(Not) Signed, Sealed and Delivered – Do you need to sign a contract to be bound?

Howes Percival LLP

15th April 2019

A recent case has seen the courts confirm that a binding contract can exist even if it’s only been signed by one of the parties. In Anchor 2020 Ltd v Midas Construction Ltd (2019) EWHC 435 (TCC), Midas were engaged by Anchor to build retirement accommodation and whilst it was intended they would enter into a JCT Design & Build contract, that never happened. Instead the works progressed under a series of letters of intent until some 9 months into the project when Midas alone signed the contract.

When there was a subsequent dispute about the contents of the risk register Midas added to the contract when signing it, the parties took the matter to court to decide if a contract had in fact come into existence.

As already mentioned, the court decided that it had. They reasserted the principle that “Whether there is a binding contract depends…not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct…Even if certain terms of economic or other significance to the parties have not been finalised, objective appraisal of their words and conduct may lead to the conclusion that they did not intend agreement of such terms to be a precondition to a concluded and legally binding agreement.”.

Following on the heels of Arcadis Consulting (UK) Ltd v AMEC (BSC) Ltd (2018) EWCA 222, (in which working under a “letter of intent” could have left a contractor facing a £40m claim), this case is a further reminder of the potential risks of working without a formal contract in place

For further information on the above or to ask a question, please contact Simon Franklin on  01223 791008 or email simon.franklin@howespercival.com.

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