A familiar cry: ‘was it in writing?’

A decision this week from the TCC shows that we continue to argue about whether a contract was in writing for the purposes of the Construction Act. Parties on the wrong end of an adjudicator’s decision often argue that the money is not payable because the contract is not in writing and so the Adjudicator does not have jurisdiction. These cases do not arise where there is an express adjudication clause in a contract (even if oral or partly oral), but typically where the contracts are low value, are not based on a standard form or where the terms are not fully set out - as here.

In this case a subcontractor sought to enforce an adjudicator’s decision through the Court, which the contractor had refused to pay on the grounds there was no contract in writing - certain matters being, it alleged, only orally agreed.

The Construction Act only applies to contracts in writing, as defined. The Judge summarised the cases on what ‘in writing’ means as follows:

• All of the terms of the contract must be in writing and recorded in one of the ways set out in the Act (section 107) for there to be a construction contract in writing
• Where parties agree trivial matters orally, adjudicators and judges must be robust but objective in relation to the particular contract and parties in deciding whether this means the contract is not in writing, e.g. on a £1m project an oral agreement as to which of two slightly different shades of light blue to use may be trivial on one project but not on another project.
• The existence of implied terms in an agreement does not mean the contract is not in writing (a point that has been debated in the courts) The Judge refused to enforce the decision as he saw there were issues that the parties should resolve in Court.

What next?

The Construction Act is due to be amended by Autumn next year. It is likely that the amendments will include the removal of this ‘in writing’ requirement. If so, we can expect parties to argue that an adjudicator’s decision is not enforceable because there is no contract at all, whether written or oral, because, for example, the parties have yet to agree key terms, or the agreement was not intended to be contractually binding.

The proposed amendments introduce a new requirement that adjudication agreements must be in writing for the Act to apply. This does not sit well alongside the policy of bringing purely oral contracts within the scope of the Act and is likely to lead to arguments about whether the adjudication agreement was in writing, so we may not have seen the end of cases like this.

Reference:Allen Wilson Joinery Limited v Privetgrange Construction Limited [2008] EWHC 2802 (TCC).