Just about any legal issue depends to some extent on the definition of terms – and definitions depend on who wins an argument in front of a judge. Take the vexed and exasperating question of ‘contracts in writing’
They both came to court waving. Bennett Electrical waved its adjudicator’s award at Management Solutions & Professional Consultants (MSP). And MSP waved its award at Bennett. The judge waved back. Bennett argued that the MSP award was invalid because of the rule that no adjudication is available if the contract is not in writing. But it was, said MSP. Yes, it was, said the judge. Heaven only know what sums of money have been wasted on all this contract-in-writing shambles.
So what went on? Bennett sub-subbed the work to MSP on two separate sites. On a Colchester RAF base, MSP said it was underpaid by £32k and called for an adjudicator. Bennett said the adjudicator had no authority. It argued that the original written contract was varied orally when it asked for completed work to be removed and a different form of trunking installed. That was enough to run smack into the rule that the “whole” of the agreement be in writing, said Bennett. Ah, said MSP, but the contract contains a written variations clause allowing Bennett to add or subtract from the scope of the work. But, said Bennett, an oral variation is outlawed by the Construction Act. The judge went with MSP on the grounds that it doesn’t make business sense if statutory adjudication can be ousted by any old oral change order.
On the second contract, in Sheerness, Kent, MSP stopped work. So Bennett got someone else in. Then it charged MSP for the extra costs incurred. That dispute went to another adjudicator, who found for Bennett. But MSP argued that this contract was not in writing, so the adjudication should be declared void. Here we go again.
MSP said that Bennett had founded its claim in the adjudication on a contract that was never entered into. In fact, a different contract was in operation, and it was not in writing. Notice that there are two arguments being advanced here. The judge was on to it. An argument about what makes a contract is not a jurisdictional question – it is simply an argument within adjudication. So, once the adjudicator decided that Bennett had “pleaded” the correct contract, the adjudicator had made a binding decision. So, for summary enforcement, the judge was bound by the adjudicator’s decision. He enforced.
Now then, en route to that conclusion the court gave some useful guidance about what makes a contract in writing.
On the second contract, in Sheerness, Kent, MSP stopped work. So Bennett got someone else in. Then it charged MSP for the extra costs incurred ...
MSP argued that its contract with Bennett lacked any written indication of a commencement date, or any reference to a full or accurate description of the scope of the works, nor how the price was arrived at. None of these points attracted the judge. This “absent” information did not mean a written construction contract did not arise.
MSP ran another point. The Bennett purchase order was faxed to MSP at the outset. It referred on its face to smallprint terms and conditions on the rear but MSP said they never arrived, so there was no “contract in writing”. The judge reminded us that the rules for a “contract in writing” are satisfied if a purchase order merely refers to another written document containing terms – the Constuction Act’s clause 107 (3).
The outcome of all this is that the award in favour of Bennett was enforced and the award in favour of MSP was also enforced. But there is an angle to this, which is encouraging. MSP received its decision and waved it at Bennett, but got nowhere. MSP quite properly went to court. Once there, Bennett pointed out that it had just received an award in its favour in a second adjudication. There had been no time to begin High Court proceedings so would the judge please stay any judgment in the proceedings.
There was a nifty solution. The judge decided to “reserve judgment” in the first adjudication and to announce his decision when the second one came to him. He would then hear argument about whether the court could set one off against the other. Which is what he did. Mind you, the arguing didn’t stop there; there were some fascinating quarrels about who should pay all the lawyers. I’ll tell you about that another time.
Tony Bingham is a barrister and arbitrator specialising inconstruction