The recent case of Goldsworthy & Others v Harrison & Anr [2016] EWHC 1589 (TCC) is another reminder to ensure certainty as to contract terms before commencing work.

Summary of the facts

This was an application to Court by the contractor (Goldsworthy) against the homeowner client (Harrison) to enforce an Adjudication Award. The Adjudicator had awarded Goldsworthy £72,000 in interim payments under the building contract.

At court, Harrison argued that the adjudicator did not have jurisdiction to make the award as there was no contractual term to adjudicate (the statutory right to adjudicate does not apply to residential occupiers).

Goldsworthy’s position was that the JCT Minor Works 2011 applies which contains a right to adjudicate.

Harrison argued that the JCT Minor Works had not been entered into because they had not reached final agreement on the terms and the contract had not been signed.

Decision

In considering the case of RTS Flexible Systems Lrd v Molkerei Alois Muller GmbH & Co KG [2010] UKSC 14, the Judge noted the following:

- Whether a binding contract exists between parties depends not on the subjective state of mind of the parties but on words/conduct between the parties, whether all essential terms required by law had been agreed and whether that led to an intention to create legal relations.

- It is possible for parties to have agreed to be bound by a contract even though other important matters are yet to be agreed.

- Performance may bring a contract into existence, as opposed to offer and acceptance.

As the application was for summary judgment on Goldsworthy’s part, and not a trial of the contract issue, the Judge could not give a decision on whether the parties had or had not agreed to enter into the JCT Minor Works contract. The Judge did not grant summary judgement for Goldsworthy for enforcement of the adjudicator’s decision, meaning the matter would have to proceed through the Courts.

Conclusion

Even though a decision was not made in respect of the existence and terms of the contract between the parties, this case highlights useful guidance on when a contract may come into existence between parties (i.e. it is not a simple case of whether or not a contract has been signed).

It is a reminder to make sure that all contract documents are completed and properly executed.

There are a whole raft of works which are excluded from adjudication unless the contract expressly allows adjudication. For example, without an express clause, adjudication is not possible:

a) for works outside England (although adjudication provisions do exist for Ireland, Scotland and Wales).

b) off shore installations or installations not forming part of the land to which they are attached.

c) tunnelling, boring or construction of underground works for extracting minerals.

d) certain works related to nuclear processing, power generation, water/effluent treatment.

e) certain works related to chemical, pharmaceutical, oil, steel or food and drink.

f) supply contracts unless installation is included.