Civil Engineering Reference
In-Depth Information
Obviously, the contractor cannot recover interest on late payment under the Late Payment
ofCommercialDebts(Interest)Act1998forthefullperiod,becausetheinvoicewillbethe
first it has sent to the correct party. A recurring problem that is fundamental to the resolu-
tion of most disputes in the construction industry concerns whether or not a binding con-
tract has been entered into in a given situation and, if so, in what terms. Unless the rights
and duties of the parties can be pinpointed with reasonable accuracy, it is impossible to say
whether they have or have not complied with their obligations.
ofproblem.ItisalsoofinterestbecauseitconcernedtheJCTManagementContract.Atthe
time the problem arose, the management contractor was Wimpey Construction Ltd, later
becoming Tarmac. The employer was a firm called Wiggins Waterside Ltd. Stent was the
prospective works contractor. Stent was certainly employed to carry out foundation works
- the question was, by whom? The reason why the question came before the court was that
Stent had a large claim for the cost of dealing with ground conditions, but Wiggins was in
receivership.
UndertheJCTManagementContract,thereisgenerallynodifficultythattheworkscon-
tractor is in contract with the management contractor under the terms of the JCT Works
Contract. In this instance, however, the position was clouded because tenders had been in-
vitedandaletterofintentsenttoStentbytheemployerbeforetheappointmentofWimpey
as management contractor. Wimpey, although not formally appointed, had been involved
in the foundation works contractor tendering process and confirmed to Stent that it would
be in contract with Wiggins.
Representatives of Wiggins continued sending instructions to Stent. A key document
was probably a letter of instruction to Stent stating that they were to start work on the
foundations under the letter of intent but that Stent must enter into a Works Contract with
Wimpey.Fromthenon,StentandWimpeyactedasthoughaWorksContracthadbeencon-
cluded between them, but Wimpey stated, quite reasonably, that it could not enter into a
Works Contract until the formalities of the Management Contract with Wiggins had been
completed. In the meantime, Wimpey continued to process applications for payment from
StentasthoughtheWorksContractwasinplace.Infact,noWorksContractwaseverform-
ally executed, despite Wimpey having executed the Management Contract with Wiggins.
The judge held that a binding contract came into existence between Wimpey and Stent
whenWimpeyenteredintotheManagementContractwithWiggins.WimpeyandStenthad
beenagreedaboutalltheimportanttermsoftheircontractbeforethen,andthecontractwas
dependent only on the execution of the Management Contract.
The judge rejected a suggestion by Stent that Wimpey were estopped (prevented) from
denying the existence of a contract just because Wimpey had acted in all ways as though a
Works Contract had been executed. He said that Wimpey might have acted in this way in
