Civil Engineering Reference
In-Depth Information
This question has been touched on elsewhere. Many of the problems in the construction in-
dustry would be avoided if the parties concerned ensured that there was a proper written
contract inplace andsignedbybothparties beforeworkbeganonsite. Anythingelse isask-
ing for trouble.
Parties to building contracts seem strangely reluctant to settle all the formalities before
work begins. Despite all the evidence to the contrary, there is a firm belief that the form-
alities of a legally binding contract will not be a problem once construction starts on site.
Experience shows that this is a misguided view. In answer to queries about the existence of
aformallyexecutedcontract,anarchitect willoftensaythatthepartiesdidnotgetaroundto
actually signing the contract, 'but everyone acted as though the contract had been signed'.
In
A Monk Building and Civil Engineering Ltd v Norwich Union Life Insurance Society,
10
theexistence orotherwiseofabindingcontractwasinissue.Essentially,Monkclaimed that
there was no contract and that they were, therefore, entitled to be paid on a
quantum meruit
basis. Norwich argued that there was a contract, and Monk were entitled only to the con-
tractual sum. It was originally intended that the contract would be executed as a deed before
work commenced. Draft contracts were scrutinised by Monk, which made various amend-
ments. Eventually, a letter of intent was issued to Monk on behalf of Norwich. Monk made
various amendments to the letter, signed and returned it, and made arrangements to start
work without prejudice to the unresolved contractual position. At the time of starting work,
there were many items still unresolved. The project managers wrote to Monk shortly after
work commenced with what was later described as an offer, which it was alleged Monk ac-
cepted by continuing work.
Discussion continued during the progress of the Works, but without agreement on several
terms. But throughout the project, both Monk and the project managers relied on various
contract provisions.
Thecourtheldthattherewasnoconcludedcontractbetweentheparties.Theprojectman-
agers had no actual or ostensible authority to negotiate a contract on behalf of Norwich, but
only authority to issue the letter of intent. Importantly, there was no agreement of all neces-
sary terms. The court said that it was irrelevant that Monk had relied on contractual provi-
sions during the progress of the Works.
Although the reliance by both parties on contract terms might, in some circumstances, in-
dicatethatbothpartieshadacceptedthattheywereboundbythecontract,thatisanassump-
tion which can be overturned by other factors. Key factors are where, as in this instance,
