2022-03-25（192）Engineering law and the ICE Contracts

Since the engineer normally has no implied authority to accept any tender, decisions at the tender stage on a mistake by a tenderer must be made by or with the specific authority of the employer.

Although it may fix the employer with notice of mistakes, the engineer should even with a pure lump sum contract go through the rates in detail—see in particular N. 7 below.

(b) It is generally accepted that in a measure and value contract such as the I.C.E. 5th edition, the contract price is on final measurement recalculated from the individual rates without any adjustment, so that errors in extension, totalling or carrying forward of rates have no effect. It is therefore particularly necessary for the engineer to check the individual rates. 

Mistakes in the rates themselves not found by or on behalf of the employer before acceptance of the tender bind the contractor for all work done, including variations unless they fall outside the variation clause in the original contract (pp. 169, 172). In this case it is obviously the individual rates and prices in the bill of quantities which are the contractor’s offer as to price and there is no total price in the tender, so that there is no doubt that if the employer accepts a tender as it stands after he or the engineer has discovered a mistake in a rate, the mistake will be rectified. But as we have seen, that is so only if the employer or engineer realises that the contractor did not put in the rate he intended, not merely that a particular rate is uneconomic or the tender unbalanced (N. 7), so that this rule will generally only apply to obvious clerical errors or where the rate makes the whole bid so low that it is obvious there has been a mistake.

6. INTENTIONAL DEDUCTIONS FROM THE TOTAL OF THE BILL. In a measure and value contract, since the works are remeasured on completion and no distinction is made between the original work and extras, it is suggested that where the contractor in his bill of quantities makes a deduction from the total, the natural interpretation is that it is a short way of reducing all his rates proportionately. So that if the total of the bill is £1,000 and the contractor makes a reduction to “say £950” and tenders at that figure, he must be taken to have reduced all his rates by 5 % for all work, including extras. That is, unless he makes it clear that he is simply making a bulk reduction limited to £50 whatever the final contract price may be. For example, sections 5.26 and 6 of the C.E.S.M.M. (p. 231) require a bill of quantities prepared in accordance with the method to include an adjustment item in the grand summary, against which the tenderer may insert “a lump sum addition or deduction”. The method clarifies the implications of the lump sum nature of the adjustment.