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

Signed, Sealed & Delivered – Are You Actually In Contract? by Richard Silver

August 31, 2018 | Silver Shemmings

One of the most important questions we at Silver Shemmings Ash LLP consider when approached by clients for advice in relation to a dispute, is whether there is in fact a contract in place between our client and the other side and if so what are its terms?

All too often contracts, subcontracts, appointment agreements etc are not signed and/or letters of intent have been issued, parties assume that there is a contract in place in that works have been commenced, payments have been made, instructions issued etc, but that is not necessarily the case

Establishing the contract and thereafter its terms is vital in either advancing or defending any claim

There are five main elements that must be satisfied in order to enter into a legally binding contract:

1. There must be an offer by one part

  • An offer is an expression by one party of willingness to be bound by some obligation to another
  • An offer may be made in writing or orally or by conduct
  • An offer can be made to an individual or group or to the world at large
  • An offer can be contrasted with an invitation to treat, which is merely a supply of information to tempt a person into making an offer
  • In instances where it is more difficult to detect if there has been an offer made or simply an invitation to treat, the courts will look at the intentions of both parties

2. There must be an unqualified acceptance by the other party

  • An acceptance is the act of agreeing to an offer
  • Acceptance may be made in writing, orally or by conduct
  • Acceptance must be unqualified – if an acceptance is qualified then it will amount to a counter offer, which the first person is free to accept or reject
  • An example of this is where supplier A provides a quotation to contractor B with A’s special terms of business – this is the offer
  • If B writes purporting to accept the offer subject to his own contract terms, this is a qualified acceptance and amounts to a counter offer
  • This is known as the Battle of the Forms and in these circumstances, if there is a contract it is often the set of terms last in time which were acted upon which is decisive

3. There must be consideration except in the case of deeds

  • Consideration is something which is given, done or forborne by one party in return for some action or inaction on the part of the other party
  • In the case of building contracts, the consideration will be the carrying out of the works by the contractor and the payment by the employer
  • Consideration need not be adequate but must be sufficient, in other words, it does not matter that what one of the parties has given is not equivalent to what is given by the other
  • Consideration must not be unlawful and must not be a vague promise
  • Consideration must be present or future – it cannot be something already done or given at the time the contract is made

4. There must be an intention to create legal relations, this may be absent for example where the two parties are related in same way

5. There must be genuine consent

  • Duress makes the Contract voidable (the contract is valid but may be annulled by the innocent party) – duress is where the party has been forced or coerced into entering the contract

If you have any questions of a similar nature to this, please feel free to contact myself on richardsilver@silverllp.com or another member of the Silver Shemmings Ash team for advice

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 if these is to facilitate a greater knowledge and understanding of construction and property law, there remains a considered lack of training in such areas for companies and one to which we look to address

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