The fact that you have a contract that is only evidenced by an oral agreement does not stop you suing under the Construction Act – but be careful of potential pitfalls.
Most of us know what an adjudication is. It is a quick-fix dispute resolution procedure introduced by statute which came into force last May – The Construction Act. Maybe you have been on a course to learn how to adjudicate. Those that have will know that you can only adjudicate on a construction contract which is in writing, and that there is a wide definition in the statute as to what that means (by reference to standard forms, exchange of letters, and so on).

But can you adjudicate on a construction contract where there is no evidence in writing of what was agreed? The answer is "yes". There is a curious provision in the act that states:

"An exchange of written submissions in adjudication proceedings … in which the existence of an agreement otherwise than in writing is alleged by one party against another party and not denied by the other party in his response constitutes as between those parties an agreement in writing to the effect alleged."1

Now consider this: imagine you are an M&E subcontractor brought in at the last moment, perhaps to replace an insolvent predecessor or simply because some additional specialist works were required at short notice. Your operatives began on site without any form of written contract. In fact, the only thing you could point to as evidence that you had a contract was a conversation you had had with the main contractor on the telephone, in which he asked you, and you agreed, to carry out the works. He explained that you would find out everything else when you went on site and sent you nothing more than the relevant part of the specification.

Assume you attempted to extract a written order from the contractor but that this was not forthcoming. Lo and behold, problems arise and you end up at loggerheads with the contractor.

He might think he has the upper hand since he has not agreed anything with you in writing. So you see your lawyer. You should be told that the fact that your contract is only evidenced by an oral agreement does not stop you suing. He may also advise you that since your contract is not in writing, you cannot resolve the dispute by an adjudication; but hopefully he will remember this curious provision in the act, and advise you to begin an adjudication.

  • It is possible to adjudicate on a contract where there is nothing in writing
  • That adjudication may not be possible if the other party denies there was an oral contract
  • But you need to be a bit careful. In your "written" submissions for the adjudication, you need to refer to whatever oral agreement you say was reached. You will then have to wait for the other side to come back with their written submissions and hope that they do not deny the existence of the oral contract. If they do not, the act says that you now have an agreement "in writing" on which you may adjudicate.

    There are one or two potential pitfalls. First, the standard rules for some adjudicator nominating bodies ask for a copy of the contract containing the adjudication clause or for a copy of the written agreement for the purposes of the act. If you are faced with such a request before putting forward your written submissions, you should advise the ANB in question that you will be relying on section 107(5) but that they should not advise the other side.

    But what if the main contractor (in the example above) does deny the existence of the oral contract? Some might argue that it is then still a matter for the adjudicator to decide on his own jurisdiction, much the same way as an arbitrator might. To my knowledge, the point has not yet been decided (certainly not by any court). But recently I had an adjudication in which these circumstances actually came about. I prepared the written submissions on behalf of my applicant client for an adjudication in which I included an allegation that an oral contract had arisen. That allegation was not denied by the contractor and we were therefore within the act.