Westminster Building Co Ltd v Beckingham EWHC 138 (TCC) [2004]
This was an action to enforce an adjudicator’s award in favour of Westminster. Westminster carried out refurbishment works to Mr. Beckingham’s home. As a result the HGRCA adjudication scheme did not apply. Westminster provided a tender and a revised tender, both of which were based on a Specification which provided that the contract would be on the IFC 98 Form. On 27 June 2002 Mr. Beckingham wrote a letter of intent. The crucial words were “My surveyors will be progressing the preparation of the formal contract documents over the next few weeks for signature by both parties, in the interim please proceed to make arrangements for the implementation of the works. In the unlikely event of matters not progressing I would confirm that you will be reimbursed any reasonable expenditure in connection with the project”.
Westminster started work on 15 July 2002.
On 17 July 2002 Beckingham’s QS forwarded to Westminster an IFC 98 Form. Some of the details were different from the Specification e.g. it incorporated amendment 3, the dates of possession and completion were different and the QS wasn’t named as the QS for the contract. Westminster signed the Form and returned it to the QS. Beckingham did not sign it. The works proceeded and payments were made on the face of it under certificates issued in accordance with the IFC conditions.
Westminster argued the contract incorporated the terms of the IFC 98 Form, which contained provisions for adjudication.
HHJ Thornton held that at the point Westminster started work on 15 July 2002, there was a simple contract between the parties created by the letter of intent which provided that such work as was carried out in accordance with the specification and the drawings would be remunerated on a quantum meruit basis. This was because inter alia the letter envisaged that a formal contract under hand would be executed and that this would take place. It was therefore clear that no formal contract would be entered into until the formal contract had been signed by both parties.
However, by parity of reasoning with the Harvey case, HHJ Thornton found that all the necessary ingredients of a valid contract were present and incorporated in the signed contract documents Westminster sent to Beckingham. The act of forwarding the documents constituted an offer, albeit coupled with an underlying arrangement of an administrative kind that both parties would sign the contract. Mr. Beckingham allowed work to proceed, remained silent and operated the contract as though IFC 98 applied. He thereby accepted the offer. The signing of the formal documents was not a condition precedent and even if it was he had waived it.
This case shows, like Harvey and Stent Foundations v Carillion Contracts Ltd [2000] BLR 188 and Durabella v Jarvis that where the evidence shows the parties intended to be contractually bound, the mere fact that the parties contemplate executing formal documents does not detract from that intention. Such an arrangement is, in HHJ Thornton’s words “an underlying arrangement of an administrative kind”. Something more – like the language in the Preliminaries and the Letter of Intent in Jarvis v Galliard – is necessary to elevate it to a condition precedent.
Malaysian Construction and Contract Law 