In 2002, the defendant, Mr Guy Marsh engaged the claimant, Mr Brian Maggs, to carry out refurbishment works on his town house in Bath. The contract between Mr Marsh and Mr Maggs for the works was partly written and partly oral. A budget estimate of £36,510 plus VAT was accepted by Mr Marsh. That estimate only briefly described the works to be covered. It also referred to “omission of certain items as discussed”.
Work began in June 2003. During the course of the work, Mr Marsh gave instructions to Mr Maggs’ workmen that additional items of work were to be undertaken. Mr Maggs was not prepared to do the extra works within the contract price. However no estimates were provided for any of the additional works, nor were any asked for.
The work was finished in early 2004 and Mr Maggs submitted his final bill in the sum of £69,293.71. Interim payments were deducted and Mr Maggs requested payment of the balancing amount of £26,043.71 plus VAT. Mr Marsh disputed that bill and refused to pay the sum claimed. Mr Maggs issued proceedings in the Bristol County Court.
The trial judge was faced with the task of determining the terms of the contract by construing the intention of the parties. He found that subsequent conduct could not be taken into account in this context and preferred Mr Maggs’ recollection of events at the time of entering into the contract. The court ordered that Mr Marsh pay Mr Maggs the sum of £69,692.22 plus VAT plus interest. Mr Marsh appealed.
Whether evidence of conduct subsequent to the formation of a contract can be taken into account where the contract in question is partly oral and partly in writing.
The appeal was allowed. Their Lordships held that they were able to take into account conduct subsequent to the formation of a contract when considering what forms the terms of an oral contract. Determining the terms of an oral contract is a question of fact. In this case, no complete record in writing was made. Accordingly, the only way to determine what had been agreed was to hear evidence about it at trial, two or three years later. Given that the accuracy of the parties’ recollections was disputed, it was highly relevant to receive all evidence about what the parties had said and one about the disputed matters in the meantime.
* Full case details
Brian Royle Maggs t/a BM Builders (A Firm) vs Guy Anthony Stayner Marsh and Marsh Jewellery Co Ltd, Court of Appeal (Civil Division), Smith LJ, Moses LJ and Hallett LJ  EWCA Civ 1058
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This case highlights the importance of recording the terms of a contract at the time of the formation of the contract. It is often difficult to record those terms accurately in the context of construction contracts, because although a variation mechanism may be included, it is often difficult to predict what extras work or materials may be required. Notwithstanding that obstacle, it is advisable to include as much as possible in the written contract and make allowances for extras where required. Where that is not possible, parties to a construction contract need to bear in mind that their conduct subsequent to the formation of a contract may be analysed if there is a dispute over the terms of that contract.