Qatar: completion dates and variation clauses need careful thought

Out-Law Analysis | 12 May 2020 | 2:24 pm | 3 min. read

Construction industry contractors in Qatar could be left without payment if they are not careful to check how instructions issued to them after works have been completed will be paid for.

The risk arises if the fresh instructions constitute a variation to works deemed to have been completed, and will depend on what the contract between employers and contractors provides. The position on the issue is different in Qatar to under English law.

Variation clauses and the law

In Qatar, the 'variation' clause is the one most contractors gravitate to. It usually gives them entitlement to additional time and cost where they've been instructed to perform works which fall outside of the original scope and provides an opportunity to increase the overall profit made on the project.

In addition, contractors are obliged to achieve completion of the works but often there's disagreement between contractors and employers as to when completion was achieved. Typically the contractor takes the position that it occurred earlier than when the employer considers it did, and occasionally the contractor continues to receive instructions to perform variations after the completion of the works.

Completion triggers matters such as the defect liability period starting, retentions being released, bank guarantees becoming expired, different insurance policies applying – or lapsing – and, importantly for the contractor, the liquidated damages provision ceasing to be a risk.

However, in their discussions with employers around having completion certified, contractors must remember the impact completion has on the variation mechanism.

The English law positon is that the variations mechanism ceases to operate after completion. 

The position is summarised neatly in the 10th edition of Keating on Construction Contracts, a prominent source of knowledge on construction contracts, where the law is shaped predominantly by the 2006 case of TFW Printers Ltd v Interserve Project Services Ltd. The extract from the book states: "Variations after practical completion. It is submitted that the architect cannot issue instructions requiring a variation after practical completion, so that if thereafter the employer wishes them to be executed, they should be the subject of a separate agreement."

That principle outlined in Keating is not expressly included in Qatar's civil code. However, the general spirit of Chapter 13 of the civil code is that the contractor's obligation is limited to executing the work agreed upon, and once it's done that, the contractor has no further obligations. 

Two examples of this can be seen in Articles 693 and 696.1 of the civil code:

  • Article 693 provides that once the contractor has completed the work and notified the employer of this, the employer should take delivery of it, but if the employer fails to do so without good reason, the work will be deemed delivered;
  • Article 696.1 provides that when the employer has taken delivery of the work, the contractor’s liability ends except with regard to latent defects

The position in Qatar seems to indicate, generally speaking, that variations instructed post-completion are not to be treated as part of the original contract.

However, these provisions are not mandatory – specific contract terms agreed by the parties will be binding under Article 171.1 of the civil code and the principle of 'freedom of contract'.

Parties can therefore agree what the consequence of completion has on the variation mechanism. In each case, the contract must be carefully reviewed. In particular, the definition of "variation" should be scrutinised. 

Review contracts and get clarity

If, as in most construction contracts, a variation is defined to mean a change to the "works", arguably, once those works are complete and effectively delivered, there can be no variation – even if the defect liability period has not lapsed. In cases where there is no specific wording in the contract providing otherwise, instructions received post-completion in these circumstances should be treated as a separate agreement and priced accordingly.

Under Qatar law, if no price is agreed, the contractor should be paid on the basis of Article 699 of the civil code. It states that to determine the price, reference should be made to the equivalent value of the work at the time of the contract as well as the value of materials supplied by the contractor that are required for the work.

The core message then is: be careful identifying the correct completion date and once you have, check your contract carefully and be clear on how instructions issued post-completion will be paid for if they constitute variations to the works.