ºÚ¶´ÉçÇø

Gleeson was the main contractor at Burrows Water Treatment Works in Dawlish, Devon. It invited tenders for a subcontract on the IChemE Brown Book for a water main.

On 20 October 2005, Yates quoted £221,827.92 to complete in four to five weeks. However, Yates would normally contract on an amended CECA or an NEC contact and it wanted its tender letter to prevail over the other subcontract documents. Furthermore, Yates said it would not accept the deletion of clauses similar to clauses 12 and 13 of the Institute of Civil Engineers’ conditions of contract or 60.1 of the NEC, which refer to unforeseen ground conditions.

Gleeson held a pre-contract meeting on 1 November 2005. The record noted the form of sub-contract was to be the IChemE Brown Book. However, the level of liquidated damages was not agreed.

Gleeson emailed its order number on 2 November 2005. Yates ordered the materials but queried the liquidated damages. Gleeson responded on 3 November and later posted its order number and documents, stating that the subcontract was the Brown Book.

The subcontract itself was never signed, although Yates did sign the VAT form.

Work started on site on 6 February 2006, but by 14 February Yates was having trouble with the ground conditions and emailed Gleeson on 16 February with possible changed drilling methods and extra costs.

Gleeson said it was Yates’ responsibility to complete in five weeks and substantiate any claim. On 26 July Yates made a claim ‘under the contract’ that the ground was different from that described in the tender. It referred to the terms in its quotation, plus clauses 3, 5, 6.2 and 6.3 of the Brown Book.

In January 2007, Yates claimed £1,327,529 for its costs to 31 October 2006, describing the subcontract as including the IChemE Brown Book. Gleeson replied on 25 May 2007 that the claim was deficient and unclear. Under clause 6.3 of the Brown Book, compliance with the contract’s notice provisions was a ‘condition precedent’ of entitlement to claim, ie a condition that had to be fulfilled.

Yates claimed its emails of 16 February 2006 and July 2006 had been complying notices. Then, in a further email notice in June 2007, Yates specifically referred to the Brown Book clauses 6.2 and 6.3.

The court held that the 1 November 2005 meeting had not accepted Yates’ quotation nor had Gleeson’s email of 2 November 2005. The subcontract sent on 3 November 2005, however, was an offer that Yates accepted by signing and returning Gleeson’s form, starting work, accepting variations and issuing its 26 July 2006 notice of a claim.

As a result, the court held that the parties had agreed that the Brown Book conditions applied, and that these took precedence over Yates’ quotation. Although the court was not deciding any part of the underlying dispute, Yates lost the first round.