When a stipulation for a written contract may be overridden by events

Anchor v Midas Construction [2019] EWHC 435, Building Law Monthly June 2019. TCC

Facts

Anchor required the design and build of a new retirement home and entered into negotiations with Midas Construction (“Midas”).  The parties agreed at the outset that they would only be bound upon the mutual execution of a written agreement, and that any agreement would be ineffective without both signatures.

Negotiations went forward and a series of letters of intent were issued.  Eventually in July 2014 Midas signed the draft of the JCT Contract then in circulation and sent it to Anchor but Anchor did not countersign.

Meanwhile, although the contract price was £18.2m, Midas had realised that it had made a bad bargain and therefore claimed a “quantum meruit” payment of £28.5m on the basis that there was no contract between the parties, and it was entitled instead to payment for the fair value of the works.

Anchor’s defence was that a contract had been entered into even though Anchor had not signed the document and even though Anchor had previously stipulated in its letters of intent that there would be no contract form unless and until both parties had signed an agreed document.

Held

Despite the stipulations for a mutually signed written agreement, it was clear on the facts that the parties had an intention to form contractual relations and that they had in fact agreed upon the terms as at July 2014.  Although Anchor had not signed, it was clear from the evidence that “on the present facts, Midas believed that a contract had been concluded on 21 July, otherwise it would not have continued with the works.”

The Judge remarked that in his decision-making process “the fact of performance is of considerable weight.”

Comment

NB: In another recent case a different conclusion was reached, see Astra Asset Management v The Co-op Bank.

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