Legal Developments In Construction Law: December 2015

1. Settlement Agreement - Or Is It?

   Mr and Mrs Seeney agreed a property swap with Gleesons. Gleesons would take the Seeneys' defective house and build them a new one. A detailed specification for the new house was to be agreed, together with a price for any additions and alterations that the Seeneys wanted to make to the specification. The £30,000 bill for the extras was agreed but was that figure binding on Gleesons or was it subject to a formal contract that was never concluded?

   In deciding whether parties have reached agreement the court considers all the negotiations. If they appear to have agreed in the same terms on the same subject matter, usually through offer and acceptance, a contract will have been formed. The parties can conclude a binding contract, even if a formal document recording, or adding to, the agreed terms needs to be executed. Whether they intend to be bound in such circumstances, or whether they intend to be bound only when the formal document is executed, depends on an objective appraisal of their words and conduct.

   The court found that a binding agreement had been reached, as recorded in an email from the mediator in the dispute. The judge also said that the courts should be very reluctant to undo agreements reached with or through a mediator, and should take a realistic, if not mildly sceptical, view of parties who seek to avoid the consequences of such an agreement months, if not years, down the line.

   Seeney & Anor v. Gleeson Developments Ltd & Anor [2015] EWHC 3244

2. Hybrid Construction Contract Gives Court A Payment Headache

   The Construction Act does not apply to all construction works. Sometimes a construction contract is for both included and excluded construction works. In this situation, the Act says, disarmingly simply, that it only applies in so far as the contract relates to 'construction operations' as defined in the Act. But where does that leave an application for payment for both sorts of works, without distinguishing between the two?

   A steelwork contractor for two power generation plants submitted a hybrid payment application. No valid payment or payless notice was served in time and the contractor issued adjudication proceedings for the part of the application that it said related to construction operations under the Act. Enforcement of the adjudication award for the full amount was refused, because of jurisdiction issues, and the contractor issued separate court proceedings and asked for summary...