Sydenhams (Timber Engineering) Ltd, the claimant timber company, made a claim in respect of unpaid design and construction work it carried out on a hotel in Bournemouth for CHG Holdings Ltd, the defendant developer. CHG contended that there was never a direct contract between it and Sydenhams and that Sydenhams was in fact a subcontractor to the main contractor, Rybarn Ltd.

At CHG’s request, Sydenhams had provided a quote for the design, supply and erection of timber frames and CHG signed the order for manufacture. There was no main contract in place between Rybarn and CHG until some months later. Payment for the works was then discussed between all three parties, and it was agreed that some of the works would be paid for by CHG in instalments through Rybarn. Rybarn was in financial difficulty and failed to pay Sydenhams, so Sydenhams suspended work. CHG then paid Sydenhams directly, in order to get Sydenhams back on site and agreed to continue to do so until the works were completed. Sydenhams duly completed the work and CHG signed further orders for manufacture. Sydenhams was never paid. Rybarn went into administration and was not in a position to make any payments.

CHG argued that it was Rybarn, not themselves who were liable to Sydenhams. In any event, CHG argued that the original order for manufacture was nothing more than a letter of intent and was not contractually binding.

Whether there was a direct contract between CHG and Sydenhams which gave rise to a liability on the part of CHG to pay the sum in dispute to Sydenhams.