HHJ Thornton QC held that the letter of intent did not form a contract, because the parties envisaged that they would sign a formal contract. In the absence of a formal contract the contractor would be reimbursed any reasonable expenditure. However, as a contract had been signed by the contractor and sent to Mr Beckingham all of the necessary ingredients for a contract existed. Mr Beckingham was bound by it, because although he remained silent he allowed the work to proceed. The capping agreement was not a settlement agreement, and in any event as it was not supported by consideration was of no effect. In the absence of a withholding notice Mr Beckingham was ordered to pay the amount of the decision. Finally, his challenge under the Unfair Terms in Consumer Contracts Regulations 1999 failed because an adjudication clause provided no significant imbalance in the terms of the contract.
*Full case details
Westminster Building Co Limited vs Andrew Beckingham, 20 February 2004, TCC HHJ Thornton QC
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This case is interesting, not just because it involves adjudication, but also because it demonstrates that a party will be bound by a formal contract even if they do not sign it, but allow the work to proceed. It also demonstrates the importance of "consideration" (an exchange of something of value, or money) when varying a contract. The capping agreement was not valid because it capped the contractor's fee, but the contractor received nothing of value in return. It would have been valid if it had been signed as a deed. Finally, the adjudication clause in the contract did not fall foul of the Unfair Terms in Consumer Contracts Regulations 1999, and thus a residential occupier can be contractually bound to adjudicate despite the fact that the Act excludes residential occupiers.