Westminster Building Company Ltd. v Beckingham

A letter of intent may create an interim agreement without incorporating the proposed standard-form contract. A subsequent offer of complete contractual terms may nevertheless be accepted by conduct, particularly where the other party allows the works to proceed without objection. A variation agreement which changes the contract sum, but is intended to be read with the underlying construction contract, remains subject to that contract’s adjudication clause. The adjudicator therefore has jurisdiction to decide whether the variation is enforceable or supported by consideration. An adjudicator’s decision made within contractual jurisdiction will be enforced, absent a recognised basis for resisting it. An adjudication clause in a consumer construction contract is not unfair merely because it was not individually negotiated, where it is in plain language, the consumer had competent advice, and it does not create a significant imbalance or materially hinder access to legal remedies.

Westminster sought judgment enforcing an adjudicator’s decision requiring Andrew Beckingham to pay certified sums and interest arising from refurbishment works to his dwelling-house. Beckingham disputed the contractual terms, contending that the works were governed only by a letter of intent and specification, and that no adjudication clause had been incorporated.

He further relied on a later agreement which capped his liability, arguing that it settled the underlying disputes and that any dispute about its enforceability fell outside the adjudicator’s jurisdiction. He also argued that the adjudication clause was unfair under the Unfair Terms in Consumer Contracts Regulations 1999. The court had to determine whether a binding contract containing an adjudication clause existed, whether the adjudicator had jurisdiction to decide the effect of the capping agreement, and whether the adjudication clause was binding.

1. Contract and incorporation. The letter of intent did not create a full contract for the entirety of the refurbishment works. Read as a whole, it created an interim arrangement under which work carried out in conformity with the specification and drawings would be reimbursed on a reasonable-expenditure basis. The reference to later execution of formal documents was consistent with that conclusion.
2. When Westminster returned the signed contractual form, it made an offer to carry out the works on the terms contained in that form. Beckingham accepted that offer by allowing the works to proceed, remaining silent about the documents, and acting throughout as though the form governed the works. Any precondition requiring signature by both parties was waived by that conduct. The contract therefore contained the adjudication procedure in the JCT Intermediate Form.
3. Jurisdiction. The agreement of 20 February 2003 was a variation of the underlying contract, not a stand-alone settlement agreement. It was to be read with the underlying contract and did not settle all disputes. A dispute about whether the variation was enforceable, including whether it lacked consideration, was therefore a dispute arising under the contract and fell within the adjudicator’s jurisdiction. Shepherd Construction Ltd v Mecright Ltd [2000] BLR 489 was distinguishable.
4. The adjudicator applied the correct consideration approach derived from Williams v Roffey Brothers & Nicholls (Contractors) Ltd [1991] 1 QB 1. His decision was made within jurisdiction and was not impeachable for an error of law. Since no valid withholding notices had been served, the certified sums were payable.
5. Unfairness. Applying the guidance in Director General of Fair Trading v First National Bank plc [2002] 1 AC 481 and Lovell Projects Ltd v Legg and Carver [2003] BLR 452, the adjudication clause was plain and intelligible, did not contravene good faith, did not create a significant imbalance, and did not materially hinder legal remedies. It was not unfair and was binding.
6. Judgment was entered for Westminster in the sum claimed.