Davidson v Hanson Quarry Products (Europe) Ltd

Where negotiations are conducted by a company’s personnel, an offer may objectively be treated as made by that company unless the counterparty is clearly informed that the contracting party is another entity. If the counterparty accepts the offer on that understanding, a contract may arise between the counterparty and the company. Documentary references to a joint venture or payments made by another joint-venture participant do not necessarily alter the contractual relationship, particularly where the surrounding dealings consistently point to the company as contracting party.

The claimant, a specialist sub-contractor, carried out drainage and pavement works on an M27 carriageway renewal project. The defendant and Stenoak Associated Services plc had formed a joint venture. The defendant argued that the claimant had contracted with Stenoak or its subsidiary, Associated Asphalt Ltd, and was therefore not liable. The claimant contended that he had entered into an oral contract with the defendant at a meeting on 15 October 2001. The central issue was the identity of the contracting party.

1. Judgment for the claimant. The claimant had carried out the agreed work and was entitled to recover under his contract with the defendant.
2. The court found that the material negotiations and the meeting of 15 October 2001 were conducted by personnel of the defendant. The claimant entered that meeting believing that, if agreement was reached, he would contract with the defendant.
3. The meeting note recorded the agreed costs for drainage and central-reservation works but made no reference to Stenoak or Associated Asphalt. The court accepted the claimant’s evidence that he was not told that the contract would be with either of those entities. He would have objected had that been proposed.
4. In those circumstances, the claimant was entitled objectively to treat the offer made by the defendant’s personnel as coming from their employer. His acceptance therefore created a contract between him and the defendant. The court treated this as the parties’ agreed position on the legal consequence of those facts.
5. Subsequent documents and events did not displace that conclusion. The claimant’s correspondence was addressed to the defendant; the defendant’s personnel administered the work and payment applications; and payments made by Associated Asphalt were consistent with the joint venture’s payment arrangements. They did not establish that the claimant had contracted with Associated Asphalt or Stenoak.
6. The alternative claims in quantum meruit and trust were not pursued, and the court did not determine the legal submissions directed exclusively to those claims.