Adjudication Available Only for Contracts Wholly in Writing

Author:Mr Colin Fraser
Profession:McGrigor Donald

"Did you take all of that down?"

It was held in a very recent Court of Appeal decision that for an agreement to be 'evidenced in writing', generally, all of the agreement, not just part of it, must be evidenced in writing.

The Legislation

Under the Housing Grants, Construction and Regeneration Act 1996 ("the Act") all parties to a construction contract (with certain defined exceptions) have a right to refer a dispute to adjudication. But; that is only construction contracts that are agreements in writing.

Section 107(2) of the Act reads as follows:-

"There is an agreement in writing -

(a) if the agreement is made in writing (whether or not it is signed by the parties),

(b) if the agreement is made by exchange of communications in writing, or

(c) if the agreement is evidenced in writing".

The purpose of 107(2) is to ensure that 'agreement in writing' is defined as widely as possible. Parliament was certainly aware of the informal agreements that are prevalent in the industry, particularly between contractors and sub-contractors. The thrust of the Act is to exclude as few agreements as possible from the provisions.

Indeed, the annotations to the Act state as follows:-

For the most part, subs (2) will apply to fairly informal arrangements such as an exchange of letters or a written acceptance of a quote.

The Act (at s. 107(b)) even goes so far as to extend the concept of writing to include as writing anything being recorded by any means.

DM Engineering (NI) Ltd -v- RJT Consulting Engineers Ltd

That pragmatic approach was followed at first instance where Judge MacKay stated that s. 107 was an 'inclusive not an exclusive' piece of legislation. He further held that an insistence upon a recitation of the whole agreement would be contrary to the Act.

The Court of Appeal, however, thought differently. The Court decided that it is necessary that the whole of the contract, which must be a complete agreement, must be evidenced in writing.

If it is not, the court said, an adjudicator has no jurisdiction. This was so, despite there being some evidence in writing capable of supporting the existence of an agreement, the parties involved, the nature of the work and the price and that it appeared that there was complete agreement between the parties.

The court's reasoning was that, given the pace of the adjudication timetable, an adjudicator must have certainty in relation to the terms of the contract.

The decision is an English one and is not...

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