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Malcolm Charles Contracts Ltd v Crispin, [2014] EWHC 3898

Intention to create legal relations in the formation of contracts.

Facts

MCC, a contractor, submitted a tender to Crispin. The Parties undertook cost reduction exercises and proposed a JCT Standard Form of Building Contract for a Home Owner/Occupier, which included an adjudication agreement in the case of a dispute. The contract between the parties was never finalised nor formally signed, yet correspondence and works continued between the Parties until Crispin aborted. MCC claimed for loss of profits and an Adjudicator rendered a Decision that awarded damages to MCC. The Decision was challenged by Crispin on the basis that there was no binding contract between the Parties and thus could not include a binding agreement to adjudicate.

Issue

The question arose as to whether there was a binding contract between the Parties, which incorporated the adjudication agreement, in the absence of a formal and finalised agreement.

Held

On the law, the Court held that an objective test of the whole correspondence and conduct of the Parties applies, to determine whether the Parties reached an agreement of the same terms with a mutual intention to be legally bound thereto. There may be circumstances in which the Parties expressly stipulate their intention that their agreement will not be binding until embodied in a formal document, in which case there will be no intention to be bound. On the facts, examples of such acceptance and mutual intentions were shown in the preparation of building materials and stages of the project. Accordingly, the Court held that, on an objective assessment of the holistic conduct and correspondence of the parties, there was a mutual acceptance and intention to be bound by the same terms of the agreement. Thus, there was a binding contract between the Parties, on the basis of which the Adjudicator’s decision is binding and enforceable.

Word Count: 302


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