Articles from the Silver Shemmings Ash Team on contractual matters, recent case law changes and items of interest in the construction and property world

Contract Formation – The Best Of Intentions!

March 13, 2020 | Silver Shemmings

Parties enter into agreements (usually) with the very best of intentions but for a multiplicity of reasons things don’t go to plan and one or more of the parties wants some form of redress.

The parties rights and liabilities are to be determined by the terms of the agreement they have entered into. All too often, however, the parties have not given at the outset due consideration as to what might go wrong, relying far too much on trust.

Obviously, it is advantageous that the agreement is fully set down in writing and with a full set of terms and conditions. But even where there has been no written agreement that does not necessarily mean that there is no contract.

We all enter into contracts every-day from buying a tube ticket, buying lunch or going to the gym. These agreements are not all in writing but are nevertheless just as enforceable with rights and liabilities.

To form a contract there needs to be:
• an offer;
• an acceptance;
• consideration; and
• an intention to create legal relations.
An offer could be a quote or an estimate.

Acceptance of an offer is when there is an unqualified acceptance of the offer. Clearly, signing a contract will meet this requirement, however, allowing a contractor to start the work following the issue of an estimate may equally constitute an acceptance.

Consideration is the requirement of reciprocal obligations on the parties to a contract, for example one party undertaking some work and the other for paying for the work undertaken. Both parties must receive valuable consideration for performance of their side of the contract but it need not be a “fair” amount. If you contracted to do work for too lower a price you are likely to be bound to the bad bargain.

Certain terms may be implied into contracts by law, or by usage or custom. The Sale of Goods Act and the Sale of Goods and Services Act by way of example imply certain terms into all contracts for the sale of goods and services, primarily for the purpose of consumer protection. The supplier of goods or services is obliged to provide goods of a satisfactory quality which are fit for the consumer’s purpose or perform the services with reasonable skill and care.

So, yes I would strongly advise that you enter into a written contract, but where you have not that does not necessarily mean that there is enforceable agreement

Author Richard Silver is Senior Partner at Silver Shemmings Ash. He is multi qualified as a Barrister, Solicitor & Chartered Quantity Surveyor with over 30 years of experience in the Construction Industry

Aside from his work globally as a legal advisor, his main focus is dispute resolution, encompassing the Construction, Building, Rail & Civil Engineering sectors. Having acted as Arbitrator, Adjudicator, Mediator, Lead Representative and Expert Witness on quantum, programme & planning he is widely experienced, as Lead Representative & Advocate, in all forms of Dispute Resolution

At Silver Shemmings Ash, we provide seminars and training alongside our core activities in contentious and non-contentious matters. The purpose of these is to facilitate a greater knowledge and understanding of construction and property law. There remains a considerable lack of training in such areas for companies and this is an issue which we are looking to address

This article was originally published in ‘London Business Matters’, the magazine of the London Chamber Of Commerce & Industry, in February 2020 and is part of a series from Silver Shemmings Ash

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