COMMISSIONER FOR MAIN ROADS V REED & STEWART PTY LTD (1974) 131 CLR 378
High Court of Australia – 29 November 1974
The Commissioner engaged Reed and Stewart to build part of an expressway in Sydney. The contract provided that Reed and Stewart were to take topsoil from the site and lay it around embankments. It was estimated that there would be sufficient top soil on the site to allow Reed and Stewart to layer the embankments but the contract did provide that if there was a shortage of topsoil the contractor would be paid a good rate for each unit of topsoil.
The Commissioner’s engineer, acting as contract manager, realised that the estimate of available topsoil was short and that the Commissioner would incur extra payments if it exercised its contractual power to order Reed and Stuart to supply extra topsoil to the site. He therefore arranged for another contractor to supply the topsoil.
Reed and Stewart sued for breach of contract.
Did the contract clause, which allowed the engineer to take work of the contractor also allow the engineer to give that work to another party? Did the contract clause, which provided that the engineer could direct the contractor to supply additional topsoil give the engineer an option to give that work to another party?