31 January 2012 Written by  Wondwossen Wakene

Revision of Contract

Unilateral Modification: The Contractor

The right to unilaterally modify the contract is not a privilege operative in favor of the contractor. In the strict sense our civil code does not provide such a right i.e. a right to unilaterally modify a contract to the contractor. Even under normal course of things, a contract can be varied only by a court of law (Art 1763). What we have under Art 3268 is not unilateral modification of the contract. Rather the contractual right extends only to requiring the revision of the contract. Even this right of requiring revision is conditional upon other issues mentioned under Art. 3286(1). Hence, the contractor should encounter material difficulties of an absolutely abnormal nature, unforeseeable at the time of the contract.

What makes the modification unilateral probably is the fact that the administrative authorities are placed in a situation they cannot question the validity of the request. If the conditions mentioned under 3286(1) are fulfilled, Art.3286 (2) obliges administrative authorities to bear part of the exceptional expenses. However, administrative authorities have one choice -preferring to cancel the contract.

If the difficulty is not that much material or of an abnormal nature i.e. if it simply compels the contractor to perform a supplementary work not mentioned in the contract, in this case he may initiate the work after having obtained a requisition order. However, if the supplementary work is very necessary in the absolute sense, and of an urgent nature, the contractor should initiate the work without a requisition order. In this case, administrative authorities will not have the chance of canceling the contract. They would rather simply compensate the contactor.

Example

The Ministry of Defense has entered in to a contract with a domestic construction company to construct a military complex which incidentally involves the residents of over twelve hundred military officers. After the completion of the significant portion of the complex, the contractor came across a silly still critical omission in the building- the complex has no stairs. Because the contract was a build- only contract, the design was made by another contractor to whom the contractor at hand has no legal relation. And it was in the design that the stairs were missing. Now the contractor wants to know your position as to the possibility of constructing the stairs as of self help. What will be your position?

Unilateral Modification: The administrative Authorities

This right of administrative authorities makes them special parties to a contractual arrangement. This is a prerogative in two senses.

  1. “During the currency of the contract… the administrative authorities may impose unilaterally upon the contractor changes in the original conditions of the contract” (Art 3283 (1). They may even order the contractor to perform works not even mentioned in the contract. There however reservations held by the law with this respect. Accordingly:

1.1.      the changes under Art.3283(1) may affect only the provisions which affect the arrangement of the public works,

1.2.      those changes under Art.3283(1) may not affect the financial position of the contractor,

1.3.      new works under Art.3284 involve payment of compensation and they are conditioned on the same

1.4.      new works may not imply imposing tasks which completely differ in terms of object from the work mentioned in the contract,

1.5.      new works may not dictate new ways of performing them,

1.6.      Unilateral revisions may entitle the contractor to cancel the contract “where the increase or reduction of the work required by the administrative authorities involves a variation of more than one-sixth of the cost mentioned in the contract.”

  1. The imposition by the administrative authorities is irrevocable even by an otherwise stipulation in a contract. The contracting parties may not agree to the effect that the administrative authority cannot unilaterally modify the contract.

Revision by a Court

Courts may vary a contract based on different considerations. For equity considerations variations may be made. On the other hand, courts are entitled to vary administrative contacts. This is an exception to the rule under Art 1764(1). Thus, a contract cannot be varied simply because it has become more onerous. The law holds “A contract shall remain in force notwithstanding that the conditions of its performance have changed and the obligations assumed by a party have become more onerous than he foresaw.” Furthermore, the law is explicit with regard to the limitations that we have against courts with relation to contracts. As such courts shall not make contracts for parties under the guise of variation. The effect of economic changes must be regulated by the parties and not by courts. However, under Art.1767 (1) an administrative contract may be varied even when it is made more onerous than before. But, the court may vary the contract only when the contract was made onerous because of an official decision. This “official decision” should not be any type of official decision. For sure, an official decision is a measure taken by a grant of compensation. Does this mean that the official decision may not entitle the court to vary the contract? See Article 1767 (2) with Art 3193 (1) and Art 1767 (1) with Art.3193 (1). It is wise to consider the reference Art. 1767(2) makes to Articles 3191-3193. These three articles further elaborate on the exception under Art.1767. Read the articles and discuss whether they return us back to the rule under Art.1764?

Last modified on Wednesday, 02 May 2012 13:05