The defendants entered into a building contract in respect of significant refurbishment works that they wanted undertaken at home. The building contractor carried out the works in a manner and at a pace which was not to the defendants liking. The defendants therefore terminated the building contract before the works had been completed.
The claimant building contractor was invited to inspect the works of the first contractor with a view to him providing a quotation for the costs of undertaking and completing the works commenced by the first contractor. The claimant provided an oral quotation and the defendants subsequently engaged the claimant.
The work did not go well. It took several months longer than anticipated by the defendants, contained a large number of defects as seen by the defendants and cost far more than the defendants anticipated or were prepared to pay. In consequence, this action was started.
The first issue related to the terms of the contract between the two parties. There was no written record of the contract, the parties had merely shaken hands on an oral agreement whereby the claimant would carry out and complete the works at cost with a mark up of 20%.
The defendants claimed that there was a further term that the price of the works would be capped at £100,000. The clamant contended that the £100,000 figure was only given as a guide, had no contractual effect and was merely an approximate indication of how much the work might cost if carried out on the claimant’s terms.
The second issue related to whether the claimant had agreed not to charge the defendants the costs of any works carried out after a certain date. The defendants claimed that after failing to complete the works in a timely manner the claimant had agreed not to charge the defendants any money for work carried out after a certain date.
The third issue related to whether the defendants had a claim against the claimant in respect of defective and incomplete works.
Reference
The court held that there was no enforceable agreement containing a cost limit. This was because the precise scope of work to which such a limit would relate was neither clearly defined nor definable at the time the contract was entered into. There was no list or schedule of work items that were to be carried out and no ready means of quantifying the amount of work needed for any particular work item. Further, even if the claimant had said what was alleged in respect of the cap on costs, this could not have been intended to have had contractual effect.
In relation to whether the claimant had agreed not to charge for works carried out after a certain date, the court held that the claimant had so agreed. This is because the claimant knew that the work left to be carried out after that date was essentially remedial works for which the claimant would not be entitled to charge anyway.
Finally, the court held that the defendants did have entitlement to damages for certain defective and incomplete works.
*Full case details
Monavon Construction Ltd v (1) Simon Davenport (2) Angelika Davenport [2006] EWHC 1094 (TCC)
Contact Fenwick Elliott on 020 7421 1986 or NGould@fenwickelliott.co.uk
Postscript
This case demonstrates the typical problems caused by not having a written agreement. It is perhaps surprising that the court held that there was no cap on the amount payable to the claimant on the basis that there was no precise scope of work. The claimant did have the opportunity to inspect the works and one may perhaps think that in submitting a quotation on the back of an inspection the claimant was taking the risk as to whether the quotation was sufficient to cover the whole work or not.
What is also interesting is that in the absence of a written agreement the defendant's claim in relation to certain snagging items failed. The court held that it could not be said that there was an implied term that snagging work would be carried out or that it would be carried out without further payment since such work is not necessary. Furthermore, the court’s view was that snagging does not necessarily arise as a result of poor or bad workmanship, particularly if it relates to shrinkage cracks and the like. It is therefore advisable that snagging is expressly addressed in any written agreement.
