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Posted June 14, 2017 | Published in Contracts & documentation

What contract have I got and do I 'have' to pay?

In this blog I look at the two questions we are probably asked the most – what contract do I have and do I have to pay the application?

"Smash and grab” continues to grab the headlines whereby a party may find that they have to pay the sum demanded in an application due to failure to give either a “Payment Notice” or a “Pay Less Notice”. In ISG Construction Limited v Seevic College, ISG managed to recover £1,097,696 via an adjudication due to failure of the College to issue the requisite Payment/Pay Less Notices. However the College referred exactly the same application to the same adjudicator who valued the Works at £315,450.

When the case was eventually brought before the Technology and Construction Court it was decided that the College still had to pay £1,097.696 and the adjudicator’s second decision valuing the Works was irrelevant – failure to give a Payment or Pay Less Notices meant that the College accepted and effectively agreed to the full amount of the application.

The Courts are frequently asked to decide whether an agreement has been entered into for the design and construction of some of the largest schemes in the country, and often reach surprising conclusions. Recently in Arcadis Consulting (UK) Limited v Amec (BSC) Limited a consultant found itself on the receiving end of a claim in relation to a defective car park which had to be demolished and rebuilt at a significant cost many years after it was completed.

The idea is to give a practical but informal guide to the issue of how contracts are and are sometimes not entered into, and how to pursue or indeed avoid a “Smash & Grab”

One of the consultants involved faced a claim for millions of pounds, but sought to rely upon a limitation on their liability within drafts of the contract that were discussed and exchanged, but never finally signed. The Court found that the draft agreement may have been exchanged, discussed at some length etc., but was never agreed. The Court found the parties had entered into a simple contract and that the limitation did not apply; the consultant was then faced with what was a seven figure claim, without any of the protection he may have hoped for from the a carefully drafted and negotiated, but ultimately unsigned, agreement.

Both of these questions are being addressed at a seminar which I am giving with two of my colleagues Edward Farren and Andrew Weston – “Sub-Contractor Legal Update: “Smash & Grab” and Sub-Contract Pitfalls”. The idea is to give a practical but informal guide to the issue of how contracts are and are sometimes not entered into, and how to pursue or indeed avoid a “Smash & Grab”.

Although the seminar is aimed at Sub-Contractors, who according to the surveys make the most use of adjudications, smash and grab etc., the seminar should be of interest to those not only pursuing a claim, but having to defend one.

For further information on Fenwick Elliott’s Sub-Contractor Legal Update and details on how you can register to attend this free seminar please click here.

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