NO VARIATION IN CONTRACT

Northern Advocate, 10 May 1937, Page 5

NO VARIATION IN CONTRACT

Tenderer’s Incrieased Costs Claim

The Whangarei Hospital Board was asked to-day by its grocery contractor to vary the contract he had with, the board.

He said in a letter that recent legislation had caused manufacturers to increase costs of all • Dominion-made -goods, and. conditions overseas had reflecfbd considerably higher costs for imported goods. He made this request for adjustment, as no one could have forseen prices rising to their present level and that these increases had been caused through conditions beyond the control of manufacturers arid merchants. He suggested the price being raised only to the net wholesale cost to no profit whatever. Figures Quoted. He quoted the following figures:— TOlb sugar, wholesale price when contract Was taken, 13/8 net, present cost price 17/8, contract price to board, 14/-; 251bs oatmeal, 3/11, 6/8, 4/2; fine salt; 4/6, 6/3, 4/8; sago, Ifd lb, 1 2id, 2d; rice, 12/10 cwt, 16/6, 13/6; flour, 7fd lb, 9|d, 8d; golden syrup, 4|d tin, 6id, sd; blue, 9fd lb, 1/2, lid; prunes, 3id, s|d, 4d; raisins, 4id lb, 7d, sd; starch, sfd lb, 7id, 6Jd. The chairman, Mr. J. A. S. MacKay, said that nothing was provided for in the contract for any adjustments. If costs had gone down instead of up, he did not think the contractor would have agreed to an adjustment. ; Mr. F. Elliott: I do not agree. No doubt when he tendered the increases which have since come about were not contmplated. I think the circumstances are -exceptional and we should pay now what the goods cost > him. Generally speaking, it is an unheard of thing to ask for an adjustment, but such a position is not likely to occur again.

“Dangerous Precedent.”

. Mr. Elliott moved that the tenderer be paid what the goods cost him. , Mr. F. Higginson seconded the motion pro forma. Hb sympathised with the tenderer, but recognised that the granting of an adjustment would be a dangerous precedent. However, he would like to hear the matter discussed.

Mrs. J. Donaldson movd that the house committee’s recommendation be adopted. She said that a variation had never been made before, and she knew of one tenderer last year who was supplying meat cheaper than he could buy it, but he did not' ask for a rebate.

Mr. J. G. Barclay pointed out that the tenderer under consideration had tendered last year in September. He psoke of industrial legislation affecting the prices, but all this legislation had been passed before he submitted a price, and he must have known the effect of that. Among the articles he had mentioned, only two were produced locally—sugar and oatmeal. The others were imported'. Sugar was now-dropping in price. There had been no increase in the duty and railage costs on the imported goods and the increases in prices had been caused by world conditions.

Rise In Imported Goods.

No one knew that the prices of imported articles would rise as they had, and he thought the tenderer had a case there. The chairman said that the whole of the articles mentioned had been affected by present conditions. The tenderer should have foreseen that prices were bound to rise. If the board varied this contract, it would have to be prepared to vary every contract it had.

“We know of contractors who have lost money over contracts and we

have lost money ourselves through making contracts which were not good by the time the contract was lifted,’' the chairman added.

Mr. A. Clarke: I am in favour of holding to the contract- What object or advantage is there in making a contract if we are going to vary the terms?

Mr. Barclay said that the whole cost of goods had risen 17 per cent over all since 1933, but were still 17 per cent lower than they were in 1929, before the depression. Taking the price index figure in 1914 at 100, he said that the board’s contractors did not give the board the benefit when the prices dropped from 160 in 1929 to 126 in the depression. However, owing to the great rise in overseas costs he was supporting the motion.

Principle Involved.

Mr. W. J. Bell; The contractor does not mention any items upon which he is going to make a profit. The chairman; The whole principle of is involved in this.

Mr. Elliott: I am still of,the opinion that this case is not likely to occur again and we would not be establishing a precedent. The case should be treated on its merits.' Other tenderers’ pries were slightly above the present tenderer’s, but I do not think any of them contemplated a big rise in costs. I think that, under the circumstances, this man did not contemplate a substantial rise and he should not be asked o supply the hospital at a loss. Mr. Elliott said that there had been cases of dairy factories varying contracts with carriers due to increased costs.

The chairman said that a great deal of business was done in the farming community in forward buying and forward selling, but in cases where beasts were sold at a less price than they were delivered, he had never heard of an increase in price being asked for. Contractors realised in most cases that they had to stick to contracts. ' The amendment was carried.'