To a contractor: "No, of course not. You'll have no idea what you are entitled to receive or when. Additional claims for delay and disruption will be non-starters. We do a lot of work for contractors, here's my card."
To a developer: "No, of course not. You'll have no control over the quality or the management of the work. You will have no remedy for late or defective work as there will be no programme or quality duties and, worst of all, you will have no idea how much you have to pay. We do a lot of work for developers, here's my card."
These responses are based on a traditional view that, without a contract, everything is up for grabs. The only safety net for those outside the refuge of a contract is the law of restitution, or the removal of unjust enrichment of one party by the other. Quantum meruit – or fair reward – requires compensation that reflects the value of the work.
In fact, this traditional view is being subtly altered. The lines between contract and no-contract situations has blurred in a series of cases, most recently Birse Construction vs St David and Serck Controls vs Drake & Scull Engineering.
Let's consider the traditional view and possible arguments.
Admittedly, these are selected comments from judgements that included questions that were, perhaps, not expressly answered. There are also some points of conflict in the judgments. However, the courts appear willing to take a contractual line, even to the extent of examining "agreed elements" where no contract has been negotiated. In short, the basic tenet that a court will not make a contract where the parties have failed to do so themselves is in danger.
Interesting questions arise. How do you stay out of anything that could be perceived as contractual agreement while in negotiations? Should you state at each turn that nothing is agreed until everything is agreed?
The problem with courts making up contracts is that they cannot complete the job and will not create the commercial balance the parties failed to find themselves. They might pick out only some negotiation points and get a partial view.
The law is in flux in this area at the moment but, in the meantime, it seems that your non-contract may be worth a bit more than the paper it is not written on.
Stuart Jordan is a partner at solicitor Campbell Hooper.