Hadley Design Associates Ltd. v The Lord Mayor and Citizens of the City of Westminster

A contractual power to terminate on one month’s notice should be given its clear meaning where the contract contains no adequate basis for restricting it. A term cannot ordinarily be implied at common law if it contradicts an express term, whether implication is said to arise by law or to give business efficacy. Timeload Ltd. v British Telecommunications Plc concerned only arguability at an interlocutory stage and did not establish a general rule requiring good cause for termination.

Unfair Contract Terms Act 1977 section 3 requires genuine written standard terms adopted more or less automatically. A specially drafted and materially negotiated contract will not ordinarily satisfy that description. The statutory restriction on substantially different contractual performance did not apply to the termination in this case.

Hadley Design Associates Ltd. provided surveying and related consultancy services to Westminster City Council under a 1987 contract concerning refurbishment works at Churchill Gardens Estate. The contract incorporated modified RICS conditions, including a provision permitting termination on one month’s notice.

The Council exercised that power in 1996. HDA claimed damages for the loss of future work, alleging a collateral contract, estoppel, implied terms, statutory protection under the Unfair Contract Terms Act 1977, and analogous common-law restrictions. HDA also claimed additional fees for redesign work on Phase 4C. The issues were whether termination was contractually or legally restricted and whether further fees were due.

1. Termination. The 1987 contract incorporated the RICS 1981 conditions as modified. Clause 1.7 permitted either party to terminate on one month’s notice. No collateral contract or estoppel was established. The contemporaneous documents and evidence did not support an agreement that termination was limited to default, insolvency or lack of Council funding.
2. Implied terms. The proposed terms requiring good cause, fairness, reasonableness, good faith or substantial reasons would inhibit the express termination provision. No statutory provision required their implication. Nor were they necessary to give the contract business efficacy. A common-law term cannot be implied if it contradicts an express term.
3. Authorities. Timeload Ltd. v British Telecommunications Plc was an interlocutory decision on arguability and was materially dependent on BT’s statutory and regulatory position. It did not establish a general rule that contracts terminable on notice require good cause. The authorities stating the strict approach to implication were preferred and applied.
4. UCTA. The Council and HDA had not contracted on the Council’s written standard terms of business. The 1987 contract was specially drafted. In any event, section 3(2)(b)(i) did not apply to the Council’s termination, and the one-month notice period was not shown to be unreasonable under section 11(1). No general common-law doctrine restricting termination in the manner alleged was established.
5. Fees and order. Fees were payable at the contractual stage points by reference to the relevant estimate or final account. Later changes to the estimated cost did not retrospectively alter fees already due and paid. Both claims failed. The action was dismissed.