EQ Projects Ltd v Alavi (t/a Merc London)

A building contract requires agreement on the parties, price and workscope, but an express completion period is unnecessary where the law can imply performance within a reasonable time. A fixed-price contract is not converted into a provisional or variable-price arrangement by earlier quotations. A contractor claiming payment for additional work must establish a request, agreement or acquiescence by the employer, identify the additional work and prove its cost. Risks known to the contractor and not allocated to the employer remain with the contractor. A contractor remains contractually liable for defective work despite the existence of a third-party warranty unless the contract provides otherwise.

The claimant carried out shopfitting works at the defendant’s premises under a contract formed by the claimant’s written offer and the defendant’s acceptance by conduct. The dispute concerned the proper contract price, the scope of the works, alleged additional works and prolongation costs, defects, and an alleged compromise reached during negotiations.

The defendant alleged that the contract price included an unjustified uplift and counterclaimed damages. The claimant sought payment of the balance of the original contract price and further sums for additional works. The central issues were whether the sums claimed were contractually due, whether the claimant had established entitlement to payment for additional work, and the extent of the defendant’s counterclaim.

1. Original contract. The contract was formed by the claimant’s offer of 25 July 2003 and the defendant’s acceptance by conduct. Agreement existed as to the parties, price and workscope. No binding six-week completion period was agreed; the works had to be completed within a reasonable time.
2. Contract price and misrepresentation. The agreed price was fixed at £236,119 plus VAT. The earlier quotation’s apparent provisional sums did not qualify that price. The contract nevertheless contained a term that the price was based on construction costs of £223,619 and design and project-management fees of £12,500. The additional £23,619 represented an unjustified main-contractor uplift after Preprint ceased to be the main contractor. The allegation of fraudulent misrepresentation failed because dishonesty was not proved, but the defendant established breach of contract and was entitled to credit for £27,752.32 including VAT.
3. Additional works. There was no supplemental agreement or acquiescence on 14 October 2003. Nor was there any other request by the defendant for the disputed works. The landlord’s works were matters known to the claimant and within its contractual risk. The claims for additional works, quantum meruit and prolongation costs therefore failed. The fixed-price contract contained no variable or provisional sums.
4. Defects. The claimant was not obliged to replace the existing air-extraction system, but it was obliged to install a new ceiling which preserved its operation. Damages were allowed for replacement grilles. The remaining proved defects produced a counterclaim totalling £8,460. The existence of a third-party warranty did not remove the claimant’s contractual liability.
5. Disposition. The alleged compromise was not final or binding because the proposed agreement was never confirmed. Judgment was entered for the claimant for £37,781.71, together with interest.

First-instance decision. The judgment does not state any prior appellate decision.