Certainty is a great thing, but construction projects are often carried out without an executed contract in place. If a dispute ends up in legal proceedings, the courts may have to analyse what the parties have said, which may be unclear, making the best sense of it that they can.
In Goldsworthy v Harrison(1) builders carried out works for the Harrisons, who were residential occupiers. The Harrisons envisaged using the Joint Contracts Tribunal minor works contract form, but a contract using that form was only sent out for signature over a year after the works had started. The builders declined to sign but subsequently went to adjudication and obtained an award on the basis that the minor works form, and therefore adjudication, applied. Adjudication would not otherwise have applied to the Harrisons because they were residential occupiers. The builders then asked the court to enforce the award, but the Harrisons claimed that the minor works form did not apply.
The court noted that whether there is a binding contract – and, if so, its terms – depends on what the parties have agreed. This requires consideration of communications between them, by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed all of the terms which they or the law regards as essential to create a contract. It is possible that they might agree to be contractually bound by agreed terms even though they defer other important matters to be agreed later and contracts may come into existence, not as a result of offer and acceptance, but rather during and as a result of performance. It can consequently be appropriate to look at the parties' conduct in order to determine whether and how a contract was made.
In the circumstances, without fuller evidence from both sides, the judge found it impossible to say that there was no triable issue as to whether the parties had agreed, with contractual effect, to the application of the minor works terms (with appropriate gaps). Therefore, the application to enforce the adjudicator's award by summary judgment failed.
For further information on this topic please contact Chris Fellowes at Mayer Brown International LLP by telephone (+44 20 3130 3000) or email (firstname.lastname@example.org). The Mayer Brown International LLP website can be accessed at www.mayerbrown.com.
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