instructions was preventing it from carrying out its works. BNP contended Briggs was not entitled to terminate. It therefore treated the termination notice as a repudiatory breach which it accepted thereby terminating the Contract and giving BNP a claim against Briggs.

The Court had to decide whether Briggs was entitled to terminate. Spoiler alert – Briggs was not because the Further Activities formed part of its original scope. It had to perform them and could not suspend pending a variation instruction.

Decision

The scope of Briggs’s obligations

The Court concluded that the Contract made it “plain beyond serious argument” that Briggs’s design and build obligations included performing the Further Activities.
Briggs was responsible for the complete delivery of the stair pressurisation system, including any asbestos removal works necessary to achieve this.

There were several key features of the Contract wording that confirmed this, including:

  1. Briggs accepted full responsibility to deliver the Employer’s Requirements (essentially the specification) which defined the scope of works widely.
  2. In particular, the Employer’s Requirements expressly stated that the scope of the asbestos removal works:

“included, but was not limited to, the removal of all [the asbestos] identified”

[emphasis added]

Those qualifying words made it clear that Briggs’s asbestos removal obligations were not to be read restrictively by reference to the Quotation or the Survey.

  1. The Employer’s Requirements also provided that Briggs’s scope included “all the incidental sundry components necessary for the complete execution of the work”.
  2. Beyond the Employer’s Requirements, the Contract also clearly allocated the risk of site conditions to Briggs, including “any risk, contingencies and all other circumstances which may influence or effect the execution of the works”. This plainly included the presence of asbestos.
  3. The Contract repeatedly stated that Briggs could not rely on any information provided by BNP. This included the Quotation and the Survey.

Termination

Given the position on Briggs’s scope, the Court found that it was an “inevitable conclusion” that the cause of the suspension was not any impediment, prevention or default by BNP, but rather Briggs’s own default by failing to undertake the Further Activities, contrary to its contractual obligations.

Briggs was not entitled to issue the suspension notice or to terminate the Contract, and had thereby repudiated the Contract.

Comment

This decision provides vital guidance to parties to construction contracts on two matters: scope and termination.

Scope

The decision confirms that courts will, in certain cases, enforce broadly drafted terms. These may include:

  • Terms assigning responsibility to a contractor for the entirety of the design and construction of works, including items not expressly spelled out in the scope.
  • Terms that push the risk of information provided by the employer onto the contractor.
  • Terms allocating full site condition risk to contractors.

The decision underscores the importance of contractors considering during contract negotiation the practical viability of such terms – can they accept these kinds of risks?

This is particularly relevant on complex projects and projects where there is a higher risk of unforeseen conditions or conditions that may need specific attention, such as those projects undertaken offshore, on brownfield sites or in old buildings.

If contractors have concerns whether information made available during tender is reliable or comprehensive, they should address this via their own due diligence, amendments to the contract provisions and/ or other mitigation measures (such as pricing).

Likewise, they should carefully consider the implications of accepting broad obligations to deliver a scope. This may include considerations like: What sort of additional works could this reasonably entail? Are there specific exclusions? How does this reconcile with the variations regime and other contract obligations?

Clearly defined terms can clarify matters significantly, including responsibility for associated time and cost consequences. As a team, we have seen parties adopt novel risk sharing procedures and seen the potential pitfalls with such approaches.

Termination

As to termination, parties should tread carefully. Attempting to terminate when there is no entitlement to do so can backfire, with the terminating party suddenly defending a claim for wrongful termination. No party wants to go from pursuer to pursued. A fundamental issue when deciding the strategy to address this is whether there is an entitlement to terminate.

Our team has extensive experience advising parties on disputes regarding scope or risk allocation or who are seeking to exit problem contracts. We have experience of advising parties on termination entitlement and have seen clients take differing commercial decisions based on the strength of that potential entitlement.

Scarlett Morgan assisted with writing this article.

Footnotes

1 There was also a dispute as to Brigg’s obligations relating to structural reinforcement works. This is not discussed here for brevity, as it raises the same issues of principle.