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Trentham Ltd v Archital Luxfer Ltd (1992) CA
The plaintiffs, T, were the major contractors in the building of various industrial units. The defendants, A, carried out some of the work on windows etc for T as sub-contractors. The parameters of the agreement between A and T were negotiated in a lengthy procedure starting on 12 January 1984. Although a contract was agreed on 2 February 1984, negotiations concerning specific elements (including whether the contract comprised T’s standard conditions or A’s) continued into April 1984. The negotiations involved multiple separate points and no finally approved paper was ever even created. Work by A had started in February and payments from T began in early March. When a dispute occurred, A contended that there was no contract.
Held (by Steyn LJ with whom Ralph Gibson and Neill LJJ agreed) there was a contract. His Lordship’s reasons comprised the following: (I) Following Brogden v Metropolitan Railway (1.2.3) ‘a contract can be concluded by conduct’. (II) ‘The contemporary exchanges and the carrying out of what was agreed in those exchanges support the conclusion that there was a course of dealing which on [T]’s side generated a right to performance of the work by [A], and on [A]’s side it created a right to be paid on an agreed basis’.
The coincidence of offer and acceptance will in the vast majority of cases represent the mechanism of contract formation. It is so in the case of a contract alleged to have been made by an exchange of correspondence. But, it is not necessarily so in the case of a contract alleged to have come into existence during and as a result of performance… The judge analysed the matter in terms of offer and acceptance. I agree with his conclusion. But I am, in any event, satisfied that in this fully executed transaction a contract came into existence during performance even if it cannot be precisely analysed in terms of offer and acceptance. [IV] It does not matter that a contract came into existence after part of the work had been carried out and paid for. The conclusion must be that when the contract came into existence it impliedly governed pre-contractual performance.
The plaintiffs, T, were the major contractors in the building of various industrial units. The defendants, A, carried out some of the work on windows etc for T as sub-contractors. The parameters of the agreement between A and T were negotiated in a lengthy procedure starting on 12 January 1984. Although a contract was agreed on 2 February 1984, negotiations concerning specific elements (including whether the contract comprised T’s standard conditions or A’s) continued into April 1984. The negotiations involved multiple separate points and no finally approved paper was ever even created. Work by A had started in February and payments from T began in early March. When a dispute occurred, A contended that there was no contract.
Held (by Steyn LJ with whom Ralph Gibson and Neill LJJ agreed) there was a contract. His Lordship’s reasons comprised the following: (I) Following Brogden v Metropolitan Railway (1.2.3) ‘a contract can be concluded by conduct’. (II) ‘The contemporary exchanges and the carrying out of what was agreed in those exchanges support the conclusion that there was a course of dealing which on [T]’s side generated a right to performance of the work by [A], and on [A]’s side it created a right to be paid on an agreed basis’.
The coincidence of offer and acceptance will in the vast majority of cases represent the mechanism of contract formation. It is so in the case of a contract alleged to have been made by an exchange of correspondence. But, it is not necessarily so in the case of a contract alleged to have come into existence during and as a result of performance… The judge analysed the matter in terms of offer and acceptance. I agree with his conclusion. But I am, in any event, satisfied that in this fully executed transaction a contract came into existence during performance even if it cannot be precisely analysed in terms of offer and acceptance. [IV] It does not matter that a contract came into existence after part of the work had been carried out and paid for. The conclusion must be that when the contract came into existence it impliedly governed pre-contractual performance.
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