Colas Ltd & Ors v Transport for London

Under a commercial contract, pricing provisions must be construed by considering their language, the contract as a whole, the relevant background and commercial consequences. Where rates are stated to be the full inclusive value of work, they include contractual and regulatory restrictions unless the agreement clearly provides otherwise. Specific uplifts may address identified categories of enhanced restriction, but they do not prevent other restrictions from falling within the general inclusive pricing provision.

The claimants, a highways-maintenance joint venture, sought declarations concerning the proper pricing of task works under a framework agreement and call-off contract with Transport for London. They contended that restrictive working conditions imposed through permits under the London Permit Scheme were outside the Schedule of Rates and entitled them to submit prices outside that schedule. Transport for London contended that the rates and percentage uplifts were comprehensive and included compliance with permit conditions. The central issue was the contractual allocation of risk for permit restrictions.

1. Contractual interpretation. The court applied the unitary approach summarised in Wood v Capital Insurance Services Ltd [2017] UKSC 24. The objective meaning of the contract was to be determined from its language, read in the context of the agreement as a whole and tested against commercial consequences.
2. Contractual scheme. Clause 138AR identified normal working hours and certain defined restrictions, while clause 138AR.5 recognised further restrictions imposed through permits. Clauses 107SR and 155AR required compliance with those permits, which took precedence over normal working hours.
3. Pricing effect. The Schedule of Rates was expressly stated to be the full inclusive value of the work. Paragraph 1.3 included compliance with the Traffic Management Act 2004, associated permits, and limitations and constraints on the use of the work location. The reference to other restrictions in paragraph 1.3 included restrictions imposed through permit conditions.
4. The specified percentage uplifts addressed identified enhanced categories, including certain strategic routes, traffic-sensitive streets and out-of-hours work. They did not displace the general rule that other permit restrictions were included in the rates. The commercial uncertainty of those restrictions was a pricing risk assumed by the parties through the tendered rates.
5. The claimants’ declarations were refused. The court granted Transport for London’s declaration that the claimants were not entitled to submit prices outside the Price List merely because a task was subject to restrictions under clauses 107AR, 138AR and 155AR.