This question is as perennial as the evergreens and is of interest especially to Contractors but equally important to the Architect / Engineer / Supervision Offer as they are the party that will assess a claim for loss and / or expense.
For us to provide an answer to whether loss and / or expense can form part of a variation item, first let us look at what is meant by loss and /or expense. In the English case of Hadley v Baxendale (1954) 9 Ex341, it was held that damages or loss and expense are that which arose naturally and in the ordinary course of things. Another way of looking at it is that the term loss and expense means the sums recoverable are equivalent to damages at common law. Simply this would mean that the Contractor can claim for loss and / or expense suffered if the work is disrupted or delayed, subject to those caused by the Contractor themselves and the specific causes or events as contained in the contract entered into. As it is equivalent to damages at common law, a contractor may choose to claim under the relevant provision in the contract or bring legal action for damages resulting from the breach of contract in court. Loss and / or expense items may include the following :
• Additional Preliminaries
• Disruption costs
• Overheads
• Profit
• Finance charges
• Other additional costs not reimbursable under the contract.
