Harvey v ADI Ltd [2003] EWCA Civ 1757

Construction law – Formation of contract – Construction contracts

Facts

Harvey (H) refurbished some properties owned by ADI (A). The architects working on behalf of A provided tender documents which were based on a construction contract. H offered to carry out the work in accordance with the contract and returned the tender form to represent an offer to complete the works for A, in exchange for a lump sum payment. Once the work was underway, A’s architects wrote to H expressing the intention to enter into the agreement and that the contracts were being created. They also stated that if the contract failed, H would be entitled to payment on a quantum meruit basis. No formal contract was prepared and H claimed payment on the basis of A’s letter.

Issue

The issue for the court was whether a contract had been agreed between the parties and more importantly, whether the parties had acted upon the contract that had been discussed. A argued that the letter that H had operated under was part of the negotiation process and the agreement had not been confirmed. Furthermore, if the court found in favour of the plaintiff, the court would have to consider the extent of the payment H would be owed under the quantum meruit system.

Held

The court dismissed H’s appeal on the basis that the letter could not be read on its own and it was part of a larger agreement between the parties. The court found that the letter described the future action of the parties but this did not automatically mean that a contract had been entered into.