The ordinary way that contracts are entered into provides a natural breeding ground for disputes, as vividly demonstrated by this recent Appeal Court case
“I unhesitatingly prefer the submissions of counsel for the claimant to those of counsel for the defendant,” said the learned High Court judge in the case of Bryan & Langley Ltd vs Martin Rodney Boston. Well now, there’s a man who’s pretty certain about life in that court that day. He gave short shrift to the defendant’s case. Tail between legs, you would have thought. Amen, you might have said. But no, the defendant was not cowed into silence. He went to three judges in the Court of Appeal. They unhesitatingly reversed the result.
Bryan & Langley is an adjudication case; I first told you about it on 10 December last year. One of the points was whether the parties had agreed a contract containing the JCT98 standard form. Mr Boston was spending £500,000 on his posh home in Cavendish Street, London W1. The main contractor, Bryan & Langley, complained of an underpayment. An adjudicator decided the dispute but Mr Boston argued that JCT98 was not included in the contract and thus no adjudication could apply, since he was a mere consumer. The first instant judge agreed.
Let me tell you why the events are so interesting: because what happened here happens time without number, and causes trouble galore. Two parties begin the bidding process. Out comes the enquiry, the bid bumf. Then the builder prices the bumf or part of it. Then the potential customer decides he can’t afford it. So there is a revised price bid. Then there’s a sort of tribal dance of ducking and diving in meetings and memos and soon nobody can remember quite what happened or where they are. Is it all done? Or are we still sorting out, still negotiating? In the meantime someone says: “Oh, let’s make a start on site.”
Mr Boston’s architect wrote to the builder to say all was well to proceed, since the tender and subsequent amendments were agreed at £437k. Then he said: “The contract will be executed under JCT98” and then he said: “Should the project not proceed your reasonable costs will be recoverable from the client.” In due course the builder signed the JCT but the client didn’t. So, was the JCT98 in the contract if it was never executed?
The first judge decided to accept the argument that this letter “looked forward to the making of another contract” after the temporary agreement. It followed that the non-signing of the JCT didn’t bring in the contract form.
But the Court of Appeal took things slowly. It said: the parties always intended JCT98 to be in the bargain. By the time of the letter there was nothing of substance to be agreed. The fact that a floor finish was yet to be agreed was minor. It would be treated as a variation. So all the terms of the contract were agreed.
Be that as it may, there still has to be unequivocal acceptance. There was. It happened when the builder embarked on the project. The letter saying “should the project not proceed then costs only would be payable” did not take away an immediate contractual commitment on the JCT98 terms. In any case, the contract proceeded and was built, so the reserved position of the employer never arose. In short, the tribal dancing was all done, and each party signalled to the other a willingness to contract on JCT98 and the adjudicator’s authority to adjudicate was in place.
One other point: Mr Boston argued that even if the JCT98 was in place, he was still outside the adjudication rules because he was “a consumer”. Consumers are protected by the unfair contract terms regulations of 1999. Not this time, said the first instant judge and so did the Court of Appeal. Those regulations ask if it is unfair to lock this consumer into adjudication by means of a standard form. Some previous cases say no, some yes. In this case there was no unfairness. The reason was that Mr Boston had engaged the services of a professional team to prepare the contractual bumf and there was no lack of good faith by the builder. It would be repugnant to common sense to reject these terms. That all sounds okay until the phrase “common sense” was uttered. That just gave a whiff, a sense that these unfair contract terms regulations and JCT98 and adjudication could just end up in the House of Lords. Then we’d hear what another five judges have to say.
Let me tell you why the events are so interesting: because what happened here happens time without number, and causes trouble galore
Tony Bingham is a barrister and arbitrator