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Contracts “in writing” – not gone yet

Much has been written about section 107 of the Construction Act 1996 and the meaning of “in writing“, not to mention the myriad of case law on the point. In the last few years, a fair number of paragraphs have also been devoted to the changes in the LDEDC Act 2009 that, if they ever come into force, will delete section 107 and remove this requirement for construction contracts.

Just about everyone agrees that opening up adjudication to parties who didn’t get around to sorting out their paperwork is a good idea, although a number of commentators have expressed concern that adjudicators may not be up to the job of deciding what the terms of the parties’ contract are, if there isn’t a written contract.

I don’t agree that adjudicators can’t work out what the terms of the contract are. We do it routinely now, including where there is a jurisdictional challenge. Jurisdictional challenges are routine, and will often involve ascertaining contract terms in a very short period time.

We may make a non-binding decision on our jurisdiction, based on the outcome of this investigation into contract terms, but more often than not, the parties accept that decision. Even if they don’t, the court is always reluctant to disagree with us. It is a rare case (like Rok Building Ltd v Bestwood Carpentry Ltd) where that happens. Sometimes the parties do something, such as failing to challenge the adjudicator’s jurisdiction (like in SG South Ltd v Swan Yard), that gives the adjudicator jurisdiction where there wasn’t any to start with.

I recently wrote that I think most adjudicators are capable of determining what the terms of the contract are, especially those that are legally trained. The difficulty adjudicators face is simply ensuring that all the relevant paperwork is disclosed to them and the right witnesses have prepared a statement and are available, if necessary, to attend a meeting. There are no rules of evidence, so we really are dependant on what the parties are prepared to disclose. To see what happens when there is a lack of disclosure, one only has to read Akenhead J’s judgment in Nickleby FM v Somerfield Stores. It seems that sometimes mistakes do occur. There may have been no bad faith here, but I wonder how a court would have dealt with the issue, if the emails had not been disclosed to it, rather than an adjudicator?

In my view, the onus is on the parties to get things right, just as much as it is on the adjudicator to make the right decision.

So, back to the “in writing” point

Firstly, I think it is just another issue for an adjudicator to deal with and, most probably, will be the first issue he deals with as it will, in most instances, affect all the remaining issues in the dispute.

Secondly, depending on the value of the dispute, it may be something that should be referred to the adjudicator in isolation. After all, an adjudicator’s decision is binding on subsequent adjudicators, so why not use the process in that way? Arguably, the TCC could be asked to give a declaration (using CPR Part 8), but remember that process has limited uses and cannot be used to determine substantive issues, or ones that involve the investigation of a factual dispute.

Finally, I don’t believe things will change if the LDEDC Act 2009 comes into force. It will be business as usual on these issues.

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