The defendant engaged the claimant builder to carry out work at his home in Beaulieu. Work carried out was in excess of £500,000. Initial letter of intent provided for a limited amount of work to be carried out. However, that letter of intent said that the work would be carried out under the terms and conditions of the JCT 1998 Private Without Quantities Contract. The defendant sacked his construction advisers, and then proceeded to carry out some of the valuations on his own, before deciding to pay nothing further to the contractor.
The judge found that by signing and returning a letter of intent a contract had been formed. More importantly, the express contractual provisions had been included within the contract. This was because the letter, forming the contract, referred to a JCT contract, and article 5 of that contract provided for adjudication. The residential exception in the Construction Act did not apply, because the parties had agreed by contract to refer disputes to adjudication. The basis of the reference to adjudication was simply the contract to the parties and not the Construction Act.
The Issue
The contractor commenced an adjudication, and the adjudicator awarded £50,401.35. The defendant refused to pay on the basis that:
- There was no written contract;
- If there was a contract it had been terminated;
- It was a dwelling which was excluded from the Housing Grants, Construction and Regeneration Act 1996; and
- The agreement was contrary to the Unfair Terms in the Consumer contract Regulations 1999.
Reference
Judge Peter Coulson held that the reference in the letter of intent to the JCT Form of Building Contract incorporated article 5 which stated that any disputed difference would be referred to adjudication in accordance with the detailed provisions of clause 41(a). The letter of intent that had been issued by the defendant’s advisers had been signed and returned by the claimant. There was therefore a contract in writing, and adjudication provisions had been incorporated.
Work carried out in subsequent valuations included the value of varied work, as the contract provided for variations. The fact that the claimant had not signed a second letter of intent in respect of that work was irrelevant. The additional work had been carried out pursuant to the written terms of the contract as that contract anticipated that there would be variations.
The contractual machine in respect of the payment had not entirely broken down. The defendant continued to operate it, and therefore it could not be said that the contract had terminated.
Finally, the adjudication provisions did not fall foul of the Unfair Terms in Consumer Contract Regulations 1999. The defendant had had competent objective advice from construction professionals, and the contractor did no more than accept the standard terms offered to it in the letter of intent. This approach was on all fours with Westminster Building Company Limited vs Beckingham [2004] BLR 163. The adjudicator therefore had jurisdiction and the judge granted summary judgment in favour of the contractor.
*Full case details
27 May 2005, TCC, HHJ Peter Coulson QC
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Postscript
The judge found that by signing and returning a letter of intent a contract had been formed. More importantly, the express contractual provisions had been included within the contract. This was because the letter, forming the contract, referred to a JCT contract, and article 5 of that contract provided for adjudication. The residential exception in the Construction Act did not apply, because the parties had agreed by contract to refer disputes to adjudication. The basis of the reference to adjudication was simply the contract to the parties and not the Construction Act.
