Or why you should always put it in writing. We explain how recent court rulings affect you
Get it write!
Oral agreements aren't worth the paper they're not written on.

Although the Construction Act requires contracts to be in writing, relationships can shift as a project develops. This happened during a refurbishment of the Liverpool Holiday Inn.

The Inn had retained RJT Consulting Engineers Ltd to provide an outline design for the M&E services and appointed David Patton (Ballymena) Ltd as main contractor, who subcontracted the M&E to DM Engineering NI Ltd. DM wanted RJT to carry out some of its subcontract design work and both reached an oral agreement.

So far, so hunky-dory. But then it all went wrong. DM felt RJT's design was inadequate and late and wanted to go to adjudication. RJT refused, arguing that that could only happen with written agreements.

The judge, however, noted that the agreement wasn't only oral. There were a number of documents between RJT and DM, including invoices and minutes of meetings showing the nature and place of the work and name of the client. He agreed with DM that adjudication could go ahead.

RJT disagreed and appealed. Lord Justice Auld sided with the company, ruling that, to go to adjudication, all of an agreement must be in writing except when relevant parts of an oral agreement are not denied.

Adjudication for profit, not fun
Adjudications mean what they say.

A Qatari sheikh wanted to refurbish a property in Curzon Street, London. As his intermediary, he used a firm called Dardaydan, which employed Solland for the design, construction, fitting out and decoration. The date for completion was June 21, 2000.

After its 11 July invoice went unpaid, Solland issued an adjudication notice for lack of payment and withholding notices. Although the adjudicator awarded Solland £658,944.72 plus interest, Dardaydan still did not pay.

Solland sought summary judgement, but Dardaydan argued that as Solland had failed to give notice to secure an extension of time, it had racked up a damages bill of £810,000; as this was bigger than the award, it did not need to pay.

The court, however, decided the adjudication award was a sum due under the contract and ordered Dardaydan to pay up.

Dardaydan then argued the wording of its contract excluded the requirement of the Construction Act that it had to comply with an adjudicator's decision.

The court disagreed, saying an adjudicator's decision that party A should pay £x to party B was just that. It did not mean party A could pay a different sum or no sum at all. Otherwise adjudication would be just for fun and not for profit.

Asbestos dust-up
You can't offload your costs onto another subcontractor.

In 1992, Richardson Barberry Properties contracted Tarmac (as Carillion was then known) for the demolition and construction involved in the redevelopment of the old Lewis's store in Birmingham city centre.

Tarmac subcontracted the removal of asbestos on the site to TW Ward (Industrial Dismantling) Ltd and engaged consulting engineers Farebrother & Partners to help and Worcester City Council's laboratories to provide an asbestos monitoring programme.

Ward did two significant things. First, it failed to remove all the asbestos, then it went bust, leaving Tarmac to remove the remaining asbestos at its own cost.

With Ward insolvent, Tarmac could only recover its money by sueing either Farebrother or the council. It did both.

Farebrother argued that the asbestos removal was outside the scope of its engineering works and Tarmac agreed to stay its action. Tarmac then sued the council for failing to do asbestos monitoring as described in conversations and the purchase order.

In court, though, it emerged that Tarmac had carried out its own survey of asbestos to be removed but hadn't given the council a copy. Without the survey, the council could hardly check that the asbestos had been removed.

The court ruled that Tarmac was being opportunistic in trying to recover from the council the cost of Ward's failure to remove asbestos.

Butcher burns, pub roasted
A poorly skilled contractor can cost you dear.

Although Mr Young was an antique dealer, not a builder, when he sold a fireplace to BJW Property Developments Ltd, BJW employed him as an independent contractor to install it in the lounge of its pub.

The fireplace was to go in the party wall shared with a butcher. To install it, Young removed a firebrick lining on both sides of the fireplace and a glass fibre fire curtain to the rear.

However, the properties were originally built in the mid-16th century and what neither Young nor BJW knew was that the chimney breast had been built with timber fillets. With the firebricks and fire curtain removed, the timber ends were exposed and liable to catch fire.

A few weeks later a decorator lit the fire to warm the room while he was working. When he cleared up, he extinguished the fire and noticed nothing amiss. However, the fire had spread through the party wall into the butcher's and broke out in the small hours of the next morning. No-one was hurt but the damage came to £214,000.

BJW admitted Young's negligence but denied responsibility for the damage, claiming it hadn't authorised Young to be negligent and that the fire was an accident.

The court rejected both arguments, ruling that the work on the party wall had been carried out negligently. BJW was therefore liable for the fire damage.