Anchor 2020 Ltd v Midas Construction Ltd

Contract formation is determined objectively from the parties’ words and conduct. A binding construction contract may arise even though only one party has signed, where the parties have agreed the terms they regarded as necessary and their conduct shows an intention to be bound. Performance is a relevant, sometimes powerful, factor, but does not automatically establish a contract. Matters of detail may be left for later agreement if the contract remains workable and sufficiently certain.

Where a document is incorporated into a contract, its objective contractual significance depends on the context in which it was introduced. A risk register included merely to explain agreed pricing does not, without clear wording, reallocate substantial risks or define the scope of the works.

Anchor engaged Midas to design and construct a continuing retirement community. The parties intended to use a JCT Design and Build Contract and proceeded through successive letters of intent while negotiating the substantive contract.

Midas signed the contract documents on 21 July 2014. Anchor did not sign them at that time. Midas later included a risk register in the hard-copy documents. The register identified certain risks as excluded, and the parties subsequently disputed whether it formed part of the contract. Midas argued that no binding contract had been concluded, alternatively that the risk register was incorporated and that payment should be assessed on a quantum meruit basis.

The court determined whether a contract was made on 21 July, which documents it contained, and the resulting basis for valuation.

1. Contract formation. Applying the objective approach in RTS v Molkerei [2010] UKSC 14, the court considered the parties’ communications and conduct, rather than their subjective beliefs. The parties had agreed the contract sum, the contract sum analysis, the schedule of amendments, the contractual structure and the novation terms as between themselves. The M & E drawings, area schedules and laundry quotation were not conditions to formation. They were matters that could be corrected or supplied later, and the contract remained workable and sufficiently certain.
2. The fact that the JCT documents contemplated execution by both parties did not make both signatures a condition precedent. Article 10 required the novation agreements to be entered into upon execution of the contract, but did not provide that their prior execution was necessary for the contract to exist. The absence of a performance bond likewise did not demonstrate that no contract existed. Anchor had chosen not to enforce the contractual payment consequence of that omission.
3. Midas’ continued performance after 21 July, together with its contemporaneous statements that the contract was in place or secured, strongly supported an intention to create legal relations. Later disputes and commercially motivated changes of position were a poor guide to the parties’ objective intentions at the time of formation.
4. Risk register. The risk register was not part of the contract. Objectively, the July communications indicated that it was included for completeness and as a breakdown of the agreed £155,000 allowance. If it was intended to transfer substantial risks or define the scope of the works, that would have required clear wording. Its later insertion did not amount to a counter-offer and the subsequent discussions did not incorporate it into the contract.
5. The parties therefore entered into a binding contract on 21 July 2014. Midas’ entitlement was to be valued under that contract. The alternative quantum meruit issue did not arise. The court nevertheless observed, obiter, that if a quantum meruit had been required, the JCT payment terms in the putative contract would in principle have provided the appropriate basis, subject to defects and any proper prolongation claim.

First-instance decision. No appellate history is stated in the judgment.