Four little letters that say ‘pay up’

All Metal Roofing vs Kamm Properties is another of those contracts-in-writing cases that occupy the High Court’s time. The rule is that if you want to have your dispute come to high-speed 28-day adjudication, the parties have to have a “contract in writing”. Twelve years ago some of us moaned at parliament for including this rule in what we called (on this page at least) the Hugh Grant Construction Act. On 1 April next year, I think, we will have its replacement: the Local Democracy Economic Development & Construction Act. It does away with the contract in writing rule. Some say it swaps one can of worms for another. That said, experienced adjudicators will be able to deal with the new problems, no doubt.

Meanwhile, we still have the contracts in writing rule. “For there to be a valid construction contract,” said Mr Justice Akenhead, “all the terms of the contract must be in, or evidenced by, writing. It is clear that not only the material terms but all terms must be in or evidenced in, writing.” He added: “It follows that if particular terms are agreed orally and are not evidenced in writing, the adjudicator will not have jurisdiction.”

You can imagine the fun we have had with all this over the years, especially when there is a quotation and an order and lots of toing and froing. That happened in the case we’re discussing: All Metal Roofing received plans, details, a spec and a request for a price from Kamm.

All Metal Roofing’s written quotation was really well done. It gave a schedule of rates and a total sum for the works on the schedule; explained that the offer excluded design (sensibly); that it was worked out on today’s metal prices; it included an attendance schedule of help needed from the main contractor; stated that monthly valuations were required; stipulated payment 30 days from the invoice date; made clear that “pay when paid” was not on and gave its day work rate of £30 an hour, with an uplift for plant and material of 25%. I bet the firm has used that style year in, year out. It’s neat and simple. There are things missing, of course, but it shows that All Metal Roofing is a thoughtful outfit. In due course the two parties met and talked about a broad programme. I got the usual impression that Kamm couldn’t or wouldn’t pin down a date. Then an order turned up, ordering delivery as soon as possible. Hooray!
As usual there were delays before All Metal Roofing got on site. Then things went wobbly for Kamm. It failed to hit the completion date in its contract with its employer, Globe Plan Developments.

Kamm blamed All Metal Roofing and withheld £30,000. All Metal Roofing cried foul and the adjudicator ruled that the money should be paid. Kamm said the ruling had no force because the contract was not in writing. There was, it said, an oral term about completion, and as Mr Justice Akenhead said, all terms have to be written down.

You may immediately see the snag for Kamm. There was a quotation by All Metal Roofing and there was an order from Kamm. Kamm said that between bid and order, a time for completion had been agreed, but only orally. Ah, but the order said delivery was to be “asap”, so a completion term was evidenced in writing. Well, that was game, set and match. Asap was the agreement as regards to time.

Kamm had to abide by the adjudicator’s decision and pay up, plus the High Court costs and All Metal Roofing’s costs. Many a contract in this business is formed with ordinary everyday things hanging out the end. Often it’s the programme. Sometimes it’s the price. Things not yet agreed, such as a completion date, are not part of the contract; only the expressly agreed items have to be in writing.

Many a contract in this business is formed with things hanging out the end. Often it’s the programme. Things not yet agreed, such as a completion date, are not part of the contract

When the new act comes along, don’t get the idea that you can relax as to what terms are in writing and what is oral. True, that won’t torpedo the right to adjudicate but there will be exciting arguments about whether this or that oral promise was agreed. Look out for that new can of worms.

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings Temple