This is the final article upon the consequences of not having a signed and executed contract in place and how the courts address this problem.
A simple contract
The courts are willing to find that there has been a contract reached, depending on the facts of the case.
- The decision of Arcadis Consulting (UK) -v- AMEC (BSC) Limited [2016] EWHC 2509 is another in which the TCC decided that neither party’s terms and conditions were incorporated into the contract after another painstaking exercise by the court in analysing the exchanges by the parties of correspondence and documents that had the appearance of contractual terms and conditions.
- The court identified a letter that “had all the hallmarks of a letter of intent” and this constituted evidence of “a simple contract”.
- In addition the court said that performance by the parties “will often make it unrealistic to argue there was no intention to create legal relations and difficult to submit that a contract is void for vagueness or uncertainty”.
- The letter identified by the court was a letter of instruction and this together with the carrying out of the design work pursuant to that instruction evidenced a contract between the parties.
- No contract means no jurisdiction of the Adjudicator
- Even in the enforcement of an Adjudicator’s decision by way of summary judgment the TCC has concluded that there was no contract made between the parties and as consequence they have ruled that the Adjudicator had no jurisdiction to Adjudicate upon a dispute. As a result of this conclusion the court has declined uphold and enforce the Adjudicator’s decision.
- In Dacy Building Services -v- IDM Properties LLP [2016] EWHC 3007 the Technology and Construction Court the Defendant IDM defended the enforcement of the Adjudicator’s decision by way of summary judgment on the grounds that it had a realistic prospect of successfully defending the claim because there was no contract between the parties.
- If there was no contract this would mean that the Adjudicator had no jurisdiction to adjudicate under Section 108(1) of the Housing Grants Construction and Regeneration Act 1996 as amended. As a result of an amendment oral contracts fall within the ambit of the Act. In this case the Claimant had argued that the contract was made orally.
- Whilst the court recognised the case of Spartafield Limited -v- Penten Group [2016] EWHC 2295 decided that the Adjudicator has the responsibility to grapple with the manner in which the contract has been made Mrs Justice Gefford made the point that Spartafield -v- Penton Group had nothing to say for the circumstances where the Adjudicator has not had jurisdiction reserved to him on whether or not a contract has been made at all.
- In those circumstances the court can then investigate whether or not a contract has been concluded. On the facts of this case the court could not find who the Claimant entered into a contract with and for this reason the Defendant had a realistic prospect of success in defending the claim and therefore the application by the Claimant for summary judgment and enforcement of the Adjudicator’s decision failed.
- What is the solution to avoid the sorts of court decisions made against you in the event of disputes about what was agreed or not agreed at the time of the transaction? The only safe solution to avoid these pitfalls is to employ lawyers at the time the deal is being negotiated to make sure your business is protected against the unintended consequences of not having a written contract in place or of having a contract on terms that have not been properly agreed.
