J Murphy & Sons Ltd v Johnston Precast Ltd [2008] EWHC 3024 (TCC)

The construction of a contract and liability for breach

Facts

The claimant was a main contractor for works which requested the defendant sub-contractor to tender for the supply of a pipe for the purpose of carrying water. The claimant faxed the defendant with an order for the pipe which referred to conditions overleaf. The defendant then sent an acknowledgement to the claimant containing a copy of its own terms and conditions and proceeded to make the pipe. The pipe was delivered and subsequently laid in foam concrete. However, four years later, the pipe burst. On excavation, it was discovered that a void around the pipe had increased the pressure on it to levels that it could not sustain. The claimant argued that the fax constituted the contract and that the subsequent acknowledgement did not incorporate the defendant’s terms and conditions into the contract. It further argued that the contract contained an implied term under section 14 of the Sale of Goods Act 1979 that the pipe would be fit for purpose in connection with installation using foam concrete.

Issue

The issues in this context were the point at which the contract was entered into, the terms implied into it and whether the defendant was in breach.

Held

It was held that the contract was entered into at the point that the fax was received because this was the time that both parties treated the contract as being in existence. The defendant’s terms were not incorporated and the claimants ‘terms overleaf’ were to be disregarded because they were never sent. There was agreement in respect of the specification of the pipe and there was no implied term that the pipe would be fit for purpose in a foam concrete environment. The defendant did not know that this was the manner of installation and even if it had, had no reason to believe that it would affect the efficacy of the pipe. In any event, it was the void that caused the leak and this could not have been anticipated. Therefore, there was no breach of contract and the defendant was not liable.