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Living in sin
The dangers of contractor and subcontractor
co-habiting out of wedlock were highlighted when Hayden Young
went to work for Laing O’Rourke on Coventry City’s Ricoh arena
“Living and working together on site? Dear
me, yes. Hammering and screwing? Dear me, yes. Come the date of
the first football match they had practical completion but still
had not wed”
The man standing centre stage asked the
audience: “Did the subcontract come into existence?” Those from
Laing O’Rourke yelled: “Oh yes it did.” Those from Hayden Young
yelled: “Oh no it didn’t.” Titans at loggerheads. Two
enterprises that needed each other trying to find a way of
living together. Two firms trying to get into contract spent two
years trying and still didn’t make it.
Meanwhile, Hayden Young got on with the work
and Laing O’Rourke paid. In the end they fell out and nobody
could work out whether they’d agreed the rules of the game.
Coventry City football club played its first
game at the new Ricoh arena on 20 August 2005. Practical
completion was achieved the day before. Mind you, this Laing
O’Rourke project was much more than just a soccer venue – it had
a hotel, a swish casino, exhibition halls, banqueting suites and
a fitness fanatic’s pleasurama. Hardly surprising that the
talents of the M&E engineering folk at Hayden Young was vital.
So, why all the fuss about the wedding of
main contractor and subcontractor? Well, unlike many a
subcontractor, Hayden Young is big enough to share risk, so it’s
fair for the likes of Laing O’Rourke to strike a deal that means
that if everything goes belly-up at the hands of its specialist
subcontractor, then it would pay up to the main contractor and
the injured customer.
For Laing O’Rourke it was essential that the
deal would pass on millions of pounds worth of risk and for
Hayden Young it was essential that it was not exposed to that
risk. That’s sound commercial behaviour. It’s not just big
contractors who look carefully at the smallprint nowadays. Many
a minnow baulks at tough terms that would blow their outfit out
of the water if the blame game gets under way. Even tiddler-sized
outfits attempt to limit liability proportionate to the value of
the contract. Anyway, Hayden Young said it would do the job only
if liability were capped.
The crucial word in all this is “essential”. Hayden Young
sent a bid to Laing O’Rourke in June 2003, but soon thereafter
Laing O’Rourke tempted the M&E boys to accept liabilities, none
of which were out of the ordinary, but none that Laing O’Rourke
expected to be accepted lying down.
So they toed and froed. They wrote, they met,
they phoned, they wooed. A year into all this wooing (yes, a
whole year) Hayden Young commenced work. Yet the toing and
froing continued. Laing O’Rourke prepared a new set of
contractual documents, which Hayden Young said it was unable to
sign. Again the word “essential” popped up. There were essential
conditions both parties needed to hammer out before this
contract became live.
Meanwhile, no wedding. Living and working
together on site? Dear me, yes. Hammering and screwing? Dear me,
yes – but still no wedding. Come the date of the first football
match in August 2005, they had practical completion, but had
still not wed.
“Lawyers call these conditions ‘essential
terms’. The snag is, the word ‘essential’ can be ambiguous”
Mind you, when the question “Did the
subcontract come into existence?” was asked and we learned no,
it was damn near another three years before the answer was given
in the High Court. Mr Justice Judge Ramsey, the judge in the
case, had to decide what the conditions were in giving life to
the contract and whether these were agreed as a matter of law.
Lawyers call these conditions “essential terms”. The snag is,
the word “essential” can be ambiguous. Sometimes an ingredient
is essential to make a contract work. Sometimes one party makes
a particular ingredient essential when bidding. An essential
term might be an agreement as to a start or finishing date, or
signing the contract documents as a specific bundle. Got the
idea?
Laing O’Rourke said certain matters were not
essential and other matters were, and had been agreed. Hayden
Young said not so.
In the end the judge said the subcontract was
not concluded. Actually, he said “no subcontract was concluded”.
Puzzled? The two parties had at least agreed that Hayden Young
would get on with the work until one or the other said enough,
and they let that go on for a year. Sounds like a contract to
me, but what do I know. Be that as it may, Hayden Young will be
entitled to reasonable remuneration under quantum meruit
– “as much as deserved”. And if there’s no quarrel about how
much is deserved, I’ll eat my hat!
Readers are invited to forward recent
judgments for reporting in this column (with full
acknowledgement) to: Tony Bingham, 3 Paper Buildings, Temple,
London EC4Y 7EU. DX: 37164 Biggleswade
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