Member Article

In Hayden Young Limited v Laing O’Rourke Midlands Limited, the Judge held that a key term of the agreement, namely the level of limitation of liability in both warranty and contract, was not agreed, and although there were negotiations about it, no conclusion was reached. No contract was executed and the judge held therefore there was no contract in place throughout the works. This led to the situation where on a major piece of work, a contractor was entitled to be paid on a quantum merit basis, and did not owe duties of care which would otherwise have been in place had the contract been concluded. This is clearly an unsatisfactory position for both the employer and contractor although particularly in this case for the employer.

In RTS Flexible Systems Limited v Molkerei Alloie Muller Gmbh work was carried out under a letter of intent and the Court found that as a scope of works was not finally agreed key elements were missing. For example, there was no obligation to deliver key equipment within specified time scales.