Contracts must be conducted to be bound

Bryen and Langley v Boston (Court of Appeal - 29 July 2005)

Mr Boston invited Bryen and Langley to tender for certain fitting-out works to Mr Boston's property. The tender provided that the Standard Form of Building Contract, 1998 Edition, Private with Quantities, incorporating amendments one to three, produced by the joint contracts form, would apply, which included the adjudication provisions.

After B&L's tender was accepted, Mr Boston's contract administrator wrote to them saying "the contract would be executed under the Standard Form of Contract 1998, and would be drawn up shortly".

B&L began works but no contract was signed. When B&L issued its final certificate for the net amount, Mr Boston sought to retain £66 995. B&L referred the matter to an adjudicator.

Mr Boston's response was that, although a contract had been entered into, it did not incorporate the JCT form, as such terms remained to be agreed.

Accordingly, the adjudicator had no jurisdiction. The adjudicator ruled in favour of B&L on the issue of jurisdiction and made an award. Mr Boston failed to comply with the award.

B&L issued proceedings and appealed after its application for summary judgement was dismissed. The main issue was whether the building contract incorporated the JCT Form. Allowing the appeal, the Court of Appeal concluded that, although no formal contract was ever signed, all the terms of a building contract in JCT form, in so far as possible, had been agreed.

All other matters to be agreed were simply variations to be negotiated under the contract. The court added that the mere fact that two parties propose that their agreement should be contained in a formal contract to be drawn and signed in the future does not preclude the conclusion that they had already informally contractually committed themselves on exactly the same terms.

Comment: When deciding whether contractually bound, the question is not whether a formal contract has been executed but whether there is a feature of the agreement yet to be accepted, so as to reduce the position to one in which the parties remain in a state of negotiation. If there is, then no contract has been concluded. - Matthew Senescall, BLM London.

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