Bennett (Electrical) Services Limited v Inviron Limited [2007] EWHC 49 (QB)

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HH Judge Havery QC – Queen’s Bench Division, Technology and Construction Court

A dispute arose between Bennett, an electrical contractor and its mechanical and electrical contractor, Inviron.  The parties went to adjudication and a decision was made in Bennett’s favour.  Bennett sought to enforce the adjudicator’s decision.  Inviron opposed the enforcement proceedings on the following grounds:

(1) There was no contact for the purposes of s107 of HGCRA.  There was only a letter of intent which was ‘subject to contract’; and

(2) the adjudicator had no jurisdiction since the issue of jurisdiction had been determined in an earlier adjudication.

HHJ Wilcox dealt with the first argument.  Applying Rossiter v Miller (1878) he said that save in exceptional circumstances, the words ‘subject to contract’ mean that exchange of a written contract is a condition precedent to legal liability.  He added that it was a question of construction whether contemplation of a formal contract prevented a letter of intent binding the parties.  He relied on the fact that the whole letter of intent was subject to contract and that a third party had to approve any decision to enter into a formal contract in ruling that no contract existed.

He said that even if a contract did exist, the whole contract had to be evidenced in writing pursuant to s107(2)(c), saying:

Section 107 will not engage when the written terms are incomplete in that they do not cover key obligations, or where the written terms are incomplete and additional contractual terms have been agreed orally … [or] if the written terms are complete, but the works have been subject to significant oral variation.”

On the facts the agreement was subject to oral terms and variations.  Further the letter of intent did not cover price and rates, the method of assessing and timing the payment of such costs or the payment structure.  That the parties tacitly or expressly filled such gaps was insufficient to satisfy s107.

The Judge held that the adjudicator had no jurisdiction and that the adjudicator’s decision could not be enforced.

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