Claims » Variations

Omission of Contract Work — Limits on Employer’s Right to Omit

The right to vary includes the right to omit. That is clear. What is less clear — and frequently disputed — is whether the right is subject to any limit. The answer, established in case law across multiple jurisdictions, is yes.

4 min read · Updated 21/04/2026

In this article

1. When the omission becomes a breach
2. The legal principle — Carr v Berriman
3. Practical application and the loss-of-profit claim
4. Risks and mitigation
5. Conclusion

Key takeaway

An omission made to transfer work to another contractor is not a legitimate exercise of the variation clause. Where this occurs, the contractor has a well-established entitlement to recover the profit that would have been earned. Employers who ignore this principle risk a breach-of-contract claim that exceeds the expected saving from the transfer.

1. When the omission becomes a breach

The problem arises when an employer — for reasons of commercial preference, programme, or cost — decides to remove a significant package of work from the main contractor’s scope and award it to a different contractor. From the employer’s perspective, this looks like a variation: an omission, which is expressly permitted by the contract. From the contractor’s perspective, it is a deprivation of a bargained-for opportunity to earn profit on a specific package of work, without any legitimate basis in the variation clause.

The issue is most acute in large UAE contracts where specific packages — mechanical and electrical services, fit-out, landscaping, façade — are individually significant. The profit on these packages may represent a substantial portion of the contractor’s expected project margin, and their loss cannot simply be absorbed as a routine contract adjustment.

2. The legal principle — Carr v Berriman

The principle has been followed and applied across common law jurisdictions. In Commissioner for Main Roads v Reed & Stuart Pty Ltd [1974], and in numerous English arbitration and court decisions, the same analysis has been applied: the variation clause authorises genuine omissions — those made for programme, design change, or economy in the employer’s own interest — but not pretextual omissions designed to deprive the contractor of bargained-for work.

3. Practical application and the loss-of-profit claim

For contractors

When work is omitted from your scope, ascertain whether it is being given to another party. If so, this may lie outside the legitimate scope of the variation clause. Preserve evidence of how the omitted work was subsequently procured and by whom — procurement correspondence, site access records, subsequent contractor identification on site. Quantify the loss of profit by reference to the profit margin built into your contract rates.

For employers

If you wish to transfer a package of work to another contractor, recognise that this may expose you to a claim for the original contractor’s loss of profit. The safer approach is to agree a separate commercial settlement for the package transfer rather than relying on the omission variation power. The commercial discount of a negotiated settlement is typically less than the damages exposure on a contested claim.

4. Risks and mitigation

For employers, the risk of omitting work for transfer to another contractor without recognising the original contractor’s entitlement to lost profit is a damages claim for breach of contract that may exceed the expected saving from the transfer — and that, on UAE projects, is pursued at DIAC with the usual costs and delay implications. For contractors, the risk of failing to assert the claim promptly, or of failing to document the profit element in the rates, is a weakened negotiating position even where the principle is clearly in their favour.

Mitigation for employers: do not omit work from the contractor’s scope for commercial-preference reasons without first agreeing the financial settlement. For contractors: include a clear profit margin in all contract rates and maintain documentation showing how those rates were built up — this is the evidential basis for any future loss-of-profit claim.

5. Conclusion

The right to omit is real, but it has limits. Work cannot be removed from a contractor’s scope simply to give it to a cheaper or preferred alternative. Where it is, the contractor has a well-established entitlement to recover the lost profit — and employers who ignore this principle routinely end up with a more expensive outcome than the one they were trying to engineer.

Has a major package been removed from your scope?

Where an omission transfers work to another contractor, the resulting loss-of-profit claim is evidentially specific but legally well-established. We advise UAE contractors on when to pursue, and how to frame, such claims.

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