Durabella Ltd v J Jarvis & Sons Ltd 83 Con LR 145 
The case arose out of the aftermath of the settlement of the dispute between Jarvis and Galliard referred to above. Durabella was Jarvis’s sub-contractor for the provision of hardwood flooring in the flats. When Durabella sued Jarvis, Jarvis relied inter alia on Jarvis’s standard pay when paid clause, which Jarvis said was incorporated into the sub-contract. The relevant sequence of events was as follows:
10 August 1995: Durabella estimate for the 3 show flats – “This estimate is subject to Durabella’s standard terms and conditions”.
24 August 1995: Jarvis order – “No conditions of your quotation which are additional to, or at variance with, those of this order shall be applicable, except as stated below”. The order referred to Jarvis’s standard terms which included the pay when paid clause.
Durabella then started work on the show flats.
December 1995 Jarvis letter of intent for the remaining 33 flats – “We confirm our intention to enter into a sub-contract order with you for…33 units at the above. The basis of the conditions of contract will be in accordance with DOM/1 with amendments to incorporate Jarvis standard conditions. The 33 units will be carried out as defined in your letter dated 10 August for Tarkett flooring…Once the quantity has been established…we will then be in a position to firm up and place the subcontract order”
14 December 1995 Durabella replied “Thank you for your instruction regarding the above contract. The project file has now been entered onto our Customer Auditing Procedure….”
9 January 1996 Durabella wrote “We acknowledge receipt of your letter of intent dated 13 December 1995 which we are pleaded to take as an acceptance of our estimate…dated 10 August 1995 for works carried out to the end of March 1996 after which the fixed price period expires, and increased costs of 5% will be applicable”.
Judge Humphrey Lloyd QC held that the terms of the ‘letter of intent’ indicated that Jarvis intended to create a legal relationship with Durabella; that at the time of Jarvis’s letter of intent the parties were well on their way to agreeing all the matters necessary for a contract; that Durabella treated Jarvis’s letter of intent as having contractual force; that even if that was incorrect Durabella’s letter 9 January was clearly an acceptance of Jarvis’s letter of intent and was not a counter offer since there was nothing in it that was inconsistent with Jarvis’s letter of intent; the reference in the letter 9 January to Durabella’s estimate was insufficient to displace the terms required by Jarvis – there was no reassertion of Jarvis’s terms; that Jarvis’s letter of intent was an offer which Durabella accepted by the terms of its letter 9 January or, if programming was vital to the contract, by its conduct in attending work in accordance with arrangements agreed with Jarvis.
“It is in my judgment clear that Jarvis intended that its formal order was being postponed solely so that it could record the results of the survey and measurement, ie the quantity to be paid for at the agreed rate”