Taylor Woodrow (the defendant/first Part 20 claimant/third Part 20 defendant) was engaged to carry out improvement works to sewage treatment works owned by Yorkshire (the claimant). Taylor claimed to have appointed Biwater (the second Part 20 defendant/third Part 20 claimant/third Part 20 defendant) as its subcontractor on the terms set out in the Biwater Model Form of Conditions of Subcontract for Process Plants, December 1997, Rev 0 (the "Yellow Book Subcontract").
Biwater alleged that no contract had been entered into between it and Taylor.
*Full case details Yorkshire Water Services Ltd vs (1) Taylor Woodrow Construction Northern Limited (2) Biwater Treatment Ltd (3) Elga Ltd 16th May 2003, TCC, HHJ Forbes
The issue was whether, and if so on what express terms, a contract was concluded between Taylor (as main contractor) and Biwater (as subcontractor) for certain improvements works to the sewerage treatment plant owned by Yorkshire. Yorkshire played no part in this proceeding.

Reference

Judge Forbes decided that there was a subcontract between Taylor and Biwater and held that the terms of that contract were based on the Yellow Book Subcontract. The court held that the final form of the subcontract had been agreed following Taylor's acceptance by conduct of an offer made by Biwater.

The offer made by Biwater resolved the last outstanding matter in dispute (the liability for performance guarantees) between the parties such that the terms of the subcontract were agreed.

The court found that, at a Board Meeting in October 1999, an offer was made by Biwater that, so far as it concerned the liability of Biwater for any failure to achieve performance guarantees, substituted the revised Schedule put forward by Taylor.

While Taylor did not accept this offer immediately, the court held that on the evidence, Taylor subsequently accepted the offer by its conduct.

The court referred to Day Morris Associates vs Voyce and Another [2003] EWCA Civ 189 in reaching its conclusion that conduct will only amount to an acceptance if it is clear that the offeree did the act in question with the intention of accepting the offer.

The test is an objective one and therefore the conduct in question must be clearly referable to the offer and in the absence of the offer's reservations, not reasonably capable of being interpreted as anything other than acceptance.

As Taylor and Biwater dealt clearly and consistently with each other on the basis that the subcontract had come into existence (ie the application by Biwater for a take-over certificate pursuant to Clause 34 of the General Conditions of Contract), the court held that the only objective inference that could be drawn was that Taylor acted consistently with the intention of accepting Biwater's performance guarantee proposal and therefore a subcontract was concluded.

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Postscript

The parties acted as if they had entered into a subcontract in their dealings with each other following the offer of Biwater in October 1999. Given all the evidence, the court held on the facts of the case that a contract had been concluded by conduct. The test for finding that a contract has been concluded by conduct is an objective one and depends on whether the conduct clearly demonstrates an intention to enter into a contract.